GMR Airports Infrastructure Ltd
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GMR Airports Infrastructure Ltd
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Ladies and gentlemen, good day, and welcome to GMR Airports Infrastructure Limited conference call to discuss Q4 FY 2023 results. [Operator Instructions] Please note that this conference is being recorded.
We have with us today Mr. Saurabh Chawla, Executive Director, Finance and Strategy.
Before we begin, I would like to state that some of the statements made in today's discussion may be forward-looking in nature and may involve risks and uncertainties. Also, recording or transcribing of this call without prior permission of the management is strictly prohibited.
I now hand the conference over to Mr. Saurabh Chawla for the opening remarks. Thank you, and over to you, sir.
Thank you. Good evening, ladies and gentlemen. Thank you all for joining the fourth quarter of fiscal '23 earnings call.
The Indian economy, still remains a bright [indiscernible] in the global arena. Globally, the economies are taking challenges from geopolitical uncertainties, high interest rates and banking issues. And India economic indicators are continuing to exhibit growth momentum. Monthly collections of [ GST ], which is one indicator by April '23 was at an all-time high of INR 1.87 lakh crores. Inflation has receded, as indicated by the latest [indiscernible] and CPI numbers at minus [ 0.9% ] and 4.7%, respectively, for the month of April '23. [indiscernible] is just only building up again, reaching to USD 596 billion in May '23 from USD 576 million in January '22. We believe that [ indoors ] medium to long-term growth prospects for [indiscernible] and [indiscernible] the government drove strong infrastructure spending, the outlook is even healthier.
Regarding our performance for Q4 fiscal '23, GMR [indiscernible] gross revenue increased by 48% Y-on-Y to INR 1,895 crores in the fourth quarter, driven mainly by traffic improvements in our operation airports. EBITDA increased by 32% Y-on-Y to INR 259 crores. For the full year, EBITDA decreased by 18% Y-o-Y. The declined in Q4 '23 and FY '23 EBITDA is mainly due to the start of monthly annual fee payments at airport from April '22. Additionally, Q4 '23 and FY '23 included certain one-offs related to loss on settlement of derivative instruments of INR 30 crores and INR 90 crores, respectively, with respect to the partial repayment of bonds in Hyderabad Airport. Additionally, there were certain other onetime write-offs of around INR 63 crores at Hyderabad during the quarter 4 and for the full year.
I would like to highlight that the following key roles. During the quarter, we announced the execution of the agreement and the scheme of merger of [indiscernible] with an objective to enhance shareholder value. simplifying the corporate structure and bringing public shareholders closer to the airport assets. As part of the process, [ Jill and Groupe ADP ] will settle the cash earn-out at INR 550 crores and also the equity earnouts at 4% [indiscernible] 8%. That was the [indiscernible] EUR 331 million, that is INR 2,900-odd crores approximately from group ADP to a 10-year 6.76% per annum coupon. FCCs due in 2033 immediately [indiscernible] some completion of the market. GMR Group will remain the single largest shareholder of [indiscernible], and GMR promotor group owning [indiscernible] holding [ 42.6% ] and the public holding 34%, respectively, of the peer equity share capital.
The entire merger process is expected to be completed within fiscal year '24. So far, [ CCI ] approval for the merger has been received, and application has been filed with the stock exchanges and Reserve Bank of India and the process of evaluation and approval is related.
[indiscernible], which is a [indiscernible] commence commercial operations from [indiscernible] currently [indiscernible] are operation from the airport. Cumulative traffic at [indiscernible] Airport has already crossed 1 million mark as on first May '23. For the month of April '23, the airport handled an average of approximately 11,000 passengers per day. International operations is expected to start from June, July of this current year. We expect the new tariff regime at [ Mopa ] to be enforced by October '23.
During the quarter, we received about INR 631 crores from [indiscernible] our partnership that we have affected with respect to [indiscernible] airport. This investment is in the form of CCPS. As you're aware, in December '22, GMR and [indiscernible] announced a financial partnership or next to invest in the equity capital to 3 airport products, which improved [ Mopa ] [indiscernible] which is the [indiscernible] airport and last [indiscernible] the concession is signed.
