Enquiries for IJM’s Indian highway concessions

KUALA LUMPUR: IJM Corp Bhd has received enquiries from investors who are keen to buy the group’s five highway concessions in India, said managing director Datuk Teh Kian Ming.

“There are not many [highway] concessions in India, so people are looking for investments. All of our highway assets are completed and they have traffic,” he said after IJM’s AGM yesterday.

Teh said there was even a buyer for the loss-making Trichy concession — the IJM group managed to sell its 35.6% stake for RM60.1 million, or twice the book value of the highway.

“While the Trichy [concession] is a loss-making asset, there were people willing to buy it at a higher price than the book value,” he said.

Teh declined to name any of the interested parties or the concessions that have the potential to be sold.

The group is represented by IJM (India) Infrastructure Ltd in India. To date, it has completed several major highways and road projects in India, including part of the Mumbai-Pune Expressway (13.2km), the Chennai Bypass Phase-I (19.2km),  the Tallada-Devarapalli Road Project (142km) and the Chilakaluripet-Vijayawada Road Project (80km).

Its ongoing road projects in India are the Vijayawada-Chilakaluripet Road project (82.5km) and the Pune–Solapur Road project  (53.7km).

Teh said the group is also not ruling out listing the assets in future in order to unlock their value.

“This is one of the ways to unlock the value of the assets. It depends on the prevailing market and how fast you want to do it [getting listed]. It is one of the options we are considering and at this point in time, it’s still early to talk about this.”

Teh says there was even a buyer for the loss-making Trichy concession.

Teh explained that IJM could not give a definite timeline to list its highway assets due to the economic uncertainty brought about by the impending tapering of the US Federal Reserve’s bond purchases. In addition, the Indian rupee is currently trading at an all-time low against the US dollar.

Teh had said in a recent interview that part of IJM’s plan to unlock the value of its concession assets is by listing them directly or through a business trust.

IJM reported a net profit of RM164.34 million for the first quarter ended June 30, 2013 (1QFY14), which was 84.99% higher than the previous corresponding period on higher profit contributions from the group’s property, industry and infrastructure divisions.

Revenue for 1QFY14 was RM1.401 billion, up 34.57% from the previous corresponding period’s RM1.04 billion.

IJM Land Bhd, the group’s property unit, registered a net profit of RM81.704 million on the back of RM459.92 million revenue. In the previous corresponding quarter, IJM Land’s net profit was lower at RM51.12 million.

IJM Land attributed the major rise in sales to higher contribution from its property development segment.

However, IJM Plantation Bhd saw a substantial decline in net profit for 1QFY14, dropping to RM2.92 million from RM21.89 million a year earlier. This was due to lower crude palm oil and palm kernel oil prices realised during the period.


This article first appeared in The Edge Financial Daily, on August 28, 2013.


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