GMR group chief financial officer Subba Rao Amarthaluru spoke in an interview on the weakening rupee, the general economy and what these mean for the company. Edited excerpts:
What’s your plan on future investments?
We have decided that in the current fiscal year we will not be looking at making any fresh investments in any new projects. We want to consolidate the existing operations, existing assets, before we move on to the next growth phase.
Investment holiday: GMR group chief financial officer Subba Rao Amarthaluru.(Gireesh GV /Mint )
Does that mean you won’t bid or does that mean you will continue bidding, because there is a lag (from when you win a bid and when you have to invest and arrange the finances for a project)?
We may bid, but we don’t want to make any fresh investments during the current year. We may bid in such a way that the investments will only happen in the future years. We never took that kind of investment holiday before.
For one year we will not make any fresh cash-flow investments. This is the first time we are taking such a decision because the environment is not that conducive. (In) energy there are issues, but we have taken up a large project in the roads sector. Airports, of course, naturally there are no opportunities. Because of all these collective reasons, we have said that we would like to consolidate cash flows before we move on to the next growth phase, and pursuant to that decision, we have given a kind of investment holiday. We will review at the end of the current year whether there’s any change in this.
You mentioned that Indian banks are not investing because of sectoral issues.
See, for the power sector, anyway because of sectoral issues like fuel availability, they are not (lending). For the roads sector, there is a general feeling in some of the banks (that) a lot of players have bid very aggressively in the past, so they might get into cash flow issues. So that is the reason they are a little reluctant to fund all the developers in the road projects.
They are looking at quality of the developers before they decide on funding for new road projects. Earlier, they were just financing all the projects—the banks. Now they are also cherry-picking.
When it comes to your energy assets, you have some coal mines abroad. Do you plan to import coal from these mines for your coal-fired projects in India?
Yes, we own some coal mines in South Africa and Indonesia. We will have to assess if the domestic coal is not available at that point in time, then to that extent of the shortfall, then only we have to import. But we are confident at this juncture that domestic coal would be available. Whether it is Coal India-supplied coal or e-auction coal.