GMR Infra could lose Rs 1,200 cr a year

Last Updated: Sat, Dec 08, 2012 04:45 hrs

The GMR Infrastructure -led consortium managing the Ibrahim Nasir International Airport project in Maldives would lose Rs 1,200 crore in revenues a year, with the island nation cancelling the operations contract.

The company reported Rs 1,200 crore in revenue from Male airport in 2011-12. This was a sixth of the Rs 7,600-crore revenue GMR reported the last financial year.

A Singapore court had ordered GMR Infrastructure to vacate the airport by midnight on Friday, after the Maldivian government scrapped the contract of the Bangalore-based company to run the airport.

GMR Infrastructure was poised to see a hockey-stick growth - a term for exponential rise in revenues after an inflection point - from its operation of the airport.

The Male International Airport operations, which a GMR-Malaysia Airports combine was running for nearly three years, reported a 2.5 times jump in net profit at Rs 83 crore for the first half of this financial year and a 34 per cent jump in revenue at Rs 600 crore. Operating margins, too, have been improving at an enviable pace - doubling to 22 per cent for the first half of FY13 against 11 per cent during FY12.

One of the key elements for the revenue growth from the airport was the high percentage of inflow from fuel sales, rather than revenue from passengers passing through.

As much as 75 per cent of the revenues came from fuel sales.

Fuel sales in Indian airports are managed by oil marketing companies, while airport operators charge a throughput fee. In airports in Male and Turkey, however, the airport operator supplies fuel to airlines.

This was one of the key reasons GMR entered the airport project, and into another international airport, in Turkey. "Fuel sales and non-aero revenues such as duty-free shops were among the key elements for us to bid for the airport at Male, though not discounting the huge tourist inflow into Maldives," a senior official of GMR Infrastructure told Business Standard.

With GMR's Delhi airport just about starting to turn the corner, thanks to the airport development fee, and its Hyderabad airport already in the black, its airport segment was on an accelerated growth path.

The Male airport project contributed, at Rs 660 crore, around 13 per cent to GMR Infrastructure's top line and around 23 per cent to the airport vertical in the first half of FY13. The airport vertical, with four projects, brought in 55 per cent of the revenue of around Rs 5,000 crore during the first half of the financial year.

In addition to the growing fuel sales, GMR was poised to reap the revenues of increase in passenger revenues from its operations at Maldives. As GMR was offsetting the $25 as airport development fee from the revenue-share with the government, this core segment, too, was on a hockey-stick growth. Aeronautical revenue - for use of infrastructure - shot up by four times at Rs 106 crore, while non-aeronautical revenue (such as duty-free shops) grew by 62 per cent at Rs 174 crore.

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