IRB net marginally down on interest cost impact

IRB Infra consolidated net up on construction boost

IRB Infrastructure Developers posted a marginally lower quarterly profit impacted by a sharp rise in interest cost for loans availed for a highway project.

"The profit is almost flat, because of the higher interest outgo for the Surat-Dahisar project. The loan withdrawal for the project has increased," its Chief Financial Officer Anil Yadav said on Wednesday.

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The infrastructure and construction company posted a consolidated net profit of 1.31 billion rupees in December, down from 1.33 billion rupees a year ago. Analysts expected a profit of 1.09 billion rupees, according to Thomson Reuters StarMine data.

Interest costs rose to 1.42 billion rupees during the quarter, up 73 percent from 819.7 million rupees a year ago, the company said in a statement.

The RBI had raised rates 13 times between March 2010 and October 2011, raising rupee borrowing costs for corporates. It cut cash reserve requirements for banks on Tuesday, signaling a policy shift towards reviving growth, but did not commit to when rate cuts would begin.

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"There was an impact of amortisation also for the same project," he said.

IRB completed the widening -six laning from four- of the 240-km Surat-Dahisar highway that connects states of Gujarat and Maharashtra in western India in December, Yadav said.

India built about 1,800 kilometres of roads in 2010/11, but will award a record 7,300 kms of road-building contracts this year worth $12 billion, a top National Highways Authority of India official said in June.

IRB Infrastructure, which had net debt at 47 billion rupees as on December 31, expects to add close to 5 billion rupees in debt by March as projects progress. The firm has a cash balance of 19 billion rupees as of December, he said.

The firm has been pre-qualified for about 400 billion rupees worth of projects, even though the Mumbai-based firm has not yet emerged as the lowest bidder for any project.

Shares in IRB Infra closed down 2.83 percent at 168.30 rupees, while the overall market closed up 0.48 percent.