Infrastructure major IVRCL is on a consolidation drive. The company has decided to focus on engineering, procurement and construction (EPC) contracts and water projects, and exit all build, operate and transfer (BOT) projects, both operational and under-construction.
In the first phase, three BOT assets selloff is expected to retire debt to the tune of Rs 2,500 crore by March 2015. Besides, the company is also looking to sell off its real estate assets in the next two years.
“We have decided to focus only on EPC projects as liabilities are much lower. We will not bid for any new BOT projects. We have decided to sell off all the eight BOT assets which include seven road projects and a desalination plant to retire debt worth Rs 3,500 crore to Rs 4,000 crore and bring in equity worth Rs 1,500 crore into the company,” said chairman E Sudhir Reddy.
“The talks for the sale of assets are in the final stage and is expected to be completed in few months,” he said. “We are looking at equity flow into the company of at least Rs 600 crore to Rs 800 crore after the selloff of three BOT projects by March 2015,” he said, adding the company has not got any profits yet.
The company has been under pressure for the last few years due to higher interest rates, macro-economic issues, delays in project implementation leading to cost escalation. The company’s consolidated debt stood at Rs 6,500 crore from the BOT and EPC projects.
After the BOT asset sale, IVRCL is mulling to sell its real estate assets. It has 1,700 acres of land across Chennai, Bangalore, Pune and Visakhapatnam that have an estimated value of Rs 3,000 crore. With an order book of Rs 18,000 crore, the company is targeting Rs 8,000-crore turnover in the next two years. For FY16, IVRCL is eyeing Rs 6,500 crore. “We are looking at strategic partnerships by way of dilution of promoters equity and strengthen the business,” Reddy said.
By March 2015-16, the company hopes to become profitable. “The accumulated losses is Rs 800 crore over the last two years. We hope to wipe out the losses in the next two to three years by selling off BOT projects and real estate assets,” he said.
Meanwhile, IVRCL has received the shareholder’s approval for share sale to large investors of up to Rs 300 crore. “In next one year, we would consider a qualified institutional placement (QIP) issue or allotment of preferential shares. We have already approached shareholders and have the nod to raise Rs 300 crore,” Reddy added.