Mumbai-based Patel Engineering is set to channel proceeds from its board-approved ₹500 crore rights issue into aggressive debt reduction and liquidity strengthening, a move aimed at lowering finance costs and unlocking operational cash flow as the company anticipates “huge order inflows.”
“Though the Board has approved a rights issue of ₹500 crore, the actual issue size will be around ₹400 crore. Around 75 per cent of the money will go towards debt reduction, while the remaining 25 per cent will be for working capital and corporate purposes,” Kavita Shirvaikar, managing director, Patel Engineering Ltd, told the businessline on Monday.
Strong order pipeline
With a ₹15,000-crore order book and ₹34,000-crore in bids under evaluation, the utilisation strategy positions the company on a stronger financial footing ahead of India’s next infrastructure capex cycle. “There is a huge opportunity available in the sector where we operate. Our focus continues to remain in hydro, civil, irrigation, tunnelling and other infrastructure-related projects. Our Current order book is around ₹15,000 crore and we have bidded for over ₹30,000 crore worth of projects we have submitted bids and are under evaluation. Considering these opportunities, we do not want to increase our debt further. We are focused on continuously reducing our debt which will bring down the interest cost, improve the net profit margin and value to all our stakeholders,” she added.
Debt profile snapshot
As of September 25, Patel Engineering’s total debt stood at ₹1,543 crore, comprising ₹1,014 crore in working-capital borrowings and ₹529 crore in term loans. The company has already taken multiple steps this year toward deleveraging, including raising ₹90 crore via NCDs and monetising a Chennai land parcel for ₹135 crore, with proceeds fully utilised for debt repayment. The rights issue is now expected to accelerate this process further, with nearly three-fourths of the raised capital going directly towards trimming debt.
To support future liquidity, the company is also progressing with additional land monetisation plans. “We are targeting to monetise a couple of land parcels in Hyderabad and Bengaluru soon, within 6-9 months,” Shirvaikar said, adding that the company plans to raise an additional ₹200 crore through this sale.