Megasoft, a Hyderabad-based technology solution provider for the telecom sector, plans to put its real estate assets in Hyderabad and Visakapattanam for sale. The sale is expected to rake in anywhere between Rs 200 crore to Rs 220 crore as windfall gain for the company. Megasoft is expected to use the proceeds to retire some of its high-cost debt.
G V Kumar, MD, Megasoft, said: ?As the real estate market improves, the company plans to monetise its real estate. The funds will be used to reduce debt,? he said.
Market estimates suggest that the real estate assets of Megasoft, in Hyderabad and Visakapattanam, have a current market value of anywhere between Rs 200 crore to Rs 220 crore.
Analysts feel that if the company uses the entire sales proceeds towords retiring its outstanding loans to crediters, it would make Megasoft a debt-free company with enough cash in hand to pursue its orgainic and inroganic growth plans.
?If the company uses the sale proceeds to pay its debt in one shot, it would not only make it debt-free, but leave enough money, say around Rs 60-70 crore in its hand. This will help the company finance its growth plans,? an analyst tracking the company told FE.
As in June 2010, Megasoft has a total debt of Rs 178.12 crore on its books. The cash balance on its balance sheet is to the tune of Rs 24.55 crore. Barring Rs 10 crore local currency loan, all other loans are dollar-denominated, giving the company a natural hedge in terms of dollar revenue receivables, Kumar said.
Megasoft has managed to bounce back to black for the quarter ended June 30, 2010.