Facing liquidity issues, Gayatri Projs reports loan defaults of Rs 19.65 cr

Hyderabad-based infrastructure company Gayatri Projects Limited has reported loan defaults of up to Rs 19.65 crore in a stock exchange filing as required under Sebi's November, 2019, directive with regard to loan defaults of listed entities.

The company's shares were down 4.84 per cent or Rs 1 lower at Rs 19.65 on Bombay Stock Exchange on Tuesday. The total outstandings of the company stood at Rs 1,816.84 crore while the total financial indebtedness of the company was Rs 3,232 crore, which includes both short-term and long-term debt along with Rs 1,405.23 crore in advances from contractees, according to the filing.

The reported loan defaults comprise of smaller amounts ranging from Rs 4 crore to as low as Rs 12 lakh due for repayment to banks under 13 sanctioned loans in the past couple of weeks, an indication of ongoing liquidity being issues faced by the company.

Gayatri Projects has witnessed a subdued performance in the first 9 months of the current financial year mostly because of delayed execution of EPC road and irrigation contracts. There was a 2 per cent decline in EBITDA margin and a 17 per cent decline in net profit at Rs 116.4 crore on a revenue of Rs 2,511.7 crore during the nine-month period ending December, 2019, due to factors including inflation in fixed operating cost plus significant a hit due to expected credit loss provision, according to the company.

The company raised Rs 410 crore in December, 2019, via sale of a 5.95 per cent stake in Sembcorp Energy India. Of this, Rs 210 crore was used towards repayment of long-term debt and balance amount was utilised for meeting the working capital requirements among other things. The company's senior management recently said that it was hoping to improve the liquidity situation by fast tracking of claims' settlement and monetisation of the arbitration awards in the next couple of months. The company expects to monetise 7 specific arbitration awards for nearly Rs 400 crore.

"We expect cash flows from these awards over the next one to two months and the same will go towards repayment the respective bank debts. We are confident that through these expected cash flows the long-term debt of the company will be reduced to zero," Gayatri Projects' managing director T Sandeep Reddy told analysts in a recent earnings call.

About 70 per cent of the company's Rs 14,000-crore order book comprises of road contracts. The company said the execution delays occurred mainly due to the extended monsoons.

Gayatri Projects plunges 28% in two days on invocation of pledged shares

Shares of Gayatri Projects hit an over four-year low of Rs 62.5, and were locked in the lower circuit band of 10 per cent on the BSE on Friday, after the lenders to the company invoked pledged shares.

The stock of construction & engineering company tanked 28 per cent in past two trading days, and was trading at its lowest level since July 2015. Till 10:27 am, a combined 577,855 shares have changed hands, with pending sell orders for 120,003 shares on the NSE and BSE.

The lenders invoked 50,397 pledged shares of the promoters on November 18, data rpfovided by the company show. Earlier, on November 11, the lenders had invoked 55,206 pledge shares. CLICK HERE FOR DETAILS

Last week, the rating agency Credit Analysis & Research (CARE) had revised the ratings of long-term and short-term bank facilities of Gayatri Projects to 'CARE D', due to delay in servicing debt obligations. The instruments with this rating, the agency said, are in default or are expected to be in default soon.

“The revision in the ratings assigned to the bank facilities of Gayatri Projects is on account of stretched liquidity position of the company due to delays in receipt of receivables leading to cash flow mismatch resulting in delays in debt servicing,” CARE Ratings said in a press release.

Gayatri Projects, however, clarified that the company was in line with its stated strategy and was pursuing monetisation of its stake in Sembcorp Energy India (SEIL).

"The stake sale was being undertaken to improve company's liquidity position; however, despite its best efforts, the Company was not able to fast track the same and as a result there was a delay in Company's debt service obligations,” it said on the downgrade.

It further added that the SEIL stake sale has now progressed significantly and the Company expects to close the said deal before the end of the current calendar year. Post the completion of the SEIL deal, GPL will be able to significantly de-leverage its balance sheet and overcome its temporary liquidity crunch.

Thus far in the month of November, the market value of the company has more-than-halved from the level of Rs 131 on the BSE. In comparison, the S&P BSE Sensex was up 1 per cent during the period.

Gayatri Projects tanks 11% to over four-year low on CARE Ratings' downgrade

Shares of Gayatri Projects plunged 11 per cent to Rs 86.95, an over four year low on the BSE on Monday, after Credit Analysis & Research (CARE) revised the ratings of long-term and short-term bank facilities to 'CARE D', due to delay in servicing debt obligations. The instruments with this rating are in default or are expected to be in default soon. The stock of the construction & engineering company traded at its lowest level since September 10, 2015.

“The revision in the ratings assigned to the bank facilities of Gayatri Projects is on account of stretched liquidity position of the company due to delays in receipt of receivables leading to cash flow mismatch resulting in delays in debt servicing,” CARE Ratings said in a press release.

“The company in line with its stated strategy is pursuing monetization of its stake in Sembcorp Energy India (SEIL). The stake sale was being undertaken to improve company's liquidity position; however, despite its best efforts, the Company was not able to fast track the same and as a result there was a delay in Company's debt service obligations,” Gayatri Projects said on a ratings downgrade.

Adding: "SEIL stake sale has now progressed significantly and the Company expects to close the said deal before the end of the current calendar year. Post the completion of the SEIL deal, GPL will be able to significantly de-leverage its balance sheet and overcome its temporary liquidity crunch."