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Gammon India sells stake in infra arm to pare debt

By selling around 8% of holdings, the company has raised around Rs 40 crore

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Gammon India sells stake in infra arm to pare debt
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In order to reduce its debt, Gammon India has sold around 8% of its shareholdings in one of its arms.

With this, Gammon Infrastructure Projects ceases to be a subsidiary of the Gammon India.

Sources told DNA Money that Gammon India earlier owned over 54% shares in Gammon Infrastructure Projects. Its shareholding has now come down to 47%.

“In continuance to our earlier disclosure and pursuant to the sale of shares of Gammon Infrastructure Projects Limited by Gammon Power Ltd and Gactel Turnkey Projects Ltd (wholly-owned subsidiaries of the company) in various tranches in the open market, the company currently holds less than 51% of shareholding in Gammon Infrastructure Projects. Pursuant to this sale of shares, GIPL ceases to be a subsidiary of Gammon India Ltd,” reads a filing with BSE.

By selling around 8% of holdings, the company has raised around Rs 32 crore through stake sale by Gammon Power and Rs 8 crore from Gactel’s Turnkey Projects. The proceeds of Rs 40 crore are likely to be utilised towards debt repayment.

Gammon India has been restructuring its businesses to reduce liabilities. Its current debt stands at Rs 10,592.7 crore. As of December 2016, the net loss was Rs 20.53 crore.

According to an analyst, the company is in red and through measures such as stake sale and restructuring, they should be able to tide over the losses. “It has happened before also, and hopefully, the cycle should be reversing soon with their current order books. It will take some time though,” said an analyst.

However, the options available with the company are limited. The analyst said that it is only via stake sale, restructuring of debt and restructuring agreement that the company would be able to reduce its debt pile.

In April this year, DNA Money had reported that Gammon India’s Board had approved six restructuring proposals for de-risking businesses, deleveraging balance-sheet and monetization of assets.

...& ANALYSIS

  • Rs 32 crore has been raised via stake sale by Gammon Power and Rs 8 crore from Gactel’s Turnkey Projects
     
  • Its current debt stands at Rs 10,592.7 crore. As of December 2016, the net loss was Rs 20.53 crore
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