GMR Infrastructure Ltd
NSE:GMRINFRA
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GMR Infrastructure Ltd
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[Technical Difficulty]
Secondly, as we all know, that finance is a core function for any growing medium operation. Hence, we are reorganizing our finance function to give focus to specific areas requiring specific skill set. Accordingly, we are segregating our finance function in 2 focus areas: one being accounts, compliance, audit, shared services, IT, et cetera, which are the backbone for efficient working of any organization; and then second area being the strategic functions, including M&A, divestments, Investor Relations, fundraising, value unlocking et cetera. The aim of the restructuring is to achieve our aim of deleveraging of the auditors. Mr. Suresh Bagrodia joined us 10 months back and he's responsible on accounts, audit, compliance et cetera as Group's Managerial CFO. And Mr. Sushil Modi will spearhead the strategic finance initiatives as Group Managerial CFO to bring synergies between global finance functions. I'm happy to inform you that we have appointed Mr. Saurabh Chawla, as an Executive Director, Finance and Strategy, in the category of the CFO and KMP of the company in place of Mr. Madhu Terdal. Mr. Madhu Terdal will now be in charge of the strategic initiatives of the group and is designated as Executive Director, Strategic Initiatives. Now, I hand over the proceedings to Mr. Madhu Terdal.
Thank you, Chairman, and good morning to all. The year so far through, has been quite turbulent, but also equally eventful. On one side, we have witnessed tremendous growth opportunities in the airport sector. And on the other hand, we also see -- we also saw some resolution of power sector. The airports saw a growth average of around 11% in traffic. Equally on the Energy business, we saw some improvement in the growth rates. Indeed we also signed on implementing the resolution of regulatory issues as well as the payment required of the distribution companies. We have also emerged during the quarter as a successful bidder for Nagpur Airport, and we are waiting for the final letter of their intent from the government. And recently, we have also participated, keeping in the reputation GMR as one of the largest airport developers. We have bid for all the 6 airports that have been announced for privatization by the government of India. Obviously, considering the strength of GMR group and its abilities in terms of nurturing the airport -- various dimensions of the airport activity, we are confident that we will get some good results. Delhi Airport, to begin with, the traffic grew by around 9% and the non-aero revenues registered a growth of 19%. The non-aero revenues basically stemmed from 26% growth in retail and 28% growth in the cargoes. The much-awaited monetization has also been ushered in the DIAL board, the Delhi International Airport board has approved the monetization all for Delhi Airport land up to 10 million square foot, approximately around 60 to 65 acres of land. The RSD is being issued very shortly. The Delhi Airport also made a cash profit of INR 156 crores for the quarter ended December 2018. Following the orders of the AERA, DIAL has also implemented the Base Airport Charges, and this has resulted in an additional revenue of INR 9 crores and this is likely to go up in the coming quarters. And Delhi Airport has also filed the tariff application with AERA for the third control period that is 2019 to 2024. The work for the Delhi Airport's capacity from 64 million to 92 million passengers is on the swing -- is on the full swing, as it will be making certain announcement in a short time.As far as Hyderabad Airport is concerned, the passengers' growth registered a robust growth of 20% to 15.87 million passengers for the 9 months. And the revenue grew up by 16%, backed by 12% year-on-year growth in Aero and 24% year-on-year growth in non-aero. Hyderabad Airport also made a cash profit of INR 216 crores for the quarter December '18. And Hyderabad continues to grow at least a few airlines like Air India, AirAsia, IndiGo, SpiceJet, TruJet and Vistara have added at least about EUR 4 to EUR 5 and also added around 10 to 12 additional frequencies.The expansion plans of Hyderabad are also on time and we'll be sharing more details in the coming quarters. The construction work in Goa has gone with the regular speed. Already more than INR 230 crores have been invested into Goa Airport. And government of Goa has constituted Mopa Airport Development Authority to provide a single window administrative clearance to fast track the Mopa airport project, including the landside development.Coming to the latest addition of Cebu, the passengers growth by 15% to 8.63 million and the cash profit of INR 43 crores and a new terminal in Cebu has already been commissioned, and we are in the process of renovating the earlier -- or old terminal that is Terminal 1. Coming to the energy sector, power sector still continues to be under stress. But the Government of India has initiated several measures, an important one among them is the constitution of the high-level empowered committee to address the issues. The high-level committee not only has highlighted the causes of stress, but suggested remedy and measures, which include coal availability, implementation of change in law, the transparency in payments of distribution companies, improvements in distribution system. We are expecting that these measures are going to be announced by the cabinet shortly, and this should help with sort of a revival in the power sector. Pending this announcement, our power plants have continued to show good growth. GMR Warora energy showed an improvement of PLF from 65% last year to 65% (sic) [75%] this quarter, and we also made a cash profit of INR 36 crores as against INR 20 crores during the last year. As far as Kamalanga is concerned, it made a very significant improvement as against 54% of PLF last year we clocked a PLF of 74% during the last quarter, but coming to the cash profit, as against a cash loss of INR 50 crores last year, we made a cash profit of INR 112 crores.Bajoli Holi has made substantial progress towards the completion and we are planning to achieve a COD by the third quarter of this year. Coming to 2 of our stressed sectors, mainly Chhattisgarh Energy. As we have earlier informed to you, the lenders of the GMR Chhattisgarh Energy have already approved the change in business and management plan and the new buyer has already been identified. Almost about 80% of approval from the lenders have been received but with a view to shorten the time, the lenders have passed the resolution to take the application under the Shakti scheme for approval as only 67% approval is required. Under the Shakti scheme, we expect the resolution to be completed before March 2019. With that, GMR will be resolving the issue of GMR Chhattisgarh Energy. The second stress of our Rajahmundry Energy, as we have informed last time, we have received 100% approval from all the lenders under the bilaterally accepted resolution plan between GMR and Rajahmundry. As a result of which, the sustainable debt will be coming down to 60% only. And this is likely to be completed in the second or third week of this March, coming March.As far as Indonesian coalmines are concerned, the success story continues. The sales volume increased by 68% as against 4.1 million tons to 6.9 million tons and the revenue also increased to INR 1,918 crores as against INR 1,096 crores the previous year. And the profit also grew up by 13%. Lastly, and not the least, the Urban Infrastructure, it made substantial improvement. The executed concession agreement for the development the -- sorry -- we executed the concession agreement for development of commercial port in East Godavari District of Andhra Pradesh. The port will be developed with an initial capacity of 16 million tons and will be spread over 2,000 acres. And it has already received the state support from the government of Andhra Pradesh up to INR 200 crores. And the government of Andhra has already signed an MoU with Haldia Petrochemicals to set up a refinery cum petrochemicals in the Kakinada SEZ. So you will be hearing much good news in the coming months in this sector as well. Of course, to clarify, that GMR is not intending to make any significant capital investment in these areas. With this, I would like to open the forum for question and answers. And I will revert back to you during the closing remarks. Over to you...
