GMR Infrastructure Ltd
NSE:GMRINFRA
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GMR Infrastructure Ltd
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Ladies and gentlemen, good day, and welcome to the GMR Infrastructure Limited Q2 FY '19 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded.We have with us today Mr. Madhu Terdal, Group CFO and CFOs of GMR's business verticals.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. Madhu Terdal for his -- for the opening remarks. Thank you, and over to you, sir.
Thank you. Ladies and gentlemen, good afternoon. I am happy to share with you the financial performance and other highlights for the first half of the year 2019.We are ending the first half of 2019 in a continued volatile environment, the challenging liquidity issues, the rising interest cost and a host of other uncertainties. Though, of course, the cooling down of the crude in the recent days has started giving us some somewhat of a relief, but we have to see how long it is going to last. Combined with this continued volatile situation on the economic front, coupled with the India entering the election phase, we believe that the challenging times, for India at least, will continue to be somewhere in the middle of next year as well. As a mature corporate, we would like to assure the analysts that GMR will continue to be exercising an eternal vigil and will try to protect the interest of the group and its affairs as much as we can.Amidst all this, GMR has been able to achieve some significant results during the quarters, and the topmost among them is the full and final settlement of the private equity investors in the airport segment. As you know, the PE investors had invested about INR 1,478 crores. And now all the CCPS have stand completely converted into equity shares. And the good thing to note here, the PE investors have valued GMR Airports at INR 21,000 crores. And they have taken a 5.86% of equity stake as a part of the settlement. They continue to invested around INR 2,050 crores in our GMR Airports as NCDs. And this amount, we have utilized to add value in GMR Airports by shifting our stake of 40% in Cebu Airport. We have also increased the stake of Clark (EPC) Airport. GMR Airport has bought out 50% of that. And also GMR Airports has bought out 10% stake of Delhi Parking Services from the main port holding company.Besides, GMR Airports segment continues to pursue its growth opportunities as well. We emerge as the highest bidder for the Nagpur Airport, and we are expecting the letter of award in a very short time. The GMR Airports JV with GEK TERNA in Greece also is continuing to make progress. And we are expecting the final letter of award after the approval of Court of Auditors, which may happen anytime.We will also be continuing to look forward for the new bidding opportunities in Bhogapuram, which is coming for a rebidding after the cancellation of the first visit. We understand about 7 people have been already shortlisted, GMR being one among them. And Jewar Airport near Delhi and as well the new airports, which are likely to be announced, like Jaipur and Ahmedabad, GMR will continue to take in a very active interest in the bidding of these airports.Coming to the performance highlights of the few select assets. Delhi Airport continued to be the star in the quarter, where our traffic grew by 12% even in the -- for the half year as well as we grew about 12%. And totally, now the passenger traffic for the half year has grown to 35 million. Most significantly, non-aero revenues crossed, for the first time, the magical number of INR 1,000 crores for the half year, with a growth of more than 19%, and of which almost 1/3, like around INR 288 crores, came from the retail including the duty-free. Our expansion work in Delhi Airport has begun. Till now, we have invested a modest sum of around INR 100 crores out of the total capital outlay of INR 7,800 crores. The environmental clearance has already been received for the Phase 3A works, and the approval has also been received for the DPCC for the hot mix plant. We have already called for an expression of interest globally. The request for proposal has been sent to shortlisted parties like Larsen & Toubro, IÇTAS, Limak as well as TAV in July. And the pre-bid meeting has also been conducted, and the bid submission has been extended till 26th of November at the request of the bidders. So we are hoping to finalize the EPC contractor by the end of this year.Coming to Hyderabad Airport. Hyderabad Airport registered a 21% traffic growth for the quarter and 23% for the half year and ending with 10.4 million passengers. Hyderabad Airport revenue grow -- grew by 14% to INR 364 crores in the quarter 2 and which has been supported by the non-aero revenue, which grew by almost about 24% on a year-on-year. The EBITDA also increased by 17% to INR 256 crores, and profit after tax registered a significant number of INR 203 crores. Compared to the last year, it is a 42% jump. Hyderabad Airport also clocked a profit of INR 378 crores for the half year ended September 18 as against only INR 251 crores previous year. Hyderabad also right so is continuing to grow, and there are new destinations have been added to the airport like Amritsar, Udaipur, Vadodara and Port Blair. These are the 4 new destinations that have been added to the Hyderabad Airport. Hyderabad expansion of INR 4,824 crores is also continuing to gather steam, and already more than INR 350 crores has already been invested there. For the expansion project, GMR Hyderabad Airport had chosen Larsen & Toubro for passenger terminal building and also apron work and Megawide worldwide for the airport systems.As far as Cebu Airport is concerned, it has made significant progress, its gross revenue standing at INR 819 crores. And for the half year, its EBITDA stood at INR 124 crores and a profit after tax of INR 92 crores. And its passengers grew by 14%, marking one of the highest growth rates in the Asia Pacific region. Cebu also airport opened its terminal 2 for its operation from July 1 onwards.As you are aware, our capital plan for Goa Airport is in full swing. We have invested close to INR 138 crores already out of the total project outlay of INR 1,635 crores. And almost 99.5% of the land has been made available and the work has started in full progress.Energy sector continues to show its improvement, though the improvement is not to the extent what we desire for. We received several orders from APTEL for the busy season surcharge as well as development surcharge from MSEDCL, that