Chennai-based infrastructure enterprise, GVR Infra Projects has filed a draft red herring prospectus (DRHP) with the Securities and Exchange Board of India (SEBI). The public offer consists of a fresh issue and an offer for sale (OFS). The IPO will include a fresh issue of shares worth INR4 billion and an offer for sale of 4.32 million equity shares. Pricing of the IPO has not been disclosed yet.
Edelweiss Financial Services, Ambit Corporate Finance, SBI Capital Markets Limited and IDFC Securities Limited have been roped in as its book running lead managers to manage the issue. Garikapati Venkateswara Rao, Kondepati Ganga Prasad and Garikapati Pavan Kumar are promoters of GVR Infra Projects.
The proceeds are to be utilized for funding of working capital requirements, expenditure for general corporate purposes and reduction of outstanding amount under our short-term borrowings. Around INR2.25 billion will be routed towards funding working capital requirements and INR 100 million for paying out outstanding sum for short-term borrowings.
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Weak financial performance
GVR Infra Projects’ revenues rose from INR14.12 billion in FY 2014 to INR15.53 billion in FY 2015. However, the company’s profits declined from INR345.3 million in FY 2014 to INR314.12 million in the latest FY. Like several other infrastructure companies, GVR Infra Projects’ profits have been dwindling in recent years. GVR Infra Projects’ profits have reduced in each of the last four years.
Incorporated in 2001, GVR Infra Projects Limited has over 12 subsidiaries. It has pan-India operations and functions in the field of construction, toll collection, building and developing and other construction allied activities. The company manages projects related to power, railways, roads, bridges & flyovers, irrigation, buildings and water supply & sewerage in about 12 states of India. The company employs around 1,396 personnel and owns large units of equipment and machinery.
GVK Infra Projects follows its industry peers which have tapped the primary market to mend their leveraged balance sheets. This group includes PNC Infratech, MEP Infrastructure Developers, G R Infraprojects and Sadhbhav Infrastructure.
IDFC to part-exit GVR Infra Projects
IDFC Private Equity Fund plans to sell 4.32 million shares in the Chennai-based company through the IPO. The private equity investor invested in GVR Infra in 2011 and currently holds around 21.43% stake in the company. Incidentally, it is also planning to exit Parag Milk Foods Limited by selling its shares in IPO.