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Stock Analysis, IPO, Mutual Funds, Bonds & More

Essel Group may monetise non-media assets

, ET Bureau|
Jan 31, 2019, 07.45 AM IST
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The pledged shares on Wednesday’s closing price of Zee Entertainment can be valued at Rs 9,300 crore.

Highlights

  • At the group level, Essel has total debt of Rs 17,174 crore.
  • Out of this, Rs 11,466 crore is the infrarelated debt, which is a major concern and this can further rise in the next one year.
  • This infra-related debt covers three major verticals – power transmission, solar and roads (toll and annuity).
ET Intelligence Group: The Essel Group, led by Subhash Chandra, has embarked upon an ambitious plan of monetising its non-media businesses to deal with the current concerns over repayment to its lenders. According to sources close to the management, in the next six months, the company plans to monetise about Rs 20,000 crore by selling its infrastructure assets.

To be sure, industry experts and analysts aren’t as optimistic as the management about the pace of asset sale. They believe that given the quality of assets and their operations, the group may find it easier to sell its stake in Zee Entertainment Enterprises than the infra-related assets.

At the group level, Essel has total debt of Rs 17,174 crore. Out of this, Rs 11,466 crore is the infrarelated debt, which is a major concern and this can further rise in the next one year. This infra-related debt covers three major verticals – power transmission, solar and roads (toll and annuity). Among these three verticals, the roads are expected to generate the highest revenue of Rs1,700 crore annually from FY20.

“Part of the debt is for the underconstruction projects that are expected to become operational only from FY20,” said a source. "By the time these projects are over, the total infra debt will increase by around 20 per cent to Rs 14,000 crore."

The power transmission and solar verticals are expected to generate revenues of Rs 750 crore and Rs 730 crore, respectively, from FY20. Typically, these businesses generate nearly 90 per cent EBIDTA, depending on the accounting method.

On asset sales, the group has already entered into an agreement to sell its power transmission assets to Edelweiss Infrastructure Yield Plus (EIYP) fund-backed Sekura Energy for Rs 6,000 crore. It also expects to sell its solar business for Rs 2,200 crore. In the road portfolio, the group has 14 road projects spread across Madhya Pradesh, Maharasthra, Gujarat and a few other states. The group plans to generate about Rs 11,000 -Rs 12,000 crore through the sale of road assets. In all, these assets would fetch around Rs 20,000 crore.

The company will use this amount to reduce its infrastructure-related debt and the remaining would be utilised to reduce the pledged portion of the promoter shares in Zee Entertainment Enterprises. The promoters had pledged their 59 per cent stake in Zee Entertainment to raise money that served as equity funding in their infrastructure-related businesses. The pledged shares on Wednesday’s closing price of Zee Entertainment can be valued at Rs 9,300 crore.

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