Income from property to support DIAL, says S&P

Delhi international airport operator DIAL's recent progress on commercial property development would help it offset the adverse impact of the expected fall in tariffs, rating agency S&P said today.
Rating on Delhi International Airport Pvt Ltd (DIAL) is not immediately affected by a 89 per cent decline in tariffs that the regulator for aeronautical tariffs has proposed from January 2016 to March 2019, Standard & Poor's Ratings Services said.
The agency has 'BB' rating with a stable outlook on DIAL.
Airports Economic Regulatory Authority (AERA) has ordered a steep 93 per cent reduction in Delhi airport charges. Interestingly, DIAL had sought 42.6 per cent hike in these charges.

However, the reduced charges would not be implemented till appeals on the earlier rate order are settled by the Airports Economic Regulatory Authority Appellate Tribunal (AERAAT).
AERA's new tariff order is for the 2016-2019 period.

According to S&P, the tariffs would be implemented no earlier than July 2016, by when DIAL should strengthen its financial position and offset the impact of the fall in tariffs.
It noted that the airport operator could also benefit from the pending outcome of its appeal before the appellate tribunal related to the first control period April 2009 to March 2014.
Further, S&P said that DIAL's recent progress on commercial property development would help the company offset the adverse impact of the fall in tariffs.

Income from property development would support DIAL, it added.
"We believe the risk of a higher fall in tariffs from the passage of additional time is offset by the regulator's approach in the current order, which allows for additional revenue of about Rs 7 billion (Rs 700 crore) to help restrict the fall in tariffs to 89 per cent and maintain DIAL's financial health," S&P said.