GMR Infrastructure pulled down by interest burden

GMR Group firm GMR Infrastructure Ltd reported a 24% drop in its profit before tax for the September quarter although operating profit rose by a smart 54%. Blame a 150% jump in interest cost for this outcome. Finance charges rose as new projects started, which were funded mainly by debt.
The company had attempted to raise funds earlier this year by selling securities to institutional investors who were not willing to subscribe at prevailing prices. The company is now set to raise Rs1,000 crore through an issue of preferential shares. Part of the funds raised will be used for ongoing projects and some of it used to retire debt.
GMR’s consolidated revenues grew by 41% year-on-year and operating profit margin improved by 2.6 percentage points to 31.8%. This rise in profitability is partly due to a reduction in employee costs, which fell by 30% over the year-ago period. This relief is largely due to retiring of employees in the Delhi airport project. The company had an agreement to employ them for three years.
27/10/09 Mobis Philipose, Ravi Ananthanarayanan and Vatsala Kamat/Live Mint

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Categories: Airports Oct 2009