[Operator Instructions] The first question is from the line of Nikhil Upadhyay from Securities Investment Managers.
Sir, a few questions. First on the Urban Infrastructure side. So on the Tamil Nadu's court thing, we had received some requests from them regarding the land for the defense and all. Where are we in terms of the monetization process there? And what is exactly taking the time in that case?
Mohan Kumar? Mohan, you are on mute, I guess.
[Technical Difficulty]
[Technical Difficulty] [Operator Instructions]
Good morning. I am Mohan Rao. The Supreme Court regarding the pass-through by this land already they issued certain government approvals and audits. And we are waiting for the final approval from the collector. Once it is released, this is quite going throughout '29. It is going in very advanced stage. We'll get this finished by -- shortly.
Sir, if I'm correct, that total land -- so based on the annual reports of the subsidiary what you've mentioned, that total land, which the court will take from us, should provide us around about INR 300 crores to INR 400 crores of cash accruals?
Yes, around that. In fact, I mean they're also acquiring many states rights, so depending on that overall, we'll get this amount, more or less.
That should be probably by this calendar year or next 16 months do you think it's feasible in terms of...
Yes, I mean partly it will happen in the calendar year and a small portion in the next calendar year.
Okay. Second sir, on the airport side, starting with the DIAL. On DIAL, what I had understood was that we had zoned -- we were doing the zoning of the land and going to AAI for getting the approval, so that we can do the monetization. So like approval from AAI regarding the zoning we have received for all the zones? Or how or where are we there in terms of approvals for monetization of land?
It is basically, the land has been there long [enough] as per the master plan. But zone that we've asked for is basically for the FSSAI, which is still pending with the Airports Authority of India.
So this 60, 65 acres, which we are planning to monetize, sir, we have the approvals and everything for this land or ..?
No. The board has already approved for 10.6 million square foot for commercial space. The land area have not yet been finalized. Only the land [0:15:26] [bought] have been identified. The FSA team was depending upon the approval from the AAI, the number of aircraft we'll carry, but we're expecting it to be around 60 to 65 aircrafts based on the estimations.
Okay. And do you sense that it can happen in this year? Or any cash accruals in this calendar year or...?
Yes, this quarter -- current quarter it may not happen, but this calendar year, certainly it will happen.
Okay. Secondly sir, you said...
Excuse me, can we keep it for the next round, sir, if you don't mind?
Next question is from the line of Giriraj Daga from KM Visaria Family Trust.
Two questions from my side. First question related to the net debt. So if I look at the quarter-on-quarter, the September quarter to this quarter, net debt in there is INR 4,600 crores. So if you can do the -- possibly the cash flow status of that -- how the cash had moved and how the CapEx, now that there are few divestments, moved from quarter-to-quarter? And the second question is related to the Hyderabad Airport. Is there any case, which -- or with them hearing of the, what's expanding that in FY '20 with slightly better FY '20 revenue on that, so maybe next quarter [indiscernible] the current rate will sustain or we might have to lower the rating the next control period on Hyderabad particularly?
I will request Mr. Vishal to address on the net debt issue.
Yes, well net debt increasing primarily because of the settlement of the private equities, which has happened in the last quarter. So the -- around INR 3,500 crores of the loan has increased because of that. And INR 2,000 crores in [cities] that has been invested by the investors. So both have [interests on] borrowings. And plus there is a CapEx that has been started in Delhi and Hyderabad airports, so the cash has come down by [INR 4,300] crores in these 2 airports. That is the main thing about increasing the net debt overall.
Regarding Hyderabad, Rajesh is there?
So right now, the second control period for Hyderabad is, let's say, around 16 to 21, so we are in the second control period. There is a High Court at state on the tariff notification, which they had logged out and since there were certain claims of us, when more people have the regulator, so we had gone legal. So right now, there is a state, AERA has filed its counter. So as and when this will come up for hearing we will know the next steps. So it's difficult to get what will be the revenue as we go along. So right now the revenue is based on the tariff, which was, which we were enjoying it, prior to this revised tariff logged out by AERA.
