GVK Power to focus on consolidation, not new projects

GVK Power and Infrastructure Ltd says it’s time to focus on business consolidation, paring debt and growing the power generation business rather than chasing new orders.

The focus of the company is on stabilising the existing investments, be it Mumbai and Bangalore international airports, road projects or power generation assets. The times are challenging, GVK Reddy, Chairman of GVK Power, told shareholders on Wednesday.

During the current fiscal, two power assets — the 330-MW Alaknanda hydel power project in Uttarakhand and the 540-MW Goindwal Sahib plant in Punjab — and two coal mines are expected to be commissioned, the Chairman told the 20th annual general meeting.

Besides, two road projects — Deoli-Kota Expressway and Bagodara-Vasad Expressway — are also expected to be operational this fiscal.

“If the current year is a period of consolidation, we expect the next year to be a turnaround year,” he added.

Later, Isaac A George, Chief Financial Officer of GVK, told reporters: “The company now has a debt burden of ₹22,800 crore, both at the holding company level and at special purpose vehicles. The funds we had raised to acquire and increase stakes in Mumbai and Bangalore airports are about ₹3,000 crore, which we want to bring down.”

The company is planning to raise ₹1,000 crore through a qualified institutional placement offer with a greenshoe option of ₹500 crore. The proceeds will be used to pare debt.

A greenshoe option is the option to sell additional paper if demand exceeds expectations.

“Efforts to divest stake to a strategic partner or offer shares are at an advanced stage and expected to conclude any time. Even now, talks on stake sale are going on. However, every time we are close to freezing the deal, some external developments put them off,” added George.

“While the move to bring in a strategic partner for the rail infrastructure and coal terminal has been almost completed with (Australia-based rail freight company) Aurizon agreeing to join us, the stake divestment in the mine project is expected to happen by next year,” he added.