Gammon India on the verge of transfering its Civil EPC Business

Gammon India Limited (GIL) is an India-based civil engineering construction company. The Company is engaged in designing and constructing bridges, ports, thermal and nuclear power station, dams, high-rise structures, international airports, cross country water, oil and gas pipelines, highways, chemical and fertilizer complexes and environmental structures. The Company operates in three segments: Construction and Engineering, Oil Exploration, and Realty Development.

As their peers Gammon India is also facing a problem high debt which is withholding their growth. But Gammon started to take initiatives to reduce its debt from September 2013 when they entered into a corporate debt restructuring scheme of Rs. 13000 crores with their lenders. However, though the company was not able to reduce its debt levels, the company managed to maintain its debt level for last couple of years at the same level.

This high debt burden was affecting growth and profit. In August, Gammon India’s subsidiary Gammon Infrastructure Projects Ltd sold six road and three power projects to BIF India Holdings Pvt. Ltd for about Rs.563 crore which helped in reducing debt burden. The debt burden showed a decrease of 2.22 per cent from 10540.19 crores in December 2014 to 10306.19 crores to September 2015 for the first time in last 6 years.

To reduce further debt Gammon India decide in their board meeting happened on November 17th to transfer their Civil EPC undertaking to its wholly-owned subsidiary, Gammon Retail Infrastructure Pvt. Ltd

.By transferring the Civil EPC business Gammon India is looking for reducing the high debt of the company, run business independently of each other, bring in strategic investors and de-leverage its balance sheet.

The transferring subsidiary includes civil engineering, procurement and construction business carried on by the company in roads, hydro-power, nuclear power, tunnels, bridges, buildings, cooling towers, chimneys and other sectors including all the properties, rights and powers, debts and liabilities, according to the BSE filing.