What's it for net debt on the tariff? What is the difference between the revised tariff for AERA and what we're currently targeting by the regulatory of tariff, is it 30% or 20% or 15% lower?
So this was the tariff as per [0:18:46indiscernible] as was of those by regulator. This was to come down by almost 30%, 40%, 45%, but then there are the corresponding 3 major claims, which they have to take a [indiscernible] of that. So now -- so it skips -- you are to see the whole thing together rather than seeing tiny parts and pieces of that.
Just to answer that, Sushil would like to add.
Just to add, this is something similar as you all had seen in the case of DIAL, where few of the claims of the company has to finally go up in the TDSAT and finally, as you all know, last year got awarded positively in favor of the company, where it came to one of the biggest figure of the claims, which was the return of the real estate deposits. So basically, net debt Hyderabad is also basically, going on to the similar directions, whether at High Court, where we have filed the appeal in this industry or finally, we have settled with the TDSAT order. But we are very confident that so far, claims that we are all talking are going to be determined positively. So we do carry rights into profit groups.
Next question is from the line of [Vipul Shah] from Sumangal Investments. As there is no response from the line of the participant we will move to the next question, which is from the line of [P. Gavin] from Akash Ganga Investments.
I just -- I want to -- I'd like to congratulate you all for the taking off the demerger of value unlocking of the airports vertical. So my question is that what are you looking at? Will it be a demerger of the airport business? Or it will be an IT of the airport business and the debt proceedings -- and the proceedings from the usual debt reduction or some other cap expense? Second question is with regards to the Delhi Airport. So is there any CapEx expected in the upcoming years over Delhi Airport? And thirdly, with regards to the Cebu Airport in Philippines, there -- is that being held as an investment since this airport is performing pretty well. So we're holding it as an investment to be sale liquidated at some further date at a good valuation? Or we are looking at a stream of dividends coming from this investment?
Yes. One-by-one to begin with, on the demerger, Sushil?
So, your point is right and basically, as you would appreciate that this thinking around the demerger has emanated basically, from the feedbacks that we kept on getting from some of you as well as a lot from many other spectators whom the company and we, as a team, were interacting from time-to-time over the years. So finally, we deliberated on that feedback in our board meeting, that this is how the citations that are forthcoming, and perhaps -- so we may be thinking about it. And the board, finally, opted for forming the committee and to take it seriously because this in fact if it is there baring -- perhaps we'll be the way forward, if to implement it, but before going and tact the far reaching in terms of implementation, obviously as you would appreciate, what needs to evaluate all the pros and cons. We are reasonably confident that the feedback, when we have received from you all and deliberated even with all the stakeholders, looks to have a -- looks to be having a promising benefit for all the stakeholders, but nonetheless we would like to now, take it and discuss and deliberate trends here with various advisers and see if any piece of the puzzle, something is missing and to just make sure that we don't miss anything. So henceforth, the basis for evaluation, which for us should happen in next few months, we would come back to you in terms of whether this is a final go-go in terms of implementation or is there anything. But as I said, we feel reasonably confident that this seems to be the right path moving forward. But nonetheless waiting for some of this onwards, in terms of the various call it corporate law, income-tax law all those need to be evaluated, how those things will work out on the top of basically, the interest of the stakeholder will be at the top of the agenda. So that's on the demerger. DIAL CapEx, for this Babu you would like to add on?
Yes, before Babu takes over, just to add to what Sushil answered just there, at this point of time what you should appreciate is the recognition of the need as the group starts coming out of its challenges and tries to enter into a new phase of growth, it is the recognition of the group that took -- allocate with appropriate weightage -- risk weightage to our airport as well as other businesses. Today in the deal of the various sectors coming together, there is pursued additional risk weightage to our good businesses as well. So I think we should see it in what form and what details it will happen, I think the board and its execs will decide on that. But at this point of time, this is more a recognition to allocate the risk weightage across the sectors of the GMR group. So Babu?
Yes, regarding the DIAL CapEx on the -- it is more obvious to finalized, and you'll be hearing very shortly the communication from the crew regarding the DIAL CapEx. And we are expected to incur some good amount during this calendar year. Now just taking to your third question forward, which was on the Cebu. So Cebu airport asset forms are very strategic part of the investment. So this is -- this basically, represents our journey overseas. So we -- and as you rightly pointed out as the number reflects on its own, that this airport is performing phenomenal where post the commencement of the terminal in the month of June last calendar year, the growth in its business after the tariff reset, whether you're on the aero side as well as on the non-aero business here, it's all going around 30%-plus. So this has a huge potential the -- another terminal revamp is underway, which also is expected to complete for instance this calendar year. With that, I think there will be another leap forward in the performance of the Cebu airport. So as we speak this continues to be forming a strategic part of our investment in the airport business overseas and perhaps we would like to further improve on it. And alongside the -- some of the initiative like demerger and where is the capital raise, these are all going to further improve in terms of the portfolio, quality of the portfolio, both in India and overseas.
Next question is from the line of Parvez Akhtar from Edelweiss.[Operator Instructions]
So just wanted to check one thing, that are there any loss in the DPCC this quarter? Have you made any provision there? And if yes, what is the quantum of that provision and the reason for that?
Yes, Mohan, would you like to take this?