is Maharashtra DISCOM as well as the DNH PPAs. The Maharashtra DISCOM has already started clearing the regulatory receivables from FY '18 onwards. From October 2018, this process has begun and DNH has also commenced it. From July onwards, Warora has received totally regulator receivables of INR 86 crores. Operationally however, Warora plant was slightly affected due to the low availability of coal, and this caused a marginal loss of INR 3 crores. We hope with the improved availability of coal in the coming months, this performance should come back to its original status.Kamalanga, for the first time, has shown a profit. And this is on account of the linkage coal being realized almost 100%. As a result of that, Kamalanga clocked a PLF of 69% as against 59% in the previous quarter. And in the overall half year, we registered 76% of jump in the PLF, as a result of which Kamalanga has shown a marginal profit of INR 5 crores as against loss of INR 33 crores during the previous quarter -- during the corresponding quarter last year.One more significant progress has happened in Vemagiri Power company, where we have signed a gas supply agreement for about 6 months. We are expecting to commence the operations of the VPGL shortly with the availability of small amount of gas.As regards our overall overseas investment of Indonesian coal mines, they continue to show their robust performance. The sales jumped by 58% to $10.4 million, and the revenue grew up to INR 3,167 crores in the half year as against INR 1,869 crores for the corresponding period last year. And the profit grew up by 31% from INR 349 crores last year to INR 455 crores this half year time.As far as the true stressed assets, Chhattisgarh and Rajahmundry, I would like to recall that the -- in respect of GMR Rajahmundry, the resolution plan has been already approved by 100% of the lenders, and the full documentation has also been completed on 27th of August 2018. But in view of the Supreme Court order, one of the lenders has sought clarification from the lead bank and the same is being addressed by the lead bank. We expect the same clarifications will be offered shortly, and this resolution plan should be concluded some time early this -- later this month. As far as Chhattisgarh plant is concerned, analysts will recall that Chhattisgarh plant has also been adopted by a change in management by all the lenders, but the process was not completed before 27th of August, and the same is in progress. But in view of the Supreme Court order, the entire process has slightly slowed down, but we are hoping some speed will pick up in the coming weeks.We have made very significant stride in the urban infrastructure business, particularly in Kakinada. Kakinada Port, we have received the security clearance from the home ministry, and the letter of award have also been issued. And Kakinada Port is likely to sign the concession agreement with the Andhra Pradesh government anytime soon. There are 2 more significant infrastructure additions are happening in the Kakinada urban infrastructure region. A special natural gas infrastructure is being led by the AP Gas Distribution Corporation at their own cost to facilitate the commercial and industrial customers of our SEZ region. Codeveloper for developing the water treatment plant has also been signed. That work has also been progressed.The financial performance results are all in front of you. I do not wish to repeat them. But suffice it to say that the -- owing to the improved performance in the airport and energy sector, the consolidated EBITDA increased by 22% to INR 534 crores for the quarter from INR 437 crores for the quarter 2 last year. On the other hand, the consolidated losses have been reduced by 46% to INR 219 crores for the quarter from loss of INR 404 crores during the quarter 2 last year.With those remarks, ladies and gentlemen, I would like to conclude, and I would like to open the floor for any questions, please. Thank you.
[Operator Instructions] We have the first question from the line of [ Avinash Bala ], an investor.
Yes, I had a couple of questions. One is about your energy business. Can you hear me, sir?
Yes, please. Please go ahead, sir.
Yes. So currently, what are the projects that we're -- under development for the energy business?
So today, I mean, the project -- I can categorize into 3. I mean, one are on the operation and one project is under construction is, which is the Bajoli Holi project. And there are 2 -- there have been underdevelopment project is there, Upper Marsyangdi and Upper Karnali in Nepal. But those are -- nothing is happening on that.
The actual -- the operations development is happening in Bajoli Holi, sir. Almost about 78% of the construction progress has been completed. And the project is expected to complete sometime in the second quarter of the -- third quarter of the next year. And the Nepal project is still under consideration. It will take some time for development. So effectively, the only one progress we are doing, sir. And there is no development plan in any thermal segment.
And what is the balance CapEx that has to be gone into this hydro project?
Balance CapEx, which has gone into the Hydro project?
Balance.
Which needs to be -- which would need to be going...
It's a total -- I mean, we have to invest close to INR 700 crore.
But our equity requirement will be...
So it is a combination of our debt and equity.
But this project comes under the GRM Energy umbrella, right?
To be [ pumped ] in is about INR 800 crores, in -- of which, major portion will come from the debt side, because equity has already been pumped in by us. So from our side, the equity commitment will be in the range of about less than -- in the range of INR 100 crores or so. That's it.
Okay. And the last question is in the airport, we are now going in for significant expansion that has Goa, Hyderabad and Delhi. And from your -- all your opening remarks, all these expansions, that was close to around INR 10,000 crores. So what is the plan to fund these CapEx? How [indiscernible]...
GRK, would you like to take it?
This is the operator. We would request the locations to mute the VC. Please proceed.
Yes, sir. Sir, my question was regarding the CapEx for the airports. Within Goa, Delhi and Hyderabad, I think what plan you had initially mentioned is around INR 10,000 crores of CapEx. This is around more than INR 10,000 crores. INR 7,000 for Delhi, INR 4,000 crores for Hyderabad and over INR 1,500 for Goa. So in terms of what -- how are equity requirement and the debt, what is the plan to fund this CapEx?
