GVK group targets $10 billion market cap
Ch Prashanth Reddy / Chennai/ Hyderabad November 05, 2007
The Hyderabad-based GVK group, which is consolidating its infrastructure assets under one company, is aiming at a market capitalisation of $10 billion (Rs 40,000 crore) in a span of five years.
GVK is amongst India’s large infrastructure developers with its activities spanning the areas of hospitality, manufacturing, power, roads, airports and urban infrastructure.
Till now, it has invested over Rs 5,000 crore in its diversified business activities and has over Rs 12,000 crore projects in the pipeline.
As part of the consolidation, all the infrastructure assets will now come under one umbrella of GVK Power & Infrastructure Limited (GVKPIL), making it an integrated infrastructure player.
“The merger of the group companies will be completed by December this year. Thereafter, our market capitalisation will be in the range of $2.5 billion (Rs 10,000 crore). Given the infrastructure needs of the growing Indian economy, a four-fold increase in market capitalisation in five years is feasible,” group chairman, GV Krishna Reddy, told Business Standard.
Reddy said GVKPIL would be producing about 2,400 Mw of power five years down the line. Its total investment in the power sector following the execution of the three power projects on hand will be over Rs 10,300 crore.
The company is establishing two hydro power plants of 330 Mw and 370 Mw in Uttarakhand and a coal-based 600 Mw plant in Punjab. The three new power projects involve an investment of Rs 6,970 crore. It is currently operating three gas-based power plants in Andhra Pradesh with a combined capacity of 900 Mw. These projects have been set up at a cost of Rs 3,345 crore.
While the 330-Mw hydel project near Srinagar in the Pauri district of Uttarakhand is scheduled to be completed by 2011, the construction of the 600 Mw Goindwal Sahib project in Punjab will commence in a couple of months.
“The Punjab government has started acquiring 1,100 acres required for the project. IDBI, the lead lender, has started the due diligence exercise on the Rs 2500-crore project, which will be funded through debt-equity ratio of 80:20,” Reddy said.
The GVK group, which is currently modernising the Mumbai international airport, is looking towards modernisation of other airports in India. “Today, we have the technical capability and finance to take up such projects. We are also looking outside India for development of airports,” the chairman said.
According to Reddy, the Mumbai airport project is expected to post a net profit of Rs 140 crore as against Rs 80 crore last year.
The slum rehabilitation project around the airport, awarded by GVK to Housing Development & Infrastructure Limited, is a “windfall” to the group. The main attraction of the project is the transfer of development rights (TDRs) and 65 acres out of 276 acres of slum land to be given for commercial development.
On the other hand, Taj GVK Hotels and Resorts, a joint venture between Indian Hotels and the GVK group, has lined up investments to the tune of Rs 500 crore for its expansion plans.
The company plans to double its room strength to 1,400 by 2009-10 from the existing 700. It currently has two hotels under construction – one each in Chennai and Hyderabad. Besides, it is planning to construct hotels in Jaipur and Maldives.
“We have already signed a memorandum of understanding for constructing a hotel in Maldives. We are also planning to set up hotels in Delhi and Mumbai apart from considering setting up budget hotels in the UK,” Reddy said, adding the funds required for the proposed expansion would be raised through internal accruals.
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