GMR Plans Loans for Power Projects

India’s GMR Infrastructure Ltd. plans to secure about 30 billion rupees in loans from domestic banks by the end of the financial year beginning April 1, Chief Financial Officer A. Subba Rao said.

He added that the money will be used to fund two hydro-electricity projects the company is setting up in northern India.

Mr. Rao said the company plans also to raise debt overseas to help fund the expansion of its power generation business.

The group aims to increase its total electricity generation capacity to 6,500 megawatts from about 830 MW over the next several years.

The Bangalore-based group – which builds and operates roads, power stations and airports – has a net debt of 250 billion rupees.

Mr. Rao said the company, which has been dependent mostly on local funds, will take overseas loans only if the fully hedged debt is at least 200 basis points less than the average 12% cost of domestic loans.

GMR has proposed to set up two hydro-electricity projects – a 180 MW project in northern Himachal Pradesh state and a 300 MW hydro project in northern Uttarakhand – at an estimated cost of 40 billion rupees.

It aims to tie up funding for the projects by March 31, 2013.

Mr. Rao said that the company may – if it is able to raise lower-cost loans overseas–refinance a 60 billion rupees loan it has already tied up for a 1,370 MW coal-fired project in central Chhattisgarh province.

Mr. Rao added that GMR plans to cut its capital expenditure for the next financial year by 39% to 80 billion rupees, as it has so far not planned any new investments.
Source: WSJ

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