No, as far as the DIAL and Hyderabad is concerned, there is no equity requirement. We have internal cash accruals available. The rest will be raised through debt or some refundable security deposits. As far as the Goa is concerned, the entire debt has already been tied up. The equity, we are already infusing from the GMR Airports.
We have the next question from the line of [ Vipul Shah ] from [ Shubh Mangalam Investment ].
Sir, can you repeat the contours of the deal with the private equity players in GMR Airports? Because in your notes to the account, you have mentioned that we'll have to pay INR 3,500 crores to them. So -- and they will be having certain equity in the GMR Airports. So how we are going to fund this? And what are the main contours of this deal?
Babu, you want to take or shall I reply?
You can go ahead, sir.
Okay. See, total commitment for the PE, the total settlement is INR 4,700 crores, sir, of which INR 1,200 crores equivalent 5.86% has been taken as equity. And INR 2,000 crores will continue to be as nonconvertible debentures for the PE investors, so there is no immediate payment. And we have already paid INR 1,500 crores to them in cash.
Okay. So for their original investment of INR 1,400 crores, they've got roughly INR 4,200 crores of, right?
That was the value of the CCPS, which we had to buy.
Okay. So the deal value of GMR Airport at INR 21,000 crores, right? So after this deal, what will be the stake -- what will be the exact equity stake of GMR Infrastructure in GMR Airport once this entire deal is completed?
Which is already completed, as you rightly said. So the resultant holding of GMR Infra in GMR Airport is around 92%. It's 91.65%. And the investors will, now from here onwards, will own 5.86%.
And who are the balance shareholders, the balance 3%, 4%?
So the balance is around less than 2%, which is basically of the employee welfare trust floated by the GMR Infrastructure. So that's also effectively in a way, indirectly part of GMR Infrastructure stake, but held under the employee welfare trust.
Okay. And lastly, so should we expect IPO from GMR Airports now very soon?
This is the most difficult piece that we discuss. Obviously, as a company, we continue to evaluate and explore what are the ways in terms of unlocking the value. Only that, at this point that we can kind of guide you or navigate is that we are going closer and closer in terms of unlocking, because this was obviously one of the stumbling block in the path. So that stumbling block being out, now the evaluation process really starts from here onwards in terms of what's the way forward to unlock. Whether it is IPO or anything else, obviously, as you would appreciate, there are multiple ways of unlocking. So we -- as we evaluate and come to some conclusion, obviously that may take some time. So let's hope we come back to you all soon with some thought process.
And now what will be the debt on the books of GMR Airports after this -- including this INR 2,000 crore NCD from PE investor?
That's the only debt actually in the GMR Airport books.
There's no other debt?
There's no other debt. This debt of INR 2,050 crores, to be precise, is the only debt that will be there.
And what is coupon rate, sir, for this NCD?
The coupon will be 2%, payable on a recurring basis yearly, while the pricing, as a yield is 15% up till -- 15% as of now.
No, no. I didn't get you. Would you repeat, sir, please? And then so would you elaborate? Interest is 2% you said, right, per annum? Hello?
As I told you -- see, this is a private agreement. Perhaps it may not be desirable to discuss this. We would like to -- we may engage with you if you need more details on that separately.
So -- okay, okay. I'll contact Mr. Amit.
[Operator Instructions] We have the next question from the line of [ Siddharth Agarwal ] from Kanav Capital.
Wanted to understand in a bit more detail about the real estate development plan in Delhi. And like currently you have operationalized about 67 acres of it. About -- with -- what is the plan for the remaining 163 acres?
Babu?
Yes. As of now, as you rightly pointed out, 45 acres and 23 acres were already released. We are in the process of again releasing the terminal hotel, for which board approval is already available, which is about 2 acres of bit. And we're also working on the commercial, I mean, office space on about 12 acres of bit. And the existing Silver Resorts Hotel out of 45 acres, there was arbitration case, which has been won by us. So that land parcel of about 5 acres, that also we are going to release. So altogether, about 20 acres, we are expecting to release by end of this year.
So now, out of the 230 acres even after the end this year, we'll have 90 acres or so. So what about the remaining 140 acres? How long will it take for you to monetize this entire part?
So as you're aware that we can't release entire land parcel at a time. We are looking various opportunities. So maybe next 4, 5 years, we'll be able to complete the entire release of the land.
Okay. And this 230-acre parcel that we -- this is -- is it a single parcel or it's spread across the airport in multiple parcels?
It is -- as of now, it is about 7 to 8 land parcels. But this major parcel is the hospital district, 45 acres. Next to that is the downtown is about another 45 acres. And there's one more, it's the gateway, it's about 45 acres. So rest is another 2, 3 land parcels.
Okay. And similarly, like the parcel -- the land area in GMR Airports is much bigger. So unlike Delhi, you also plan to develop a SEZ out there. So will it be a one integrated part or that's going to be again developed piece-by-piece?
You're talking about Hyderabad or SEZ?
The Hyderabad Airport.
Rajesh?
Yes. So we have close to about 1,500 acres of land, which can be commercially monetized in Hyderabad Airport. We have done about 100 acres so far. There are plans to monetize a significant chunk in the next 2 to 3 years. There are already some discussions on their way. So we expect at least some 300 acres or so to get monetized in next 2 to 3 years.