This loss is mainly on the base of the unexpected loss on the net is under CTC basis as we're going to measure. So it will be a loss on our Dedicated Freight Corridor project. So there is some increase in the maintenance cost, especially because there is change in law in the UP that is mining on the change in law. So when we will get to this amount from the DFCC by about 4 clients, et cetera, but as per coal standard and the deep land [restricted] on CTC basis we provide it. So as of today, it is a law till the end of the project, though we've lost in term of this lawsuit provided as per the [indiscernible].
And sir, what was the quantum of the provision that we have done here?
It was about INR 100 crores we provide.
Next question is from the line of [ Vipul Shah ] from Sumangal Investments.
What is the quantum of your linkage for Warora and Kamalanga?
Ashis, are you there?
The entire quantum of PPA, we have the core linkage. For Kamalanga we have 500 of the interim quantum of PPA, there is a small shortfall. We had 500 megawatts complete quantum of linkage for the balance 350 megawatts, of which we have PPA, we have won linkage through auction, it's a small 15% deficit, which we are making good through the auction.
Okay. And sir -- and regarding DIAL, what is the quantum of increase we have taken in aero charges post this judgment? Can you quantify it, please?
Yes. See if you look up at the tariffs, which we have been charging from 7th of July, 2017, now that the board has lift charge, that increase will be around INR 100 crores to INR 120 crores in a year.
So INR 100 crores to INR 120 crores of additional revenue per year will come into this tariff order. Is that correct? My understanding is correct, sir?
Correct, correct, correct.
You have completed Basu? Okay. Okay Sushil?
That's right, what you just said about what's your implementation of this lower tariff-based airport charge, as is on day 0 the aero revenue goes up by around 10% on a per annum basis. But in addition per as you already know, that this tariff even the low tariff-based airport charge keep increasing broadly at a rate, which is proxy would be the passenger [ boat] itself because these rates are -- these revenues are not the absolute revenue that is fixed. These are all like per aircraft or per passenger or per party. So as the passenger grows, to that extent this floor revenue also keep growing.
Okay, so then lastly, the -- what's the type of -- what amount we can expect from monetization of additional 60 or 65 acres? Can you quantify please, roughly?
I think we cannot make that further statement.
Next question is from the line of [ Lavita Lasrado ] from Athena Investments.
I want to know you've given the breakup of non-aero revenue. So what is the others in non-aero revenue, which is 34% in Delhi and 21% in Hyderabad?
Are you ready Babu or you need time?
The income that we [wanted] specifically we did that, otherwise the major growth has come from the duty-free and duty paid. Duty-free has grown more than 25% and duty paid has grown at about 30% as of time.
So that comes under the tail rate? So you mentioned a breakup of others?
Actually, the tail rate has the ground...
Can you see the presentation page #10, which is the airport business for Delhi, the usual H1 the non-aero revenue breakup, the 34% comes from others. So what is the others in that, what revenue?
If you're talking about the other income, basically it's from 2 factors. One is INR 55 crores -- yes, Babu?
Yes, in the non-aero revenue, our file has the others 34% beyond the duty-free, cargo and advertisement, it has to do with some of the other elements like ground handling, the fuel linkage. Those are the other types of non-aero revenues, which have been clumped together as others in the pie, which you are referring to.
Can I ask Amit to provide the details on the achieved result of that?Ma'am, you have another question? Or can we move on?
Yes, so my other question is what is your base rentals in non-aero revenue? Is it fixed or around revenue share?
Lavita, I'll take this up. So basically, when you look at the non-aero revenue, most of our contracts are on a revenue share basis. There is a very small component of state rentals. The state rentals will be mainly on account of the space given to airlines and the concessionaires, but all other non-aeronautical revenue concessions are on the revenue-sharing basis.
Okay. My next question is why have your ad rentals fallen?
See advertisement, all across this year, we have seen the revenues have taken a dip. It's not only a phenomena for Delhi and Hyderabad, because we have seen it in other airports also. So primarily, it looks like there are some of these Chinese mobile handset guys who are doing it a big way of their advertisement, because this is like a big airport. So they have moved to the other ways of advertisement. So that was one of the primary reason I would say from Hyderabad's point of view, but that's something which we have seen everywhere.
Okay. So you mentioned about CapEx plan for April this year, so how will you fund that CapEx in future?
No. When it comes to the CapEx of Hyderabad Airport, it has normally been the kind of totally developed, once. In case of the DIAL, DIAL is already having the [option] cash about INR 3,000 crore and we're in the process of handling the entire...
Okay. And sir, what is your debt-to-net of which you shape out through this?
Regarding the total debts of DIAL [indiscernible] is about INR 8,000 crores.
Okay. Sir, my last question will be, my interest in GMR airports business has gone up sharply. What is the reason that has gone up there in Q2 and Q3, there was the sharp increase?
This is with the rupee depreciation. It is basically, rupee depreciation that is in care of GMR Airports, because of NCD of INR 2,050 crores that interest has come in too accounted for an increase of the DIAL because of the rupee depreciation.
Okay, okay. And just one last question. This EBITDA per ton in your PT GEMS business is -- seems to be falling. Do you want to -- like what is the reason behind it?
Yes. Sushil?
So these are basically buildup of pressure that we have seen in the third quarter and -- but that is more primarily, I think, on account of that temporarily Chinese government has put a ban on their import of thermal coals to balance their thermal coal inventory across-the-board and the generating companies, which has led to a significant fall in the prices. But as we speak, in the current year -- or the current quarter, the prices have already started moving upward, and it is expected that soon this temporary ban that was put will be lifted and the prices will get restored. It came down to around $30 for the Indonesian coal, and as we speak, it has already passed around $36 once again. So 30% up as we speak.
