Delhi airport to be a drag for six months, says GMR

GMR Infrastructure is likely to remain under pressure in terms of sustaining its bottomline at least for another two quarters owing to its pending application with the Airports Economic Regulatory Authority (AERA) for a revision of tariff at its Delhi airport.

For the quarter ended December 2010, the company saw the profitability taking a hit primarily due to the higher costs at the Delhi airport.

On a net revenue of about `1,359.8 crore, the company recorded a net loss of about rS22.3 crore in the third quarter ended December 2010.

“We are entitled to a tariff revision. We are seeking a revision of tariffs from the regulator. We still don’t know the structure of the revised tariffs. It could be in the form of UDF (user development fee) or ADF (airport development fee) or any other form decided by the regulator. The situation will continue to be under pressure till the tariffs are revised,” A Subba Rao, GMR’s chief financial officer, told DNA.

However, according to him, once the tariffs are revised, the company will be back at 40% Ebidta or operating profit.

“We hope to hear from the regulator in the next six months. We are asking for revised tariffs only because we are entitled as per the agreement,” Subba Rao said.

“The same adjustments in tariffs were done in Hyderabad airport also and the airport is doing well today,” he said without disclosing the details of the revised tariff the company wants the regulator to evaluate.

“Capacity costs which include interest charges and depreciation have increased by Rs 197 crore (59%) over the corresponding quarter primarily on capitalisation of T3, the new terminal in Delhi Airport. This sharp rise in the interest and depreciation costs of Delhi Airport has adversely impacted the profit before tax and profit after tax for the quarter,” the company said in a statement.

The Delhi airport has recorded 12.5% increase in passenger traffic from 19.32 million last year (9 months) to 21.73 million (9 months). Similarly, the cargo traffic at the airport too witnessed a growth of about 23.2% from 0.36 million tonnes to about 0.45 million tonnes.

Interestingly, the company is facing some issues with the government even in its toll road project between Ambala and Chandigarh.

The toll project is witnessing leakages in its traffic flow due to a road built by the state government. “This is a violation of the state support agreement. We will find a solution to this by exercising legal and other options,” Rao said.

The company which has sold its stake in Intergen recently to a Chinese company is expecting to book about $200 million in its books after discharging the loans on the international power company and other costs by March this year.

“Most of the approvals for transferring the equity to the buyer are in place. We hope to conclude the sale by March this year. This should help us record about $200 million to our books,” he said. The company sold its stake in Intergen to the Chinese player for $1.23 billion.