And what is your preferred mode of leasing up this land? Would you like to take the money upfront on a discounted cash flow basis? Or you will bring it up between lease and upfront payment?
Babu, you want to take it up?
Yes. As far as the Delhi is concerned, we may still prefer the current route. But still we are exploring all the options. We may take some amount of RSDs and some amount will be in the form of lease rentals.
Okay. And in Hyderabad, the model might be upfront?
Not necessarily. Depends upon the structure, it will be done.
Okay. So currently, given -- I mean, now there are big opportunities coming in terms of new airports that are going to be bid out in India. And from what I understand, you also selectively participate in international opportunities. So what's the plan to raise the money for all these as and when they fructify?
We will look at the various options. But as of now, there is not much requirement of equity at the GMR Airports level for the current requirements. As and when any new opportunity comes, we'll look at the various structures.
So under the current expansion of Delhi, it is for INR 7,800 crores. Has the entire funding been tied through? And what percentage of it will be debt?
No. As of now, we have not yet finalized the total structuring -- funding of this expansion. Since we are already having sufficient cash balance, we are sitting more than INR 3,000 crores. So we will be tying it up only in the next year, the requirements, looking upon the -- how much we'll able to raise refundable security deposits and how much we require to be debt tying up. So that we'll take a call in the next financial year.
And sir, your third control period is expected to start in April 2019. So have you submitted your plan for that control period?
No, not yet. We will be filing it, I think, most probably by end of this month.
Okay. And do you expect the ruling for that to come before April of next year?
We are expecting that the tariff determination process would be completed by April and May. And we should be able to get the new tariffs by June.
We have the next question from the line of Sachin Kasera from Lucky Investment Managers.
Sir, on this deal, the private equity, you mentioned that INR 1,500 crores paid by GMR Infra. Is that understanding correct?
Yes, yes. That's right.
So how did GMR Infra fund a deal of INR 1,500 crores? Did you borrow on the books from GMR Infra?
That's correct.
Okay, okay. Secondly, you mentioned that you sold your stake in Cebu Airport to GMR Airports. So if you could tell us as to what exactly was the nature of this transaction and how much did GMR infra received from the sale?
So this was basically more a consolidated -- consolidation of our airport business under the GMR Airport vertical. And as we were discussing a while back that we are basically readying the platform to kind of evaluate and come out with some process to unlock the value. So effectively, in the process what we have achieved is that this Cebu Airport, which otherwise was being held under the listed entity directly, that was the only airport asset in a way, which was outside the ambit of GMR Airports platform. So we have -- thereby at arm's length basis, we have sold this asset to the GMR Airport Limited. And basically, the -- yes, that's briefly the profile of the transaction that we have done.
That I understood. So I'm asking in terms of the monetary transaction, what was the valuation at which the deal was done?
So it was being valued at by the valuer, independent valuer at $590 million equity value for the Cebu 100% equity. We were -- GMR Infra was effectively owning 40%. So 40% of $590 million, which will be ballpark, let's call it, $240-odd million. So -- yes, that's the value.
So sir, I'm a little confused with this transaction. So INR 1,500 crores is what GMR Infra raised from a loan, and it got another roughly $240 million from the sale of their stake in Cebu Airport?
Yes, that's right. So that is what enabled GMR Infra to be -- as you would've noticed in our press release and in our deck as well, the total payment that was made was around INR 3,500 crore ballpark. So that amount consists of INR 1,500 crore that we just spoke, the payments that went, which we sourced by way of a loan. And balance money was basically out of the sale proceeds that GMR Infra generated by selling the other airport assets, which was hence -- till henceforth was held by GMR Infra from here onwards will be owned by GMR Airport.
Okay. And GMR Infra -- Airport in turn raised the money by issuing NCDs to the PE investors, that's how the entire transaction was done, right?
Correct. You got it absolutely right.
Okay. Secondly, sir, if you could give us an update -- last time, you had mentioned that you had won the case -- the Appellate Tribunal had told AERA to come out with a new tariff as per some of the guidance issued by them. So if you could tell us -- I think you indicated April, May, so that was referring to that case, particular case only?
Which one? I'm not able to understand your question.
I'm saying, sir, there are tariff on the Delhi Airport. Some time back, when we've gone to the Appellate Tribunal and you had mentioned that in the last call that the Appellate Tribunal has told AERA to come up with a tariff for the previous period as well as taking into account the fact that the deposit has to be taken for some economic consideration. So for the previous year, so 2018 to 2018/'19, which was under disputes with AERA, so can you just update on what is the status on that case?
No. This is, as you know, that 26 April 2018 that TDSAT order has come. In that, the TDSAT order, they have made it very clear that the DIAL is entitled for the return on RSDs and it has to be worked out by the regulator while determining the tariff for third control period. So now when we are filing our appeal in third control period, we are going to clean the return on this RSD from the day 1, that is from 2009, '10 onwards.
Okay, okay. So whatever be the cost that we were asking to be compensated from the period 2008 onwards will all get probably captured when the new tariff is set up.
Yes. And the new tariffs, it will come on NPV basis, we get back that money.
Got it, got it, got it. Secondly, sir, what is on the debt in the GMR Infra, the holding company, after the transaction with the PE? And if you could just share what is the rate of interest as we borrow this INR 1,500 crores of loan?