Overall, the passenger traffic from GMR Airports, Q4 '23 [indiscernible] strong growth. Passenger traffic was up by 55% year-on-year to 25.8 million in Q4 fiscal '23 with [indiscernible] and [indiscernible] experiencing a surge in traffic. On a full year basis, passenger traffic for our operational airports was up by 69% year-on-year to $92.8 million in fiscal year '23. In India, our market share in passenger traffic is approximately 26.6% for fiscal year '23.
The respectful progress on capacity expansion in our airports. Delhi, Hyderabad and REIT. All the 3 airports achieved an 86%, it is 5% and 20%, respectively, the completion as of March 31, 23.
As of April; 30, Deli and Hyderabad [indiscernible] achieved 88% and 86% of the CapEx progress being ideal airports are targeted for completion in Q2 FY '24. We expect the new tariff which I believe we enforce but [indiscernible] development in Delhi Airport, we have initiated our first self-development commercial building of about 6 flats per feet and the gateway district. In Mopa, [indiscernible] monetization of 2 hotel plots has been initiated in quarter 4 fiscal '23.
And then [indiscernible], on a Y-on-Y basis, traffic is up 26% to 1.7 million passengers in Q4 fiscal year '23. Domestic daily passengers has already reached about 112% on the April 2019 levels, while international passenger profit was about 80% of April '23. Currently 18 domestic and [indiscernible] international destinations are connected.
Our [indiscernible] review protection was filed [indiscernible] in Supreme Court challenging the earlier Supreme Court [indiscernible]. However, the acquisition was dismissed by the Supreme Court in its order date at May 11, '23. We expect execution of the concession impairment at the earliest.
In [indiscernible], foundation stone of the airport was laid by the State Chief Minister on May 3, '23. And that processes is on for the selection of the [ EPC ] contractors. R&R processes are fully completed and land handover processes in [indiscernible] as joint survey of the land is underway.
On the ESG front, GMR is fully aware of his role, so the business activity needs to be compatible with the permanent commitment in development and sustainability. In this direction, during the year, [indiscernible] the first year potent entire on hydro and solar power from June 22 of this operational usage, Main airport is switching to electric vehicles from the current conventional meters in phase-wise manner.
Hyderabad Airport has also seen ACI, Asia Pacific [indiscernible] recognition award, sixth time in a row in 15 million to 25 million passenger capita. [indiscernible] Hyderabad airports and [indiscernible] of 5% during the quarter.
The presentation of our financial numbers are already available with me. If not, you can downloaded from the IR section of our website. We are available to respond to your questions on this call and offline after the call. Now I would like to open the forum for queries that will be answered from my colleagues on the corporate and business teams. Thank you so much.
[Operator Instructions] We have a first question from the line of Mohit Kumar from ICICI Securities.
Yes. Thank for the opportunity. My first question is on the financials. The expenses have gone up by INR 3 billion. Q-o-Q. Of course, you mentioned that they pay at the one-off and write-offs. But these write-offs are close to around INR 1.2 billion -- sorry, EUR 1.8 billion, while the other interests have gone up by roughly around INR 3 billion? So can explain any other one-off sites?
Yes, there are only 2 major expenses we have incurred. One will be one of the upfront to bank facilities since we have completed the defunding of the however, their port and at a much cheaper rate in the concurrency which we have paid to the bankers of the facilities is now charged to be in the accounts since we have reached the anality of the project. And also, we are just completing the project and capitalizing the set and is going to be major items.
The second one is basically, as you know, Hyderabad Airport has done the refinancing [indiscernible] bonds at a much cheaper price for a longer term. So one of the -- regarding the earlier bonds where we have done this [ engine ], which has to be now canceled to the extent of that the loss on the cancellation of meeting has also been tied off into account, even though there is no cash flow.
These are the 2 major and some of the expenditure we have incurred on the legal and perfect charges in all the airports for the various cases which are happening, especially, EMEA issues deal before [indiscernible] Dan a good way. Some of the legal expenses suction expenses we have in that has been provided. These are the major reasons for increase cost results, only one time, and this will only be a recurring intention.
