India’s GMR Group has responded to media reports about potential plans to full divest itself of the MAS GMR MRO operation in Hyderabad.
“As part of our asset light asset right strategy, the Group does often explore different funding options available for deleveraging,” it says in a stock exchange statement.
“These being in the nature of mere evaluations at this juncture, it will be too premature to comment and we confirm that no material information relating to the company was disclosed or discussed."
Last week, India's commerce ministry’s Board of Approvals disclosed that it granted approval for GMR to buy out Malaysia Aerospace Engineering’s (MAE) 50% stake in the MAS GMR Aero Technic joint venture.
To obtain the stake, GMR must meet a number of standard conditions, which generally pertain to continuing to run the MRO business as it operates now, and continuing to meet various regulations.
Shortly following this disclosure, media reports in India cited GMR executives as saying that they plan to sell the MRO unit after obtaining MAE's stake.
GMR’s original application to the Board of Approval stated that the MRO firm lost Rs2.4 billion ($38.4 million) since its founding in 2011. An independent audit cited in the application contended the joint venture will not break even for another two to three years.
Malaysia Airlines (MAS), which owns MAE, has yet to comment on the potential of GMR buying out its interest in MAS GMR Aerotechnic. Nonetheless, the Malaysian flag carrier appears to be on the verge of major changes, which could involve the divestiture of non-core units.
On 8 August Malaysia’s sovereign wealth fund Khazanah said that would take MAsprivate. Subsequently, Malaysian prime minister underlined the need for a “comprehensive and holistic” restructuring plan for the ailing carrier, which has suffered years of losses in addition to two major air disasters in 2014.