Next question is from the line of Pavan Kumar from CRISIL Research.
Sir, I have a question regarding your Nagpur airport. So recently around 3, 4 months ago, you won this airport. And could you please tell us what is revenue share offering in the Nagpur airport? And what is the expansion plan for the same?
Madhu, do you wanted to disclose it? Or is it...
No, no. I think if it is public information or not. If it is public information, I think the amount which we have put in is 5.67%. Okay?
Sir, could you repeat it again?
5.67% is the revenue share we offer.
Okay. And what is the expansion plans, sir for -- Because the Nagpur airport is already congested in vehicle volume.
We have -- those figures are not yet, I mean, finalized, but there are some available only in the model. I think [indiscernible] now.
Okay, sir. And one more question regarding the Cebu airport. You mentioned that you have been seeing significant improvement in the tariffs and all that. Sir, how is the tariff setting determined for the Cebu airport? Is it similar to Indian model, or is it something else?
No. The Cebu tariff structure is entirely different. Once in 5 years, there is an increase in the rates. However, after terminal 2 has started, the rates have already gone up from 1st July 2018. The next increase will be in 2019 September. That is once in 5 years. That's the modeling period.
Okay, what is the basis for that increase? Is there any specific at this time?
I think there is some formulas which have been provided, and this is the [ amount ] that the rates will go up, once in 5 years.
So Cebu airport basically is not in line with what we see for our Indian airports. While our Indian airports are under the hybrid till mechanism, the Cebu works on a dual till mechanism whereby bidding of the non-aero business subsidizes aero. So aero revenue is straight increases for -- per passenger as much as the passenger growth adding any straight increase keep happening year-on-year, well, based on the tariffs that have been agreed upon. Onetime upswing in the tariffs we saw which -- as per the concession, but that was to come actually once the new terminal comes in. So that got triggered, so thereby the significant jump-up happened. Now it will grow for the tariff increase for the passenger growth; as well as what Babu just indicated, which is the -- he said, more in line [ we'd like to ] compensate for the hike. So inflation plus the passenger growth. Both becomes the kicker to the aero revenue year-on-year.
Okay. Sir, my next question is regarding Goa airport. Sir, how is it progressing regarding your investment plan? And when will it start construction at this Goa airport?
As has already been explained, the construction has already started. The [indiscernible] from GMR Airports has already gone to Goa to the extent of [ INR 114 crore ]. The entire loan has already been tied up. Two tranches of loan have already been drawn on what is going on in this.
Next question is from the line of Ashish Shah from IDFC Securities.
Sir, first, just coming back to this point on Cebu. We've mentioned that we've seen a direct increase in July for the new terminal commissioning, so what was the increase, which we saw in July, if you can mention in terms of the percentage...
Yes. In case of the domestic, it moved from PHP 181 to PHP 223, okay? I mean the next may move from PHP 383 to PHP 446. As explained, the net increase will be on 1st November 2019. That is once in 5 years. The first concession was signed on 1st November 2014.
Great, sir. So would it be now a safe assumption that, since this increase happened only in July of 2018, the one in November 2019 will be a mere inflation impact? There wouldn't be much jump-up in the tariffs, except for the inflation.
More or less. There are defined terms with the concession that's held in July.
Sure, but broadly it would only account from inflation, right?
Inflation, right.
Yes, yes. That's fair. That's fair. So after getting that 20% of the onetime kicker ongoing in terms of per passenger, it will be more like inflation issue. But another kicker will always be the passenger growth, which we don't see in any of the Indian airports or facilities because of the hybrid till.
Next question is from the line of Shankar Dutt from Kanav Capital.
Sir, actually, my question would be -- Congratulations for the good performance especially in the power sector. And [indiscernible]. Roughly [ there's an argument we have ] [indiscernible] allowance a little bit on the pipe-driven PLFs. And on [ PAT ] [indiscernible]. And first of all, do you see that these PLFs of coal from the sector of energy will continue to be in the high-levels in Kamalanga Power Plant at [59%]? And in Kamalanga there was another area to build up new opportunity over field [life] extension, so is there any plans in order to, I guess, achieve that? Or you're not planning right now?
Ashis?
Yes. In terms of PLF, we expect to continue the same run. Coal supplies remain a concern, but we have taken all action to make sure that PLFs improve, if not keep at the same level. That's one for both Kamalanga and Warora. In terms of both units, as you rightly say, that's a sweet spot for Kamalanga, but both units are balance of plans that are already there. What we have to add is the BTG. And we will wait for the opportune time. The construction will also be much shorter because all the energy infrastructure, land constitution, everything is in place. But we will wait for the opportune time in terms of signals. And no new terminal capacity is going to get added by the private sector. So there will be a time, and it could be speculative to say whether it's '21 or '22, but at that point of time we will take it all. We remain very well placed to the mine, being the -- sorry, the power plant, being 35, 40 kilometers from mine and linked to the national grid. It's very well placed for the future and growth. Which decision we will take is depending upon the signals.
Okay. And sir, you state that as we look at the landscape of PPAs [indiscernible] per player. So if that happened, [indiscernible].
Are you talking of the ideas of new PPAs coming up for stressed assets? Are you talking of that?
Your diversified portfolio shows [indiscernible] take-off through long-term PPA. So even the existing PPAs that shows more power [indiscernible] and the existing PPAs [indiscernible] in terms of [indiscernible] but most of the power purchase will happen [indiscernible] long-term PPAs.
