Hyderabad: Reliance Industries Ltd, the largest listed company in India with a market capitalisation of about Rs10 lakh crore, is aiming to become debt-free by 2020-21. On the lines of RIL, can debt-ridden companies floated by Andhra entrepreneurs get rid of their financial burden? What is happening to Lanco, GMR and GVK groups? Let us take a look.
The major industrial groups promoted by Andhra entrepreneurs were among the top 10 companies in terms of bad debts a few years ago. GMR Group, Lanco Group and GVK Group had been ranked seventh, eighth and 10th respectively in 2014-15, according to data from Credit Suisse. All the three companies are engaged in infrastructure engineering, procurement and construction (EPC) segment. Their combined bad debt was over Rs1 lakh crore.
GMR Group has been able to reduce its debt load from over Rs 30,000 crore and expects to slash the corporate debt to Rs 3,000 crore this financial year. GMR Infrastructure’s consolidated debt was about Rs 21,000 crore and was reduced to Rs 8,000 crore in 2018-19. It sold stakes in Tata Group, GIC and SSG Capital Management for Rs 8,000 crore to reduce the debt burden. GMR Infra owns and operates international airports at Hyderabad, New Delhi and Cebi in the Philippines.
GVK group has been reducing its debt burden from 2015 onwards when it had over Rs 20,000 crore. In last October, the GVK mobilised Rs 7,600 crore from investors and announced that the amount would be used to pay off debt and buy 23 per cent stake in MIAL. The company is the operator Mumbai International Airport and has bagged the contract for developing the Navi Mumbai International Airport.
On August 27 last year, the National Company Law Tribunal-Hyderabad bench had ordered the liquidation of Lanco Infratech under the corporate insolvency resolution process. Lanco Infratech had a consolidated debt of Rs 45,000 crore from 29 lenders. RBI had listed Lanco Infratech among the 12 most stressed assets under the Insolvency and Bankruptcy Code.