Rs 2,610-crore deal: GMR Infra to divest 51% stake in Kakinada SEZ to Aurobindo Realty

GMR Infrastructure on Friday announced signing of definitive agreements to sell the 51% stake in Kakinada SEZ (KSEZ) to Aurobindo Realty and Infrastructure (ARIPL) for a total consideration of Rs 2,610 crore. The GMR Group has been divesting assets to pare debt and simplify its group structure. The stake is held by its wholly-owned subsidiary GMR SEZ and Port Holding. Out of the total consideration, Rs 1,600 crore would be received on the closing date and balance Rs 1,010 crore would be received over two or three years, which would be linked to certain agreed milestones.

Proceeds from the transaction will be used to reduce the company’s debt. GMR’s consolidated gross debt as on June 30, 2020, stood at Rs 32,100 crore, while net debt was at Rs 26,300 crore. As part of the proposed transfer of stake of KSEZ, the 100% equity stake of Kakinada Gateway Port (KGPL) held by KSEZ would also be transferred to Aurobindo Realty.

The board of GMR Infrastructure (GIL) last month approved a corporate restructuring exercise with the flagship infrastructure firm retaining only the airport business listed as a separate entity. The remaining verticals – energy, EPC and urban infrastructure, the company had said will be carved out and housed in GMR Power and Urban Infra (GPUIL). At present, both GPUIL and GMR Power Infra, that housed the energy business, are units of GIL. In early July, GMR had divested a 49% stake in the airports business to the Paris-based Groupe ADP.

KSEZ is engaged in the business of implementation of a port based multi-product special economic zone project at Kakinada, East Godavari District, Andhra Pradesh and KGPL has the concession granted by the government of Andhra Pradesh to set up a greenfield commercial port in Kona village of the East Godavari district, of Andhra Pradesh. The sale transaction shall be subject to receipt of regulatory and other statutory approvals.

GMR Infra exited FY20 with consolidated revenues of Rs 8,555 crore, an operating income of Rs 2,629 crore and a net loss of Rs 2,202 crore. It has been reporting losses since FY15. GMR’s consolidated net loss widened to Rs 830 crore for the three months of April-June 2020 against Rs 330 crore in the corresponding quarter last year. The company’s revenues declined 36% on a year-on-year basis to Rs 960 crore. GMR reported an Ebitda loss of Rs 18.9 crore in Q1FY21 due to lower revenues, versus an Ebitda of Rs 600 crore in the corresponding quarter last year.