Infrastructure company Gayatri Projects is evaluating the option of diluting equity in its energy holding company Gayatri Energy Ventures Ltd (GEVL).
Infrastructure company Gayatri Projects is evaluating the option of diluting equity in its energy holding company Gayatri Energy Ventures Ltd (GEVL).
The proceeds would be used for equity infusion in its power ventures.
“We intend to dilute equity to the extent of `500 crore. That can happen in about one year,” said K G Naidu, Gayatri’s chief financial officer.
The company has been working on two key power projects at Krishnapatnam in Andhra Pradesh.
Its joint venture with the Singapore-based Sembcorp —Thermal Powertech Corporation India Ltd — is expected to commence production in March 2014 with its first unit of 660 mw becoming operational.
The second project is being jointly developed with infrastructure peer NCC Ltd.
For Thermal Powertech, the total equity required is about `1,700 crore. The promoters have infused about 35% of the equity so far, with Gayatri pumping in `237 crore and Sembcorp `350 crore, in line with their respective share in the project.
Gayatri’s total commitment to Thermal Powertech is `600 crore and `350 crore to NCC Power.
On the quantum of dilution, Naidu said, “It is a function of valuation. We would consider it a good deal if we can raise `500 crore by diluting 15% of the equity.”
The company was earlier evaluating the option of roping in a private equity player to bring in additional funds. But the proposal was put on hold.
“The partner can be a PE or a strategic investor. We are interested in someone who can come with a proper plan and understanding of the sector,” said Naidu.
The projects are learnt to be progressing well.
“We have emerged L1 bidders to supply 500 mw from each project to Andhra Pradesh. We would sign the power purchase agreements in the next 3-4 months. For Thermal Powertech, we would depend on imported coal for about 30% of the requirement. We have a long-term agreement for supply of about 1 million tonne,” T V Sandeep Reddy, managing director of Gayatri Projects, told analysts recently.
For the year ended March, the company recorded revenues of `1,801.9 crore and a net profit of about `45.9 crore. The road segment was the biggest contributor to topline at about 40%. For the current financial year, it expects around 20-25% growth.
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