KNR Constructions to dilute stake in three highway projects to Cube Highways

The Board of Directors of KNR Constructions Limited, on Monday, approved the dilution of its entire stake in three wholly-owned subsidiary highway companies to Cube Highways and Infrastructure III Pte. Ltd and affiliates. The approximate consideration for these projects, on completion, is expected to be Rs 466 crore.

As per the decision, KNR Construction will dilute the entire stake in material wholly-owned subsidiary companies namely KNR Shankarampet Projects Private Limited, KNR Srirangam Infra Private Limited and KNR Tirumala Infra Private Limited. Dilution is subject to approval from members of the company, regulatory bodies and lenders.

The transaction will be based on the share purchase agreements entered into by KNR Constructions and its subsidiaries as per the concession agreement and Ministry of Road Transport and Highways circulars.

Divestment of the subsidiaries

KNR Shankarampet Projects Private Limited: The subsidiary has a turnover of Rs 367.77 crore and a net worth of Rs 136.86 crore. The agreement for sale was entered into on August 16, 2019, and the sale is expected to be completed on or before March 31, 2021. KNR Constructions will receive Rs 137 crore on the date of receipt of the Provisional Certificate (PCOD/COD).

KNR Srirangam Infra Private Limited: The subsidiary has a turnover of Rs 241.11 crore and a net worth of Rs 98.23 crore. The agreement for sale was entered into on January 28, 2019, and the sale is expected to be completed on or before March 31, 2021. KNR Constructions will receive Rs 111 crore on the date of receipt of the Provisional Certificate (PCOD/COD).

KNR Tirumala Infra Private Limited: The subsidiary has a turnover of Rs 425.44 crore and a net worth of Rs 176.66 crore. The agreement for sale was entered into on February 11, 2019, and the sale is expected to be completed on or before December 31, 2021. KNR Constructions will receive Rs 218 crore on the date of receipt of the Provisional Certificate (PCOD/COD).

The company had entered into a share purchase agreement with Cube Highways for the divestment of these three special purpose vehicles. However, the transaction is subject to shareholding transfer restrictions set out in the concession agreement executed between the National Highways Authority of India and these step-down subsidiaries, and other approvals.

The Hyderabad-based construction company commands a strong order book of Rs 6,596 crore as of June end 2021. KNR Constructions and its subsidiaries, for the accounting year 2020-21, closed with Rs 2,903.63 crore, and its consolidated net worth was Rs 1,976.47 crore.