Let me clarify that. Basically there's a CRC staff paper of -- which you may have read in the newspaper. There is an idea to transit the market, everything being sold through the pool by -- but while everything will be sold into the pool, through the exchange rate, the long-term PP obligations remain unchanged on both parties. So we're delivered to the pool. Trying to extend it simply where it makes sense. Everybody will be delivered to the pool. To supply it from the -- to the states will be through the pool, but the underlying PPA agreements, rights and obligations will remain unchanged. What it signals, slowly the long-term PPAs will go away. It will be replaced by medium term and short term. So we are trying to transit into a new market structure without affecting the long-term PPAs. So to answer your question: We have the entire capacity of Warora tied up in long-term PPs. We have roughly 85% of the Kamalanga capacity tied up with long-term PP. There will be no changes to that, but in medium to long term, we would see more medium-term and short-term PPs come in. So no impact on the existing PPAs.
Okay. And on thermal plants and renewable projects in terms of hydro and solar, is there any plan to monetize them? Or we -- you don't have any plans to [monetize them] at the moment?
Our wind assets are very small. Solar, we had refinanced some time back, but we will look at suitable opportunities. But there is no specific transaction we have on the board now.
Next question is from the line of [ Manu Agarwal ], an individual investor.
Sir, we have been aggressive in bidding for the airport business and the new projects which are developing in Kakinada and Krishnagiri, which will happen in either investment out-years. I couldn't understand what is our outlook, how we'll be refinancing those projects or financing those projects because there are no major developments towards reducing our debt. The only plan we have is monetizing the airport business. So can you give us some upper cap for the debt that we can have on the books?
Sushil? So...
Yes. So first, to certain sites, not that -- while we are participating in all the airport stretch -- and to an extent, the 6 airports I think that happened last week, we have participated, which you have picked up, but that doesn't keep -- doesn't mean we are aggressive. What -- we remain committed to Indian airports business, and henceforth we will be participating to the extent that -- on a reasonable return -- risk-return profile. But coming to your specific issue around the leverage: You are right. And that's why we are very mindful of the statement to that extent we are on a journey of raising capital through multiple means. Obviously, there are a multiple set of assets that the company owns, and airport which has been nurtured over last more than a decade whereas we feel that the time is right. And looking at -- for interest from the multiple set of potential investors both in the financial as well as the strategic space, the kind of interest and the appreciation that we are getting all around about the quality assets that we have created primarily in India and -- but as well on the overseas space, we are reasonably confident that sooner we will be able to monetize in some form or the other. And obviously, the -- more work is going on, on that side at our end. And we feel that sooner we will come back to you in terms of the more, better visibility and color around this monetization scheme of things. Once that gets done, thereafter, perhaps, you will see. Even as of now as we speak, if you really see in the airport business on a consolidated basis, for us the leverage is very low because -- while we stated a while back that -- we had on the airport around INR 8,000 crore amount of debt, but then there is a corresponding significant amount of cash also sitting. So on a net debt basis, we -- our leverage level at the airport business standalone is nothing significant perhaps. It's only the corporate debt which is making an impact, and to that extent, we are very conscious. And we are taking all the steps that is required to delever this corporate debt as early as possible. You will soon hear...
Can you give the time where we'll get some leverage? And also sir what are the steps taken because we have already removed the loan from the Chhattisgarh and Rajahmundry from our books. So the existing loans will get removed from the books. The only way we can remove the loan is through the money we will be getting from the airport business, so what are the steps are we taking in order to deleverage the corporate book?
That's right. So which is what we were just discussing. So on -- the airport business is one of the promising business. As I said, we are seeing a significant amount of interest. So any monetization, it means succeeding to do it. And as we indicated, perhaps you -- what you will have noticed, that we have received multiple offers and interest on the airport business. So we -- if we materialize any of that, that would help significantly in terms of deleveraging all the corporate and [indiscernible]. So wait and -- wait for hearing back from us in times to come on this deleveraging. In reality, that's happening.
And sir, just can we get a commitment from the management that our loan book won't grow beyond a particular limit? We'll -- do we have that in mind, that we will not increase the loan book from INR 20,000 crores or INR 25,000 crores, nothing beyond that? Or we will just keeping on adding the projects and adding on the loan books. What is the management philosophy in those terms?
Okay, I understand the intent of the question. So without specifically answering to that: The maximum what we had therefore can say is [indiscernible]. Number one is we would like you to acknowledge that we have learned our lesson. Obviously, the growth which we emphasized, that did happen, but the anticipated revenue streams, there was a setback not wholly because of the GMR groups but because of the extraordinary environmental that was created -- First and foremost, we have acknowledged it, we have understood it. We would like to assure all of you that we hear, afterwards, the growth will not come out of the leverage or the debt. This is the first assurance I would like to give you, number one. And as rightly, Ashis told that we do not have any plans of growing in the thermal sector, at least in the -- since the -- or at least in the near future. The third thing is that our most distressed assets, as you have already mentioned, Chhattisgarh, Rajahmundry, are going out of our balance sheet. The most valuable achievement in our crown in the airports, as Sushil has told, significant efforts are on to monetize in some way or the other. And we would like to assure you that enough of capital will be raised to fund these growth in the airports. I would also like to remind you that, these bids, they are not going to call for any very substantial capital, even the new bids that are likely to be -- that have been announced. And even if we -- where we have bid also, there is not going to be any need for any additional capital during the next, say, at least 12 months or so. So we may not to bid just because I have one Nagpur, for example, we have not put a single [parcel] into that. So please take that there will be -- we will create enough of gestation period before any additional capital is created. Lastly, I would also like to remind that we do have other sectors of business. That is the energy as well as the Urban Infrastructure, where we have just articulated in the beginning that the plants are -- it's monetize our core plants as well as the other infrastructure land. So I would like to assure you that we are -- the board is very conscious. The top management is very conscious to deleverage the balance sheet as much as possible. I hope I have tried to answer your concerns.