Go away, you want to, [ Vishal ]?
As GMR Infrastructure Limited standalone total debt is around INR 3,700 crores, this INR 1,500 has been borrowed by 100% subsidiary of GMR Infra. So it will not come under stand-alone accounts.
So this INR 1,500 crore is over and above the INR 3,700 crores?
Yes.
Okay. And this INR 3,700 crores includes the FCCB or does not include the FCCBs?
Does not include FCCB.
Does not include the FCCB, okay. And what is the rate of interest at which you borrowed this INR 1,500 crores?
The commercials, I cannot share with you. So separately, you can touch base for any further details on that.
Sure, sure, sure. And sir, you mentioned that there are a lot of opportunities that GMR Airport is pursuing. So how are you going to fund some of these? While some of the expansions in the SPVs of DIAL and Hyderabad really funded, because they're cash generating. But for new opportunities like the Goa one, the one in Nagpur and a few more [indiscernible] you're doing, unless we do some more fund raising, either private equity or IPO, how will GMR Airport in turn funds unless and until it takes some more debt? It's already raised INR 2,000 crores of NCD. How are you going to fund the next 2, 3 years on the opportunities in the Airport part of the business?
As we have explained earlier also, the entire -- in the GMR's scheme of the things, the maximum outlay of capital is likely to be reserved for the Airport segment. As we have explained in our earlier explanations also, we are not intending to put any kind of a capital either in the fresh -- either in the energy or in coal sector. So today, if you really look at it, Delhi and Hyderabad are self-sustained. The Nagpur Airport, we have just won and it will take some time to get the letter of award. And then we'll have to sign the concession agreement, and then we would have to go to the financial closure. I can say that Nagpur, at least another 8 to 12 months, perhaps there may not be any requirement from the Nagpur Airport department. As far as Goa is concerned, our requirement there is not more than INR 500 crores. And already minimum that whatever immediate requirement has been treated, as Mr. Babu explained to you, has already been brought in by the GMR Airports. So GMR Airports is having sufficient cash to meet the initial requirements. And as my colleague, Mr. [ Modi ], explained to you that you are seeing the significant steps that is being taken. The airport sector is being consolidated with the induction of the Cebu, with the induction of parking, everything. So it is getting ready for a substantial value unlocking exercise. In what way and shape it will happen, only the coming quarters and the economic environment will tell us. So be rest assured, there is no immediate requirement of equity in any of these expansions, which we're planning. They will be required over a period of time, and I think GMR will be geared up for these eventualities.
Sure, sir. And one last question on the monetization front, either on the rural front or on the urban infra or the coal mines, any thoughts, if you could share with us?
I can only say at this point in time, the efforts are on in all these areas. But the circumstances are not so conducive to get some immediate results, because we have already -- the easy available ones, we have already disposed. So there are a few balance assets, but definitely, we are trying to dispose them as early as we can.
Sir, the coal mines, they are very, very profitable, going by the number that you reported in Indonesia, where we have 30% economic interest. Would we be looking to use that, because that's a very profitable one and can get us a good sum?
Give us some time. At least it is a very good asset. It's making profit. We will come out with the strategies. If there is something we have to share, we'll be able to tell.
We have the next question from the line of Ashish Shah from IDFC Securities.
Congratulations on improved numbers. First question is on the T2 terminal at Cebu, which got commissioned. So have we got any tariff increase there after the commissioning? And is anything due now?
No, there is no tariff increase. The tariff has already been -- it was already mentioned in the concession agreement itself. As per that, the step-up increase, whatever is permitted, is being implemented.
Correct. So yes, basically that's what I meant. I mean, what -- has the step-up increase happened, and what would be that increase, sir?
Just hold on. We have already applied to the government for implementation of that, and then it may take about a few months to get the clearance from them.
Right. Sir, any quantum on how much that is likely to be?
We'll come back to you on this.
Sure, no problem. Sir, second is in terms of the Hyderabad Airport tariff. So we had procured -- secured a stay from the Hyderabad High Court in that subject. So where are we in that process, for the Hyderabad tariff revision?
Rajesh?
No. After AERA worked out the revised tariff, and it did not consider so far claims. So we have got stay from the High Court. And against that, AERA has -- the regulator has filed their counter, and the matter is yet to come up for hearing. That's where we are in terms of the current stay order.
So sir, there is a mention of discontinuing operations in the results. What is that, sir? What does it pertain to?
The thing is we have rolled out PT BSL, the sale transaction has got completed and the same is discontinued operations.
Sure. Sir, last thing, any impact of ForEx mark-to-market in the numbers that we can see?
There is an impact, but both the DIAL and HIAL have got the hedge. So it will be coming only in the OCI. Otherwise, the P&L is not getting impacted.
Okay. And at the consolidated GMR level, is there any ForEx loss included?
There is no significant loss that will be in the P&L account, because major -- the loans are for DIAL and HIAL, which are properly hedged by both the companies.
We have the next question from the line of Kirthi Jain from Sundaram Mutual Funds.
This is Kirthi here. Sir, how much this consideration determine, sir, for this private equity? What was the methodology adopted in the consideration being done? Because this consideration, like, when we calculate, it comes to around 19%, 20% IRR roughly. So for regulated asset, this looks like on a higher side, sir.
