Anil Ambani last week spelt out the road-ahead for Reliance Infrastructure (R-Infra) heralding an end to its asset monetisation strategy. The group had adopted an asset-light model all along just like GMR Infrastructure, GVK Power and Infrastructure and Lanco Infratech among others.
The storyline has been typical which started with an aggressive capital heavy expansion plan followed by huge debt and not necessarily higher profits. Though L&T’s IDPL and IL&FS’s ITNL, too, experimented with this model but the results have been different for each of them. Some, like GVK and GMR, managed to reduce debt and operate a leaner model, while others like Lanco staring at insolvency despite the asset-light strategy.
“The experience in the infrastructure sector and more so in the energy sector, has been very difficult for every group that entered it. They were hurt by macro issues, internal problems, and the inability of collecting fees for their projects and so on. There is no solution, but for companies to go the asset-light way,” said Harish HV, an independent consultant.
The storyline has been typical which started with an aggressive capital heavy expansion plan followed by huge debt and not necessarily higher profits. Though L&T’s IDPL and IL&FS’s ITNL, too, experimented with this model but the results have been different for each of them. Some, like GVK and GMR, managed to reduce debt and operate a leaner model, while others like Lanco staring at insolvency despite the asset-light strategy.
“The experience in the infrastructure sector and more so in the energy sector, has been very difficult for every group that entered it. They were hurt by macro issues, internal problems, and the inability of collecting fees for their projects and so on. There is no solution, but for companies to go the asset-light way,” said Harish HV, an independent consultant.