Okay, just one more question. Is there any outlook towards the GMR Highways business? And some of our energy assets, which are Kakinada and Rajahmundry, are we going to sell those or turn-around those? Or how is the management looking towards those assets?
Yes. As earlier also I have told in the calls, we do not have any plans to expand in that. So we have -- we do not have any ideas [of coming] to additional capital. We have -- already more than 50% on the highways, we have already divested. And they are currently on a light self-sufficiently mode, but we are also expecting certain amount of arbitration outcome. They're, and to that point, substantial in the range of, say, between 700 crores to 1,000 crores also. You can say that we do not have any intention to -- we did not have any intention to continue these assets once these arbitration claims are settled.
Next question is from the line of Shankar Dutt from Kanav Capital.
Sir, you guys bid for the 6 new airports recently. So from what I understand, the bidding criteria for those airports is different from the earlier criteria. It was the revenue share with Airports Authority of India. So can you elaborate on -- based on the criteria on which the [ bidding ] segment is [ harvesting ]?
The bidding will definitely be based on the rate which you offer per passenger, both arrival and departure. That is the criteria which they have introduced instead of the revenue share.
So you won't have to do anything, because you have the[ revenue gain] with the Airports Authority of India.
Nothing, nothing. You have to pay per passenger per month. I mean what is rate.
Okay. You will pay per passenger per month to Airports Authority of India, and all your quarter revenues over and above that are yours.
Everything is yours.
But how you have started, determination will still be done by the regulator?
Amit, answer that part.
So the other question is you talked that the monetization in Hyderabad is also going pretty well. So any coverage, [indiscernible] coverage in this quarter?
Yes. So basically we have signed 1 agreement to lease for about 10 acres. There are a few other transactions which are right now the discussions are long. So in terms of having -- through the transaction, we have done one for about 10 acres. And it's giving -- and it's on a lease rental basis and giving an NPV of close to about INR 3 crore, INR 5 crore.
Okay, so [INR 3 crore]?
Yes, close to INR 3 crore, correct, yes.
Our last question, sir, is more around why the promoter shareholding in the company is high. Great amount of promoter shares are lent. And given what has happened recently among other promoters from companies which is speculating it [indiscernible], so -- and that is something happened in the [indiscernible]. So wanting to understand in the lent shares per -- why are these shares lent? And are there any plans to reduce the amount of lending of new shares?
I do not think I'll be able to make a specific clarification or explanation on that, but suffice it to say that, once -- whatever the monetization efforts and the equity raise efforts, I have just now -- we have explained to you, once they materialize, you can see certain significant improvement, but having said that, I would like to assure that people, speculative people may play it off, but with all the sense of responsibility from the management, I can say the group is completely under control of everything. And we do not see any concerns in anything, but the pledge is a historical matter. I think it will take some time to address the issue. And believe it: We are going to address it.
I think that I will just try and do analyze that, or all the big impact groups. And your company is the one that is -- it seems, that is coming out of all the [ big impacts ] that happened in the last decades.
Thank you very much for sharing our optimism. And we definitely want to live up to that.
[indiscernible].
Next question is from the line of Sachin Kasera from Lucky Investments.
Sir, just one question regarding this Delhi and monetization. You mentioned approximately around 10 million square feet. So that looks like a very, very large land parcel, so can you just give some idea as to what are the various [ social gains ], whether it will be hospitality or also office space or something? Because to be able to lease up 10 million square feet is going to be, I think, quite challenging. So what is your confidence level in terms of being able to monetize these areas, firstly?
I think, after doing a lot of on the -- I mean, study as well as the -- and inquiries to see, we are confident that 10 point is -- 10 million will be achieved. The land has already been identified. It is not far away. It is definitely a downtown district or gateway district, which you have already identified, next to a hospital district and opposite also another district. We'll be coming out very shortly with the RFP. And initially we'll come with 5 million then again 5 million.
Yes, but are we looking at hospitality? Or are we looking at office space? [ Is it family oriented] like some entertainment something like that. What exactly is that you are looking to build in this -- on those square feet?
This 10 million is purely commercial office space built over time...
Office space...
What I said is the land parts that are next to a hospital districts and opposite the hospital districts have already been identified.
Okay, but what we are looking to build really is specifically office space.
Yes, commercial office space.
Sure. And sir, just last question regarding these 6 airports for which a bidding is going on. As per the current situation, when can we expect some clarity on the [commission ] on the state of those bids?
On 25th of the February, they are going to open, and we will come to know. In terms to that is [ open ] statement.
Sure, sure. And any other opportunity that is interesting relating on the airports other than what we already have and...
Yes, Sushil?
That's an ongoing exercise. Perhaps this is not the forum where we can put a theme on specific opportunities. And the one which we have just done, as we have said, is example.
Sure, sure. And this is the last question: There are some statement in the media regarding government looking to build [indiscernible] within the next 5 to 6 years. Do you have any update on that? And how are we positioned if something like that were to go through?