So see, as you would appreciate that any instrument that we buy between 2 bilateral parties, obviously it has to be done at a fair value. So the -- what we -- the transaction -- underlying transaction basically reflects the fair value of the instrument that the investors were holding, which was being valued and basis which the quantum of the instrument that we bought, the CCPS, commensurate pro rata consideration was paid out. So it has got nothing to do with any kind of implicit number that you just spoke. That might be a derivative or a derived number that you are coming out with, which obviously we perhaps had not thought of or have not looked at. But from our standpoint, it's basically the fair value of the instrument, which finally, both the parties mutually decide and agree is what the underlying transaction all stand about.
So any methodology, sir, for calculating the assets' value? What were the methodologies, I mean, roughly...
That's a fair value. As you know that these instruments had a convertible -- had a conversion ratio at the time of the issuance, so basis which the underlying in a way equity -- the underlying pro rata equity that this instrument can potentially entitle the investor was known. And to that extent, the fair valuers did the fair valuation of the instrument. This is that, taking into account all the underlying assets that this company owns. And that's what we bilaterally agreed to -- for the transaction purpose.
Sir, in terms of ease of monetization, which would be the first, roads or it would be road or the power assets, which would be monetized first?
I do not think there is -- I can put anything in a picking order. It will depend upon the valuation. It will depend upon the potential buyers. I do not think we have any picking order. We can say that all efforts in every sector are being made to relieve the stress in the sector.
We have the next question from the line of M.B. Mahesh from Kotak Securities.
Just one question. In the opening remarks, you had mentioned the status of GMR Chattisgarh and a couple of assets, which were declassified in the earlier quarter. Can you just kind of repeat what you said? I missed that part.
I think what we mentioned as far as Rajamundry and Chhattisgarh was concerned, I think both, firstly, had gone through an SDR in the erstwhile scheme, where lenders have converted part of the debt into equity. Hence the 2 assets have not been in consolidation as far as GMR Infra is concerned. Secondly, what we mentioned is in both the cases, there are specific resolutions that are being carried out. As far as Chhattisgarh is concerned, all the lenders have agreed on a change of management. And I think the whole process of Supreme Court, they are parallelly moving in the change of management. We are expecting that should come to some sort of traction over the next few weeks. As far as Rajahmundry is concerned, we've had a resolution plan, and all the lenders have approved and signed the resolution plan. We are shortly also looking at implementing that resolution plan.
Sir, just one clarification on the GMR Chhattisgarh. There seems to be some concern that the preference is over the NCLT process over the bilateral settlement. Is there any change in view on that? Or you think that the onetime settlement or a change in management is still the preferred medium out there?
The clear preference as of now is of change of management. The lenders have also carried out that process. And what I can only say is post-conclusion of all the potential interest made that have been received for the asset, lenders have chosen to go ahead with it. Given the wake of this whole process of Supreme Court, slightly things were a little slow. And we are expecting traction to continue as far as lenders approving the change of management is concerned for the identified bidder.
And 100% of the lenders have agreed to this change of management?
That's the process that is going on as we speak.
Still going.
For Chhattisgarh.
[Operator Instructions] We have the next question from the line of [ Prem Shankar ], a retail investor.
Sir, my question is that we are listening to good news every time, but the share value is decreasing day-by-day. So what is the chances -- every time we listen to good news, but the share value is decreasing every time.
I do not think as a company, we'll be able to comment upon the market price. We are definitely focused on our job, and every effort is being made to create value in the company. It is true that the infrastructure sector as a whole is going through a difficult period, and GMR is not an exception. But if you look at the relative performance of the various infrastructure companies, we can only say that we are trying to do level best. At least, we are trying to be better at least relatively in the pack of things. So -- but the rest is on the market. Market behaves the way as it seems -- deems fit. Let us hope the good days will be back again soon.
Sir, when can I -- when can we expect GMR IPO, sir?
As my colleague just now replied to you, sir, we'll not be able to comment on anything specific. I will only repeat what he said. All the avenues for unlocking the values are on. Everything will happen at a right point of time. We have to wait for that.
We have the next question from the line of Amith Madiwale from Systematix Shares.
Just want to know about the debt restructure on airport front. So can you please elaborate on debt restructure on airport business, before the deal or after the deal, sir?
You are talking about the GMR Airports level?
Yes, GMR Airport level.
At the GMR Airports, the debt, which is now basically the one NCD of INR 2,050 crores. Earlier we used -- we have about INR 300 crores-odd debt that has been fully repaid.
Okay. So apart from this INR 2,050 crores, do we have...
There's no...
In the presentation, if you see, like the debt is around INR 15,000 crores. So if we calculate around 30%, that'll be net debt. So like the value is mismatching. So can you please elaborate on that?
No, no, the entire sector debt, if you look at this for the Hyderabad -- Delhi Airport has got [ INR 811 million ] debt. And Hyderabad has got [ INR 350 million ] debt. And Cebu -- sorry, right now, the Goa Airport has drawn only around INR 200 crores of debt. And at GMR Airports level, this -- parent level is INR 2,050 crores of NCD.
Okay. So total, sir, with the parent and with the subsidiaries, what is the total debt over there?
[ Vishal ], you would add?
Yes, I think what you're referring to the presentation is a net debt. That is a gross debt minus cash. So that is 30% of INR 15,000 crores, that means around INR 4,000 crores in the airport sector consolidated.
