ADF levy back from Dec1, recommenced at original rates: GMR

53973 Investors following GMR Infra. Share this News with them.

0

Like this story, share it with millions of investors on M3

ADF levy back from Dec1, recommenced at original rates: GMR

In an interview to CNBC-TV18, Sidharath Kapur, CFO – airport, GMR Group says the development fees, which was levied in 2009 and suspended from June 1, 2011, will now finally be effective from December 1, 2011.

Post your opinion here

 

0

Tweet

Share on Tumblr

Excerpts from Markets Midday on CNBC-TV18 Watch the full show » ALSO READ See latest News about GMR Infra See previous management interviews See what other Experts & Brokerages are saying about GMR Infra GMR Infra BSE | NSE 31/05/12 Are Mutual Funds betting on GMR Infra?

In an interview to CNBC-TV18, Sidharath Kapur, CFO - airport, GMR Group says the development fees, which was levied in 2009 and suspended from June 1, 2011, will now finally be effective from December 1, 2011.

"This levy will be recommenced at the same rate as it was being charged before it being suspended; at the rate of Rs 200 per departing domestic passenger and Rs 1,300 per departing international passenger," Kapur said. Further, he also added that the company collected Rs 1,484 crore of development fee (DF), until June 2011. "The total approval earlier was Rs 1,827 crore," he added.

Below is an edited transcript of Sidharath Kapur's interview to CNBC-TV18. Also watch the accompanying video.

Q: Could you reiterate what exactly the levy is right now both for domestic and overseas and what kind of collections that would provide for GMR via Delhi International Airport Limited (DIAL)?

A: As you are aware, way back in 2009 the Minister of Civil Aviation had approved levy of development fees for Delhi Airport. This was being collected at the rate of Rs 200 per departing domestic passenger and Rs 1,300 per departing international passenger. This levy was suspended following a High Court order effective from June 1, 2011.

The recommencement of the levy was pending finalization of rules and also a final order from the airport regulator. The rules have been notified.

Yesterday, the regulator has also passed final orders allowing us to recommence collection of this levy. So this levy is now being recommenced effective from December 1, 2011 as per the orders. It will be recommenced at the same rate as it was being charged before it being suspended.

Q: What kind of collections does GMR now stands to make over the next couple of months? So, starting December, what kind of collections would you make for whatever remains of this financial year and going into FY13?

A: So far, we have collected Rs 1,484 crore of development fee (DF) until June 2011. The total approval earlier was Rs 1,827 crore. After factoring in what has already been collected, the regulator has approved a further DF collection of Rs 1,230 crore as stage one and Rs 1,931 crore as stage two. The difference in stage one and stage two being certain costs which were not incurred as of March 31, 2010. Major portion of these costs have now been incurred, so, effectively we are now in a position to collect further levy of Rs 1,931 crore, which we will securitize with the banks and raise these funds in the next month or so.

Q: These are costs which you are referring to as of March 31, 2010. It is possible that your costs have increased even more, thereafter; do you file for a fresh increase in these levies?

A: The costs as of March 31, 2010 were effectively the final project cost of Delhi Airport because it was actually commissioned by July of 2010. So, we are not expecting any further revision.

Q: What will this mean in terms of a debt relief for you? How much does it bring the debt down for the company?

A: Pending the approval of DF by the regulator, we had availed set in short term loans from banks and this was of the order of about Rs 600 crore. So, effectively once we get the securitized loans against the DF, we would be able to repay those short term loans and that will bring the interest cost down by about Rs 15-18 crore per quarter.

Q: Have you applied for similar increases in levies in any of the other airports?

A: No, DF levy is only in Delhi and Mumbai. And, this is only for Delhi.

Q: Analysts would also want to know whether or not there is a sense of permanency to the agreement that has been reached this time because the on and off as you know cause some changes, in terms of assumptions on what happens with your collections. This is the full and final settlement that you have reached with the Airport Economic Regulatory Authority, is this is the final agreement?

A: Yes, this is a final order. Although on the face of it, it might look that there is a reduction of almost Rs 1,000 crore in the order. Effectively, about Rs 700 crore of disallowances which we will get once we give proof of actual cost incurred on those amounts which include new ATC tower, the payments which we made to Delhi Jal Board and certain provisions which were there in the earlier project costs.

These costs have been spent; so that Rs 700 crore of disallowance on the face of it will be given to us as soon as we give proof of spend of cost pertaining to these heads of items. In respect to the balance Rs 354 crore, Rs 150 crore of upfront fee, we have actually been reduced on the project cost as also it has also been reduced from the news of financing which was the amount which was paid upfront to airport authority when we took over the airport. So, that does not have an impact on the total collection of DF. Effectively there is only a disallowance of about Rs 200 crore, there is a bit of disappointment about that disallowance but we will figure out a way. We will look at various options of how to bridge this gap. In a project cost of almost Rs 12,700-12,800 crore, it is not a big amount to bridge.