Sir, how much is a cumulative amounts to? amount one-off?
In case of being write-off of the bank charges will be around INR 50 crores case. And in case of the legal expenses, we'll be around INR 50 crores to INR 70 crores -- and in case of the fees which we have paid in terms of the GMR Airports Limited, we have had the funds. Since you are aware that Cebu, we have already divested, we got the funds and we have prepared, we mapped the loans and the upfront fee which we have paid them which were supposed to amortized of 3 years now charged off to [indiscernible] account. There's a positive development since we have repaid the launch at [indiscernible].
Understood. My second question is one of the slides you are talking about the refinancing of impaired GMR Airport. What is the paper GMR Airport and what the trade this that we are seeing right now? What is the kind of savings that is possible in the FY '25?
The [ Zimmer ] Airport [indiscernible] debt will be around INR 3,300 crores this in March since after repayment of the process, which we have seen. And in the current financial year will be due doing the refinancing to the extent about INR 17 billion to INR 18 billion.
My last question is on the [indiscernible],what is the time line we are looking at for the airport? And what is the total project?
The total project cost, which is almost finalized in the case of Bigora, around 40, 70 and which includes the amount to be refunded by the government of [indiscernible], and the time line is the Chief Minister has already laid the foundation stone and the joint survey of the land is going on. We are likely to take over the land, there more cases are pending in High Court, which are only for the compensation, which are likely to be settled enough a matter of many mines.
So when they take over the land by end of June, and in the [indiscernible] term, we have already completed -- we have already issued [indiscernible] contract [indiscernible] they are going to [indiscernible] site and asking for all the certifications we are providing. So likely to start the construction maybe middle of July or first of August. Hopefully, the everything goes well.
Is that 2 to 3 years or something, sir?
It is from the date of the [indiscernible]. It is 36 months, exactly 3 years. If you start [indiscernible]
[Operator Instructions] We have a question from the line of [ Ankur Shah ] from [indiscernible] Infrastructure Private Limited.
I wanted to know regarding the land to be provided to [indiscernible]. I think -- 2 quarters you had said that by March 2023, we should be able to provide the land. So any kind of clarity and update on that, please?
We see the second trend of the market deal that you're talking about is?
Yes, sir, the 2.6 million.
2.17 million the land in February month is the issuance part to come into the land masses. The land bases have already been now seen by the now and is almost concluded and they will be taking over very, very shortly.
[Operator Instructions] We have a question from the line of Aditya Mongia from Kotak Securities.
Congratulations for a good set of results on the volumes and spending. And this is where some of my questions lie. I wanted to get a sense from your perspective on the non-aero spending at the Hyderabad Airport? It seems that on a coax basis, this number has improved quite meaningfully on a Q-on-Q basis at about 8%, 9%. And versus the pre-COVID level, it's probably up in the [indiscernible] 30% also.
The question actually relates to whether this is being driven more and more by the incremental retail area that has been opened. And if so, does it have any positive to -- or maybe in the near future.
So [indiscernible], this is [ Rajesh ]. I just take your question. So you're right when you look at [indiscernible], there are 3, 4 contributors for how do you improve your [indiscernible] revenue. So one such contributor is the additional space. Second is how do you define the layout tax flow because that increases our penetration.
[indiscernible] category selection. So all our airports, these are some of the steps which we have taken, Hyderabad has already expanded the footprint and health, the larger area is available for DD-rearrival [indiscernible]. And similarly, daily, we are expanding even so we'll have additional space over there.
So one, I think this whole -- whatever growth we are seeing to a larger extent, which is sustainable -- and this is what we will be increasingly we should be seeing at our airports without making any forward-looking statements, but this is the way we are kind of looking at improving our none [indiscernible] commercial revenues.
