Madhu Terdal, group chief financial officer, GMR Infrastructure says the company has raised USD 250 million via its qualified institutional placement (QIP) and it will not look at raising any more debt capital from the market.
This warrant is not only to boost the confidence of the promoters but also to restore their shareholding partially.
Madhu Terdal
President of New & Emerging Business
GMR Infrastructure
Madhu Terdal, group chief financial officer, GMR Infrastructure says the company's debt cycle has peaked and the cash generation cycle has begun.
Speaking to CNBC-TV18, Terdal says the company will reduce its corporate debt by another Rs 1500 crore by FY15-end.
GMR Infra has raised USD 250 million via its qualified institutional placement (QIP) and the company will not look at raising any more debt capital from the market, adds Terdal.
On a more optimistic note, Terdal says that the company's debt to EBITDA ratio too is likely to fall to 10 times by the year-end.
Below is the edited transcript of Madhu Terdal's interview with Latha Venkatesh & Reema Tendulkar on CNBC-TV18.
Reema: You recently concluded a qualified institutional placement (QIP) of USD 250 million plus the preferential allotment. How much of that will be immediately used to reduce your debt and by how much?
A: We raised USD 250 million dollar. The actual amount of is Rs 1,477 crore. In addition to that warrants will be issued to the promoters of the size of 18 crore – that will translate to around Rs 580 or Rs 600 crore. So, with that totally around Rs 2,100 crore amount is raised by the company. Therefore, this warrant is not only to boost the confidence of the promoters but also to restore their shareholding partially.
Latha: At the end of the conversion the promoters will have 66 percent?
A: That's right and totally out of Rs 2,100 crore at least 50 percent of that amount will be used to reduce the corporate debt. In my last interview I had mentioned the corporate debt, which is not backed by the cash flows, is of bother for us.
Latha: How much is that?
A: The total corporate debt in the holding company is Rs 4,000 crore in GMR Infrastructure. We are going to reduce it by around Rs 1,500 crore during this current year possibly even more than that so that is the current target. Therefore, it will go down substantially by about 30 percent or so. That is what we had promised to the investors during my last interview and I am reiterating that we are on target to meet that. However, the most important thing is, it is creating the liquidity in our stock; out of the marketcap of USD 2 billion, the liquidity was less, so that was one of our concern. Today we have about 50 very good quality investors which is almost about 65 percent backed by the long-only funds. That is changing the paradigm of trading pattern of the GMR stock.
GMR Infra stock price
On July 18, 2014, at 14:10 hrs GMR Infrastructure was quoting at Rs 26.30, down Rs 1.1, or 4.01 percent. The 52-week high of the share was Rs 38.30 and the 52-week low was Rs 10.65.
The company's trailing 12-month (TTM) EPS was at Rs 0.38 per share as per the quarter ended March 2014. The stock's price-to-earnings (P/E) ratio was 69.21. The latest book value of the company is Rs 16.96 per share. At current value, the price-to-book value of the company is 1.55.
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