GVK Power and Infra reports Rs 96.13 crore loss in December quarter

FE Bureau
GVK Power and Infra, BSE, hydro power project, GVK Coal, GVK Airport Developers, Navi Mumbai International Airport

GVK Power and Infrastructure (GVKPIL) has registered a loss of Rs96.13 crore in December quarter against a loss of Rs101.04 crore for the corresponding quarter of last fiscal on a consolidated basis. The company registered a total income of Rs1,156.15 crore against Rs1,109.28 crore for the corresponding quarter last year. For the nine months ended December 2019, the company posted a loss of Rs387.92 crore and income of Rs3,257.43 crore against a loss of Rs265.89 crore and income of Rs3,275.64 crore for the corresponding nine months of previous financial year.

"As of December 31, 2019, the group had accumulated losses during the current period and has also incurred losses during the preceding years. The group has delayed payment of loans and interest and certain loan accounts have been classified as non-performing by banks,"’ the company disclosed in a filing to BSE. It has provided guarantees and commitments and/or has undertaken to provide financial assistance on behalf of various entities, uncertainties are being faced by various projects such as delays in development of coal mines in an overseas project where the company has provided guarantees and commitments for the borrowings, losses incurred by gas-based plants in the absence of gas and litigations on rights to claim capacity charge, re-negotiation of terms of PPA of coal-based plant and delay on determination of tariff of hydro power project, arbitration on certain road projects and hydro-based plant.

The company said the prices of the coal have fallen ever since GVK Coal had acquired stake in the coal mines. GVK Coal has not been able to achieve financial closure resulting in delays in commencement of mine development activity when compared to scheduled date, delays in entering into definitive agreements for port and rail development and agreement for sale of coal. Further, certain lenders of GVK Coal have classified the loan as non-performing and the lenders had an option to curtail the rights of the company on various assets either on October 2015 or every year thereafter. The lenders have not yet exercised this option. There are also uncertainties associated with fluctuating coal prices, the discussions GVK Coal is having with non-controlling shareholders of GVK Coal’s subsidiaries to realign the option exercise rights, with lenders to reach to optimal solution and with potential investors for additional funding.

However, the management believes that the company would be able to ultimately establish profitable operations, meet its commitments, reduce debt by stake sale and the entities on whose behalf guarantees/ commitments have been extended would be able to meet their obligations. Further, the management believes that aforesaid entities would win litigations; obtain approvals of regulators; will reach an optimal solution with non-controlling shareholders and lenders; obtain requisite gas/coal allocation etc., as required despite current macro-economic environment challenges. The group’s other projects, Mumbai International Airport and GVK Jaipur Expressway, are operating satisfactorily. The group expects to execute the Navi Mumbai International Airport and has already achieved financial closure. The company subsidiary, GVK Airport Developers, has signed an agreement in September 2019 for dilution of its 79.1% stake in GVK Airport Holdings for Rs7,614 crore.