GMR Group will continue to pursue the asset-light strategy it launched a few quarters ago.
Group Chairman G.M. Rao told Business Line the company conducted a thorough analysis of the trends in the infrastructure sector and decided to take up the asset-light approach.
“It is giving good results. We will pursue it,” he said. Asked about the company’s plans to retire debt, he said the Asset Light – Asset Right approach would take care of long-term plans.
The company’s losses in the infrastructure group widened to Rs 393 crore in the second quarter ended September 2013, against Rs 179 crore in the same quarter last year.
Revenues fell to Rs 1,940 crore (Rs 2,014 crore). Addressing shareholders recently, Rao said the analysis gave the company deep insights into the changes that could be expected over the next few years in the infrastructure sector, the financial ecosystem, and the economic environment.
“The results indicated that there is a need for proactive focus on operating cash flows and to develop a capital recycling mechanism.
“After analysing these in detail, the Group changed its strategic direction to an Asset Light – Asset Right approach,” he said.
The strategy involves developing, building, creating value, divesting and reinvesting in new projects.
The company has embarked on a regular review of its portfolio to identify assets that have created good value and those that witnessed erosion of value.
GMR plans to divest such assets, freeing up capital for better opportunities.
“This recycling approach insulates the Group from the volatility seen in the global equity markets,” he said.