Gammon India breaches upper circuit on debt restructure

Corporate Debt Restructuring (CDR) lenders have started Strategic Debt Restructuring (SDR) in Gammon India (GIL). Earlier in June, 2015, the Reserve Bank of India (RBI) allowed lenders to restructure debt through converting debt into majority equity in the company. Its share prices boosted by 19.98 per cent on bourses and breached the upper circuit to Rs 15.49 on intraday basis.

GIL is the sixth company in which lenders have decided to take controlling stake in the company through the process of SDR. The leading lenders earlier called upon SDR norms on various companies like Electrosteel Steels , Lanco Teesta Hydro Power, VISA Steel , Jyoti Structures, Monnet Ispat and Energy.

GIL has consolidated the total debt of Rs 11061 crore as of FY15. The company had cash and cash equivalent of Rs 279 crore at the end of FY15. Its 19 lender consortium led by ICICI Bank agreed to further divide the company into three parts. Going forward, the lenders must find a buyer for their stake within the 18 month period to make an exit.

Recently, GIL's Board approved to separate its EPC business and transfer it to the Gammon Retail Infrastructure to reduce high debt by raising fresh money in the new firm. The transfer of civil EPC business includes civil engineering, procurement and construction business carried on by the company in roads, hydropower, nuclear power, tunnels, bridges, buildings, cooling towers, chimneys and other sectors including all the properties, rights and powers, debts and liabilities.

GIL's shareholding pattern indicates that the promoter has 34.99 per cent, while the institutional holdings stood at 14.34 per cent and non-institutional holdings at 50.67 per cent as of September 2015. The company's FII holdings contracted by 276 basis points to 2.32 per cent while DII holdings expanded by 13 basis points to 12.02 per cent in Q2FY16.

GIL is into the business of 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 viz. Construction and Engineering, Oil Exploration, and Realty Development. Its key projects include the Chennai Metro Rail Project, Bajoli Holi Hydro-Electric Project, Signature Bridge, Elevated Road Corridor etc.