Yes. So that -- as you rightly said, that's on. And obviously needless to say the government is trying its best not to repeat the Mumbai and Navi Mumbai once again, where the -- it got so much delayed that -- we all know that today it's sitting at -- some of you are also calling from Mumbai. So we all know that it's completely [ choked ]. So to that extent, government is trying to be proactive in terms of ensuring that the new airport comes pretty well in time or maybe a bit ahead, but it's in the journey of coming up. As you know and it's been spoken, for a few years it's getting delayed. We are also hopeful and keeping our finger crossed that perhaps in next 12 to 18 months there would be some action or concrete action on the ground. In terms of our edge around that airport [indiscernible] because this is within 150 kilometer of Delhi. So to that extent, we had [indiscernible]. So we would have an edge in terms of getting that airport.
Next question is from the line of [ Ashwin Bala ] from -- an individual investor.
Yes. So I just wanted to understand the -- given the [rates of the], be it [ land ] or part of the 11% from its partners and that sale didn't happen. So I just wanted to understand what are the reasons behind that and the transaction that you did.
Sushil, do you want to answer, or...
Yes. So there were certain regulatory construct to the CTs that we were to pay, which we'll --both the parties needed to be fulfilling. And somehow, within the time line that we had on agreement, this -- the same did not happen, so -- but we continue to be very optimistic that sooner we will be able to consummate that. Most of parties are trying their best to see the compliance and the achievement of all the conditions to that. So you should hear from us on this perhaps in times to come, but we should be able to have these projects and consummate it in time to come.
Internally, [indiscernible] concerned or -- so what we're looking at. And [indiscernible] in the future, will the management change?
Yes. We -- obviously this is something that both parties will discuss, but both parties continues to be committed to the condition in the commercial that was agreed. So at least as of -- while obviously we don't kind of speculating too much because it becomes difficult at times but we finally achieve all the satisfaction of the CTs, but in all probability and fairness definitely we -- there should not be any substantial change in the concept. But nonetheless, that is something we would once again discuss as we see the CTs getting complied with.
And my next question is in Goa Airport, I think, the [indiscernible]COD is in September 2021. Since yet, are you on track? Or [ when the translate ] COD for Goa.
The COD for Goa is, you're correct, in 2020, but since because of the delay in [ GT ] by 6 months 23 days, we've already asked for the government for an extension by 6 months. That is now in the active consideration of the government.
Next question is from the line of [ Ashok Kumar ], an individual investor.
A midterm control periods for DIAL starts on April 1, 2019. And I wanted to find out when can we expect the finalization of the tariff order because we are nearing February end.
CT3 has already been filed with -- the tariff operative has already filed with the regulator, and the regulator has already appointed SBICAP's as their consultants. So we are working with them. We have provide all the data. We are expecting, before March, the consultation paper should be out.
Ladies and gentlemen, as there are no further questions, I now hand the conference over to Mr. Madhu Terdal for closing remarks. Over to you, sir.
Thank you, Zed.Before I make the closing remarks, I would like to acknowledge the presence of my senior colleagues, led by Mr. Kiran Kumar Grandhi, who had just left for an urgent meeting, Chairman of Finance and Strategy; Mr. Saurabh Chawla, who has just joined as Executive Director, Finance and Strategy; Mr. Govindarajulu, Executive Vice President; Mr. Suresh Bagrodia, the Group President, Operations; Mr. Sushil Modi, Group President, Strategic Finance; Mr. Amit Jain, Head of Investor Relations. And from the airport side: Mr. Sidharath Kapur, Executive Director, Airports Joint Ventures; Mr. Radhakrishna Babu, Group CFO, Airport Sector; Rajesh Arora, Chief Financial Officer of the Hyderabad airport. And in energy: Mr. Parag Parikh, the Group Head of Project Finance and Strategic Finance; Mr. Ashis Basu, the Chief Executive Officer of energy; Mr. Manoj Kumar Singh, Chief Financial Officer of energy; Mr. Mohan Rao, Chief Financial Officer of urban transportation; and Amit Kumar, Head of Finance and Accounts.Ladies and gentlemen, as we say, all good things also have to come to an end. As the Group CFO and, before that, the head of the strategic finance, I have led the analysts call for almost now 8 years out of 13 years of GMR Group's capital market existence when it got listed way back in 2006. And our capital market journey have been lots of ups and downs. From a pinnacle of a 10 billion market cap, we are going through a not-so-glorious time now. Whether it is really a glorious time of growth or a challenging time of addressing the stress, the times what I have spent as the [ head of the stands ] have always been challenging, invigorating and highly educative. I have the privilege of knowing most of you individually, except for some new people who might have joined the analyst fraternity. I thank each and every one of you for the splendid support you have extended to the investor relations team in general and to all the team on the group in particular, but as the group has -- slowly ushering into a growth phase as it is endeavoring to come out of the stressed sector, it is time to pass on the baton to the new trio, the trio led by Mr. Saurabh Chawla, who with a tremendous experience and expertise has just taken over the role of Executive Director, Strategic Finance. He will be -- very ably led and supported by Sushil Modi and Suresh Bagrodia, who have been around with this group for some time.Of course, as a matter of clarification, I would like to clarify that, of course, I'll continue to serve the group in a little different capacity as Executive Director of Strategic Initiatives.With this, ladies and gentlemen, thank you very much once again, and you will see the new voices in the next kind of this call.So I pass on to the -- Mr. Zed. Thank you very much.
Thank you, sir.Ladies and gentlemen, on behalf of GMR Infrastructure Limited, that concludes today's conference call. Thank you for joining us, and you may now disconnect your lines.