Okay. So total debt is INR 4,000 crores at the consolidated level.
Yes, net debt in Airports.
Net debt is INR 4,500 crores. Gross debt is INR 10,500 crores. And our cash balance of INR 6,000 crores across various airports in GMR Airports together, making a net debt INR 4,500 crores as of 30 September.
We have the next question from the line of [ Bhavesh Patel ], an investor.
First of all, many congratulations for good set of numbers and improvements. My question is regarding what are the plans to go ahead with reduction of debt at the gross level as well as what is the management is doing to increase the shareholder value, be it whether it's in terms of reflecting some price or promoter buying and then effectively returns in a longer term coming to dividend as well however far you see, maybe 3 years, 5 years?
Yes, thank you. As you have seen us for the last 3 to 4 years, we have raised an equity close to around INR 8,500 crores by divestment of various assets. And as I just explained to you, we are still continuing to pursue our efforts in demonetization -- disinvestments. Our role will continue to pursue, but obviously, there are no more sellers than the buyers. So obviously, there is a constraint in getting a value. The next is, as we explained to you, there is a lot of unlocking in the airport segment has happened. I cannot tell exactly at what time and when and in what way. But I can tell you that, that is going to be one of the routes that is going to impact very significantly and positively in the reduction of the debt at the corporate level also. Also, as you might have seen that we have made very significant progress in our urban infrastructure. I would like to assure you that many times, it escapes the attention of the investors and the analysts. But we are sitting on almost about 10,000 acres of land in our Kakinada and another 3,000 acres of land in Krishnagiri as well. While Krishnagiri may take a little more time to show a little progress, but as far as Kakinada is concerned with the sanctioning of the port license, port alone, it takes around 1,870 acres of land. Besides, as last year, we have told about Hindustan Petroleum doing their due diligence for around 2,500 acres. And the infrastructure in the form of natural gas and the water treatment plant and coming [indiscernible] a very silent value creation is happening in the entire urban infrastructure. So you may see during next, maybe, I think, anywhere between, say, 6 months to 12 months, you can see that, that will become one of our very prime planks in terms of the disinvestment and it will be helping the reduction at the corporate level very significantly. I hope I have answered this question.
Yes, you have. And in fact, looking forward to seeing some of those actions fructifying. We will honestly -- as an investor, I'm very positive on the company as well as all the management plans. But to be honest, a little bit disheartened as well looking at the screen as you reflect, and again, not seeing the screen you are responsible for. But again, hoping to see some quicker action and better results. And then again, want to be with the firm for 5-plus years so that we see significant multiplication as well as dividend. And let's not lose that focus, please.
No, we share your concern, and we also share your optimism also. Be rest assured, we are focused on our efforts. This has been a good corporate trusted by the investor, and we'll do everything to retain that confidence.
We have the next question from the line of Raghav Mittal from Locus Investment.
I've a couple of questions on GMR Energy. So when I just look at the net debt you consolidated and I tried to add the net debt of Warora and Kamalanga...
Mr. Mittal, I'm sorry to interrupt. The audio from your line is breaking. Could you adjust that?
Okay, sure, just a moment. Am I audible now?
Yes, please go ahead.
Sorry. So I was saying when I just look up the finance charges for Warora and Kamalanga and I just added -- add them up and compared that with the finance charges for energy consolidated, the energy consolidated finance charges are lesser than Warora and Kamalanga finance charges. So can you just talk about what am I missing here?
That is Including the financial consolidated, what you're looking at energy consolidated does not include Warora, Kamalanga, because if you look at the energy portfolio of GMR, there are 2 big pieces. One is GMR Energy Limited, where Tenaga took 30% stake. That portfolio includes Warora, Kamalanga, and that is not consolidated. The consolidated number what you're looking at are the numbers, which include other business, which is primary trading. So these 2 are different pieces you are trying to correlate.
Maybe we could call Amit. Perhaps he will be able to reconcile the number.
What the energy consolidated is not the GMR Energy, but it is all the energy businesses, what -- which is not even forming part of the energy.
Which would be the main businesses in GMR Energy consolidating now?
It's [indiscernible] trading, energy trading, and...
Energy trading. Got it. And the second question on the PT GEMS side, EBITDA between stripping cost and rising fuel cost, so just wanted to understand the EBITDA margin has declined a lot this quarter. So is that like at a level, which we can expect going forward?
I think this business perhaps need to be seeing not as an EBITDA margin. But this is -- the way the coal as a commodity in the international market trades is more of a function of what effectively you achieve in terms of, call it, EBITDA dollar per ton, because higher the price does not automatically, the margin will have its impact. Because the cost, in a way -- a significant part of the cost to that extent is a variable cost. So -- and some of it, which has -- which gets linked to the price, but some equally significant component will be, which is fixed cost. So basically, if you see, we work -- and maybe, as of now, our EBITDA per ton will be somewhere around ballpark $8 to $10 and which we clearly see that, that's something that should get maintained in the times to come, and perhaps has the potential to go up as well.
And also just to add, I mean, from a business perspective when the coal prices are higher, I mean normally, even you try to take out the coal, which has a higher strip ratio, so you would maintain your margin. And going forward, I mean, the EBITDA and everything is definitely going to maintain, because when the prices fluctuate, I mean, your strip ratio also goes down.
We have the next question from the line of [ Siddharth Agarwal ] from Kanav Capital.
