Gammon India, which has been forced to seek a loan recast from its lenders, is hoping to raise some R2,000 crore by developing real estate on 200 acres of land it holds around Mumbai and Bhopal in Madhya Pradesh. Bankers to the company have approved a R13,500-crore corporate debt restructuring (CDR) package.
The civil engineering company holds two plots of 180 and 15 acres in and around Dombivali, on the outskirts of Mumbai. The land, which was acquired at a total cost of R726 crore from automobile maker PAL Peugeot, will now be used to develop a township project there. A 15-acre land parcel in a prime area of Bhopal ? South TT Nagar ? will be developed as a mixed use project.
?We will be monetising the land parcels in Mumbai and Bhopal by developing them on our own, which is why the debt restructuring package has two years of moratorium and eight years of repayment,? Girish Bhat, CFO, Gammon India, told FE.
Apart from extending the repayment tenure to 10 years, the CDR cell has agreed to reduce the interest rate on the loan amount to around 11.5% with a promoter contribution of around R92 crore.
Of the R13,500 crore recast, loans to Gammon India stand at about R3,500 crore, while the remaining R10,000 crore is non-fund exposure in the form of bank guarantees. Under the terms of the CDR, the non-fund exposure will be restructured in a way that roughly R2,500 crore of unutilised bank guarantees will still be available to Gammon, which will give it flexibility to bid for future projects, said Bhat.
The consortium of bankers includes ICICI Bank, Canara Bank, Bank of Baroda, Punjab National Bank and Syndicate Bank.
The company will also reduce its stake in subsidiary companies over the next two years starting with its Italian subsidiary, said the management. They, however, refused to say if they would look at selling a stake in infrastructure arm Gammon Infrastructure.
Gammon is among several infrastructure companies facing financial trouble due to high levels of debt and delayed project execution. Hindustan Construction Corporation (HCC), GTL Infra and ARSS Infrastructure are among the other infrastructure firms that have sought restructuring of debt.
Apart from looking for ways to reduce debt, the company is also hoping that nearly R1,000 crore in pending payments from state-owned companies would soon get cleared. National Highway Authority of India, NHPC and Nuclear Power Corporation of India are among the government agencies that are yet to cough up dues to the company.
?Our money is blocked. We are hoping that with awareness coming in the government machinery regarding the problems these delays are creating for infrastructure companies, some action would be there,? Bhat said.
HCC too had recently said that it has unpaid dues of R5,000 crore from the government for highway construction and hydroelectric projects.
Gammon India posted a net loss of R446 crore for the year ended March 31 against a net profit of R87 crore last year, while its total income declined by 6% to R5,330 crore against R5,690 crore last year. The company has an order book of R14,500 crore, and has bagged R2,000 crore of new orders in the last four months from the hydro sector.
The Gammon India share ended Friday 2.84% higher at R19.90 on the BSE.