Sure. The second question was more linked to -- in some ways, understanding where are the contribution to interest expense coming in beyond the mainstay business of Indian and Hyderabad. Now if I see your overall intersection, it's more than about INR 2,000 crores in this year, whether [indiscernible] Hyderabad cumulatively would be contributing probably half of that. It would make -- it easier for us to appreciate if you could tell us what are the other big components of interest expense? How much in some part of it is the stand-alone operations were doesn't explain a whole lot the 50% that you mean explained?
No. There are peak interest components in consolidated financials. Only the dial one [indiscernible]. So [indiscernible] Limited also the interest will be around INR 5 billion.
Yes. So let's say $5 billion of airports, another $8 billion of [indiscernible] another $3 billion of Hyderabad. And then, let's say, slightly more about no, there's still a meaning of INR 600 crores unexplained kind of number? Just trying to get a sense whether there's no clarity on which all other assets are contributing over here.
Yes. So there is one more -- actually, when we consolidate the GMR airport interline, there is one more entity, GMR Infra Developers Limited, which come into the picture. So there is a INR 16 crore, INR 80 crore loan. So there is additional interest cost is coming for that. And that 1 has been repaid in the April 2023.
And the [indiscernible]
Understood. I'll take -- I'll take this offline also just to get a better understanding. But coming back to numbers and I think this question was asked on the EBITDA and how it has changed from 3Q to 4Q?
See the increase in other expenses is to [indiscernible] of about INR 3.5 billion. And what we are kind of seeing as one-offs is a number that is less than 15% of the gap. So I'm just trying to be certain, should we be looking at full year numbers and adjustment for these one-offs or looking at 4Q numbers, which look quite weak and then analyzing number -- just trying to get a sense of how being so much in a single quarter [indiscernible].
I think we have already explained more expenses like the write-offs of the upfront title bank line of credit and also the cancellation of the hedgings, which we are taking in place of the [indiscernible] were repaid the loans to exit $230 million. So our hedgings have been canceled, has also been charged off. It is more than nearly [ 1 billion ] plus.
We also have additional legal and professional charges where we have repaid the same proceeds. You've got the money and we repaid the loans and amortization expenses have been charged to the account and also additional legal expenses, they are [indiscernible] towards the various phases are being, especially the case of the Acacia cases because of Hyderabad and some other cases in various forms. And there is some amount of expenditure and also from Golar, which is but most of lease expenses nearly [indiscernible] million one-off time and it will not dissipate it. That is what we wanted to commit.
Sure. So you're seeing [ $2.5 billion ], including the Goa issues or let's say, the initial go losses is where maybe Goa will continue, but other agreements of upon [indiscernible] billion should be recurring incrementally?
No, no, no, it's not like that. I mean what we said is out of other expenses is a [ 2.5 million ] one-off tax expenses, which will not be a [indiscernible]
Additionally, I think. when it comes to go up, whilst go up, maybe contributing negative EBITDA at this stage, primarily because of 2 reasons. One, these were the partial of patients in the last quarter. And secondly, the current interim tariff is significantly lower than what we would be expecting to be finance, [indiscernible], which might take another quarter or so. So once we have the final tariff, you'll see contributing positive to EBITDA.
That I completely understand. And one more question from my side. On the Delhi airport, it seems as if on a Q-on-Q basis, you've been able to improve your volume numbers. Is this something specific today because I think seasonality should be against the aviation sector on a Q-on-Q basis. So is there something special happening in Delhi? Or is it always that you have at 4Q can be better than 3Q in spite of [indiscernible]?
I think the traffic, the way the trend is it is across India, its is not specific to rely because the volumes are better in the provides a big trend is same. If you look at actually a has actually gone the animal case. [indiscernible] We have only INR 17.7 billion were -- and in case of Grab, it is about 7 million So a I mean, it's not specific to the [indiscernible].
Sure. Maybe last question from my side. We've seen quite a few routes being started from Hyderabad and the international side of things. And I think this has been our focus area, could you give us some kind of forward-looking guidance or what kind of growth in international numbers in Hyderabad can expect from here on maybe for the next 2 years?
I understand the base is a pretty low over here so just second because you're competing with Bangalore and trying to do more.
