GMR Group’s Strategy to Address Stressed Assets
GMR Power, along with its subsidiaries GMR Energy (GEL) and GMR Generation Assets (GGAL), has announced a significant move to deleverage its balance sheet by Rs 4,400 crore. The company plans to offload stakes in its non-operating assets, specifically gas plants and stressed power assets, through a strategic divestment. This transaction aims to reduce debt, enhance financial health, and streamline operations.
The framework agreement was reached with Synergy Investments Holding, which will take over several key assets, including:
GMR Bajoli Holi Hydropower (180 MW hydro-electric project),
GMR Vemagiri Power, owner of a 388 MW gas-based power plant,
GMR Rajahmundry Energy (GREL), which operates a 768 MW gas-based power plant.
This sale will allow GMR Group to settle its dues through a One-Time Settlement (OTS) and offload non-core assets, marking a critical step in restructuring efforts to improve the company’s bottom line.
Highlights:
The sale is expected to cut down Rs 4,400 crore of debt.
The transfer involves 79.86% equity stake in the Bajoli Holi Hydropower project, 51% stake in Vemagiri Power, and 51% stake in Rajahmundry Energy.
GMR Energy and GMR Generation Assets will divest assets in phases, with the full transfer expected by September 30, 2025.
Transaction Structure and Timeline
As per the framework laid out by GMR Group, the stake transfer process will occur in stages:
GMR Energy will transfer 79.86% of the equity shares in Bajoli Holi Hydropower. The transfer will happen in two parts: 70% in the first tranche, followed by 9.86% in the second tranche.
51% of the equity shares in GMR Vemagiri Power will be transferred to Synergy Investments.
51% of the equity shares in GMR Rajahmundry will be transferred upon completion of the OTS.
The overall transaction value for the transfer of securities is pegged at Rs 653 crore, subject to adjustments for working capital and other elements.
Challenges and Future Outlook for GMR Group
The plants involved in the divestment, particularly GMR Rajahmundry and GMR Vemagiri, have faced challenges in recent years, mainly due to the unavailability of affordable natural gas, which has kept them non-operational. By divesting these assets, GMR Group aims to focus on more profitable, operational projects and reduce financial strain.
Once the deal is finalized, the GMR Group expects its balance sheet to show significant improvements, positioning the company for future growth and stability. The strategic move aligns with the company’s broader goal of restructuring and optimizing its asset portfolio.
Highlights:
The Rajahmundry and Vemagiri plants have been non-operational due to gas supply issues.
The deal will help GMR meet its One-Time Settlement (OTS) with creditors.
Full transaction completion expected by September 30, 2025 or a mutually agreed date.
