GMR set to focus on consolidation

GMR Infrastructure is looking forward to consolidation next year, as the Bangalore-based infrastructure developer has all its three verticals — airports, power and highways — set to kick in with good revenues in 2012-13.

The 1978-founded company, which currently manages four airports, three power projects and six highways, has stated its incremental revenues next year would start flowing in from the Delhi International Airport (which it manages), while three more projects would start generating power and, thus, revenue. The highway division will also see three projects kicking in with revenues.

“The issue of airport development fee at the Delhi International Airport has been decided. We should be starting to collect that from the next financial year,” said GMR Group CFO A Subba Rao.

“The tariff will be fixed in such a way that the losses we incurred due to non-collection of the fee would be compensated over the next three years starting from April 1, 2012.”

In addition to this, the power vertical will start generating 2,800 Mw during the next year, while another 310 km of highways will be functional, thus funnelling in revenues. “It is not that we will not look for new projects to grow our portfolio. That will be an ongoing process,” points out Rao. “Given that, all these projects involving a capital expenditure of $2 billion will start to generate revenues.”

Even as the company is looking forward to a healthy growth path during the next fiscal, it is staring towards escalating legal issues on one of its airport endeavours besides a highway project. A civil court in Maldives had recently ruled that GMR, which won the bid to manage the airport there, cannot collect airport development fee of $25 per passenger. “The government is a signatory to the agreement which entitles us to collect this fee,” pointed out a GMR spokesperson. “We have to watch how the government handles the issue.”

While this is the issue at the airport vertical, the Ambala-Chandigarh highway project has been losing revenues. This is so, because the state government has spruced up another highway. Result: nearly 40 per cent of the traffic is being lost. “We are starting an arbitration process to claim the dues,” the spokesperson said. “That will also be to stop the movement of traffic from our highway.”