Yes, we have been trying to do better. For example, recently, I think we have -- the operations have already started to lender already there, and they are also signing to more international lines in Hyderabad. Our thrust is more on international traffic, but people look at it the trend in, they are completed with the vendor. In case of the [indiscernible] and Arab even though overall traffic at ready lower. But when it comes to international traffic, the [indiscernible] will be almost equal.
So our trust is more and most probably, as of today, our traffic is amount to 15% of the total traffic of the drama international 15% to 17%. So we wanted to make it around 20%, 25% [indiscernible] our targets.
Okay. Any incremental debt that you would be taking at an asset level than dealer Hyderabad? Or do you have enough cash on to.
I think the interest financing is complete in a Hyderabad has already raised the money and we have got sufficient cash balances. It is completing the entire construction operation in September. Really, in the month of April, we are priced [indiscernible] CapEx total funding is completed. It is also expected to complete the entire construction by September, October and start will fit well.
So no more fund rising is required in both airports at pace.
[Operator Instructions] We have a question from the line of [ Nirav Shah ] from GC Holdings.
So the first question is on the EBITDA contribution from the JVs subsidiaries at [indiscernible]. I'm seeing that for this quarter, we have reported an EBITDA loss of INR 29 crores versus a run rate of around INR 60 crores to INR 80 crores, that is the general run rate. Any specific reasons of this?
[indiscernible] JVs negative?
For the year, it's INR 335 crores contribution. And if I reduce the 9-month number, which is INR 364 crores, I get to INR 29 crores of negative.
Leader where you're getting these numbers. So have taken the 4Q presentation details or the annual JV contribution and have taken the 9 months .
[indiscernible]
is actually in the last quarter -- that is a good [indiscernible] not reconciling with our numbers for can take it offline because we got [indiscernible] from where [indiscernible] taking the numbers.
Sure, sir, sir, not worry. And just on the commuting time line on the after effort, you mentioned the bottom part, but the time lines of when do we [indiscernible] expect the completion segments?
Sir, last to export on the revenue citation support reputation have been businesses in today. and there is one more in protection still that we are expecting very shortly. After that, [indiscernible] And [indiscernible] would be is a downfield airport. So it's not like [indiscernible], which is -- it requires some CapEx, but it's not immediate.
We have a next question from the line of Ronak from Bank of America Securities.
[indiscernible]
Sorry. [indiscernible], can you please use your handset mode. Your voice is connecting.
[indiscernible].
Yes. So yes, I just wanted to again work through the math other expenses and EBITDA which was -- I guess, we have discussed it multimeters to go through it. On dial, I see a Q1 quarter-over-quarter movement of around INR 55 crores to INR 60 crores on Hyderabad, I see a movement of around INR 80-odd crores. And on GAL, a consolidated level, I'm looking at somewhere around INR 70 crores.
Now a couple of things have been maintained. One has mentioned that -- Hello?
Please go ahead.
Yes. So one thing that has been maintained will be hedged on [indiscernible], which has been INR 100 crores. And there have been write-offs of around INR 63 crores. So this totals to INR 163 crores of onetime expenses. So adjusting for the onetime expenses, would we say that GAIL performance for the quarter was actually around INR 80 crores better than the year [indiscernible] would that be the right thing to say.
Yes. We exclude the one-offs in the parks plus around INR 30 or INR 55 crores just the performance should be considered excluding the much better.
So any reason again is that transact the seasonality point it was maintained earlier. Delhi Airport, Hyderabad Airport, both showing significantly strong numbers. for Hyderabad, especially if they're saying that the around INR 80 crores of improvement in the EBITDA. I don't really see that on the top line around INR 30 crores of improvement on the top line. So exactly where is this improvement coming from?
You're talking about [indiscernible] performance or data level improvement?
Right. So I'm just adjusting for the number which have maintained, which is INR 100 crores on the [indiscernible] write-offs to happen at GLA level. So if I address fort INR [indiscernible] the front of INR 500 crores [indiscernible] EBITDA, which was generated. This basically gives me an INR 80 crore upside over the INR 140-odd crore EBITDA, which was generated in the December quarter.