Sir, you -- for the Kakinada SIR, we had mentioned that we have already signed MOUs for roughly 3,500 acres across different companies and organizations. So would it be possible for us to get some sense of what are the monetary -- even ballpark for 3,500 acres, what are the kind of amounts we are looking at?
[ Mohan Rao]?
Yes. See, it contains near about -- nearly 10 to 12 customers, so where we signed MOUs totaling about 3,300 acres, which includes this petrochemical complex by HPCL-GAIL like 2,000 acres. So I mean, because this -- please understand that okay, now we got the port license and we are going to enter the concession agreement in a few days. That is a major development, which is anchor asset for the unlocking the total remaining 8,500 acres. So as Mr. Madhu mentioned in the beginning, we're having 10,500 acres, 2,000 acres, I mean, for the port. So this will be anchor and developing the value for the remaining 8,500 acres. So once that [indiscernible] that okay, we got this commercial port license, the right number of inquiries about this, basically which are depending on the forward like petrochemical complex. That's why we are taking even this gas connection from the AP Gas Distribution with their own, because the government also realize that it is coming up very well because of this port. That's why with their own cost, they have put the gas pipeline of 6 kilometers from the main pipeline to the -- our port -- I mean, our port place. So this -- all these are sorted just at the beginning. I mean, except HPCL-GAIL, which is happening for quite some time, all others are -- once the news come out, they will come and approach us. So now we are, I mean, negotiating the price and these MoUs will be signed very shortly. To that extent, I can tell you, the price, because of various reasons, you are aware that we are not in a position to disclose the price now, I mean, like this. And this HPCL-GAIL also you are aware that okay, it went on very, very advanced stage. But you are aware that no present, because the -- see, it is a -- it should support and it requires some various angles, it is a very big project. HPCL-GAIL is a government entity. So central government, state government and district entities, all support is required. Though the support has come and they are now in very advanced stage because of this political instability, it is going slightly delayed, that’s it. So we are very bullish on all these MoUs, which will be fruitful shortly.
Okay. And sir, for the port that is commercial port that is intended to come from Kakinada, so is GMR itself going to develop this port? Or we are just going to make the land available for a certain fees to the developer who is going to take over the development and putting in the money?
Sorry. Come again, your question, please.
So the question is for the port that we intend to develop, the commercial port in Kakinada, is it something that GMR is going to develop itself? Or is it something that we are going to give it to a third party to do on its balance sheet other than on GMR's balance sheet?
Yes. This has to be -- I mean, for the time being, we are, I mean, incorporating this port as 100% subsidiary of the KSEZ. So [indiscernible] I mean, the discussion are going on, how to develop this port. It is too early to comment on that.
Okay. And sir, what would be the ballpark monetary outlay in developing a port of this size, 16 million tonnes that we are planning here for this size of this port?
Yes. The 16 million tonne capacity, the project cost should be around about INR 2,100 crores, like that. But there's a lot of changes in the dynamics, because of the coal transportation and the chemical complex are coming. So in fact, we're writing the -- I mean, the total [ DS ] proposal, which is a consultant, how to take it forward to create more value, but the customers, who are approaching to us and also the total -- I mean, the port numbers.
Okay. And sir, finally, one question I have on the airport JV. So From your decks, sir, I noticed that our advertisement, occupancy as well as the revenues have both dropped year-on-year for both Delhi and Hyderabad. So is there a specific reason why we have lower occupancy as well as revenues there in the airports in spite of you also having better traffic, et cetera?
So -- no, you are right. So this has basically to do with effectively the, let's call it, the ad industry. So -- and you would appreciate ad industry at times works in cycle. So what we have seen the recent 2 quarters, where some of the new launches perhaps, as you would appreciate, whether you take as a telecom or in a discretionary consumer durables, the prominent advertisers who typically use this medium of advertisement, there was perhaps less launches. And to that extent, this particular stream of revenue to that extent in this particular period has got dented. But we continue to see as the pipeline in this industry, in the consumer industry, as it builds up, certainly we see a flurry of activity, and that's what we are expecting in the times to come.
As there are no further questions from participants, I would like to hand the floor back to the management for closing comments. Please go ahead, sir.
So thank you, ladies and gentlemen. Thanks for all your support, good comments, observations, criticism. We have taken everything in our stride. We'll continue to perform as much as we can. Before I hand over the speaker, let me acknowledge the presence of my esteemed colleagues, Mr. Sushil Modi, Group Head, Strategic Finance; Mr. Suresh Bagrodia, Group CFO of Operations; Mr. Govindarajulu, Executive Vice President in charge of Corporate Accounts; Mr. Amit Jain, Head of Investor Relations; Mr. Radhakrishna Babu, Airport Sector CFO; Mr. Rajesh Arora, CFO of Hyderabad Airport; Mr. Parag Parikh, Group Head of Project Finance and Structured Finance; Mr. Ashis Basu, Co-CEO of Energy; Mr. Manoj Kumar Singh, CFO of Energy; Mr. Nirjhar Sarkar, CFO, Energy, Chief Financial Controller; Mohan Rao, CFO of Urban Infrastructure and Transportation; and Mr. Amit Kumar, Head, Finance and Accounts of Highways. So thank you, ladies and gentlemen.
Thank you, Mr. Terdal and the rest of the management. Ladies and gentlemen, on behalf of GMR Infrastructure Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.