So trying to understand, is there an INR 80 crore improvement in the EBITDA and the top line improvement has been just INR 30 crores, not even [indiscernible]
crores.
So -- Exactly where is this improvement coming from? I'm just unable to tie up the numbers. And I'm missing something is the OpEx number, something that needs to be adjusted even further? Are there more adjustments which have been missed on [indiscernible] to understand it.
We just wanted to understand you are talking about consolidated financial or your asset size [indiscernible]
I'm talking about at the asset level, I'm talking about the [indiscernible]
On HL asset level, the EBITDA movement in quarter on quarter we were talking about. Yes.
The last quarter SP98230956 Was INR 14 crores this quarter, this is around INR 7 crores. Not addressing multiple at this time anteing the basic sort of differences that easily made and I'm coming to this number. And so the difference between the 2 of them [indiscernible] and then I'm just removing the one-off factors, which I mentioned earlier, being the hedges, being canceled and the write-offs being taken away. And that shows me an INR 80 crores improvement on an operational business. So that's where [indiscernible]
[indiscernible] the one-off items will move. The performance of Q4 will be much better. This is what we are trying to explain.
And maybe we take an off line. The next question and the last question it I wanted to mention what that -- so in with these one-off expenses happening this time around -- that's it. Thank you.
[Operator Instructions] We have a question from the [ Sumit Krishna ] from [indiscernible] Stockholding.
Can you give any visibility of [indiscernible] will be coming in profits because it's already too long? Consistently, we are posting losses and losses and [indiscernible] gains stock has made in the last 6 to 7 months, single date has all gone. Do we have any visibility? How we can come to focus?
[indiscernible] now the expansion is getting completed by September. In the midterm, we are also filing our applications on the tariff revision by July and the new tariffs are expected to come from first April 2024 onwards. In the next [indiscernible] the current financial year, we may still continue to post a little more losses but in '24 onwards, we are expected to come in [indiscernible] basically as the revised tariff and an increase in the charter and also increase in the [indiscernible] revenues. We are hoping that '24, '25 [indiscernible].
So so you have any plans to raise equity to reduce the debt? Because operationally, I don't know how we come to the profit because the debt component is so much? In [indiscernible] and grab on a corporate level, do you have any plan to substantially use at that?
Project finance, as far as the project finance is concerned, assess are still suitable to comfortably subject to take. There is no challenge as far as the assets are concerned. At consolidated level, the debt coming down immediately not possible because now we have just completed the expansions. Over a great up 3 to 4 years, then [indiscernible] will start reducing because this will be more or less the final expansion after that, whatever the cash generated will start reducing the [indiscernible]. So it will happen for a period of 3 years onwards, down 11%, and we'll start doing the [indiscernible]
[Operator Instructions] As there are no further questions. I would now like to hand the floor over to the management for closing comments. Over to you.
Thank you so much, everybody, for joining this call. We are available offline to answer [indiscernible] respect to these one-offs and some of the margin improvements that we are seeing now, especially at Hyderabad, which I think going forward, as we expand our retail [indiscernible] you will see as we move forward. So primarily, I think the team is, the traffic has come back with engines, it's growing very well, it is highly correlated with India's GDP and spending power of consumers and as we start to offer more and more flights of course, [indiscernible], but also ability for consumers to spend at the airport. The metrics are only going to improve.
The specific question on debt reduction. I think being a capital-intensive industry, we have to wait for the new tariffs to come into place for the CapEx already happened. I think the [indiscernible] is a drag, but the trend line is very sufficient that we in 3 to 5 years' time, we should be free cash positive to not only to reduce debt, but also to -- to service our shareholders from dividend payouts as and when those happen. So I think Hyderabad is already demonstrating that back. Hyderabad is profitable this year. And hopefully, I think very shortly, really should also start to demonstrate the same metric.
Thank you so much. We are available offline. You can contact us for mobile or by e-mail. Thank you.
Thank you, sir. On behalf of GMR Airports Infrastructure Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.