See scope in modernising of 50 railway stations: GVK Power

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See scope in modernising of 50 railway stations: GVK Power

In today’s Railway Budget, Mamata Banerjee proposed the mordernisation of 50 railway stations. Commenting on the same, Isaac George, CFO, GVK Power & Infra said he saw great opportunity in modernising of 50 railway stations.

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Excerpts from Midcap Radar on CNBC-TV18 Watch the full show » ALSO READ See latest News about GVK Power See previous management interviews See what other Experts & Brokerages are saying about GVK Power GVK Power BSE | NSE 10/02/12 Are Mutual Funds betting on GVK Power?

Here is a verbatim transcript of the exclusive interview with Isaac George on CNBC-TV18. Also watch the accompanying video

Q: If you heard through what Mamta Banerjee said, there is a plan to improve about 50 stations actually to international standards; do you smell some orders here?

A: Certainly; when the bid for New Delhi railway station was out, we had given a bid for that and have been qualified for that and that is basically in anticipation that there is a great opportunity that we see in modernizing of railway stations. In the present budget when she talked about developing 50 stations to world class standards, it will possibly open up an avenue for GVK to bid for these projects and do something on the privatization of Railways.

Q: I know these are still early days, but could you tell us what would be the projected cost per bid and what is she talking about when she says "of international standards", is she trying to build Grand Central or a British Station, what is the cost of these stations and what is your annuity, what do you think is going to happen, what is it going to return to you, what's the yield, do you have any numbers on these?

A: Its too premature and too difficult to make a statement in this particular juncture unless and until we know the entire thought process that will eventually evolve, but what I believe is that they want to model the railways stations also like Airports which they have privatized and I think they want to do that, and that is what their aim is. As far as pegging a number or a cost at this stage it will be very difficult but it will substantial capital investment if we have to do that.

Q: Your general clientele or audience at an airport is somebody who has already paid a lot for a ticket, here you are dealing everyone from a Rs 25 upwards, or anybody for that matter, so how will these models differ because finally you have to rest on a revenue model, if you are paying Rs 25 for a ticket, you are not going to pay Rs 20 for platform ticket, how is this model exactly going to shape out, its very different from the airport model?

A: There will be a lot of similarities, but the developments a round railway stations, could be the real estate or commercial development around the railway stations, could be revenue stream that one has to consider to make the entire thing viable. I am not banking on expensive platform tickets to come into the railway station but there will be retail space etc that has got to be provided which can bring in the required amount of revenue to run the railway stations possibly could be the model but a great deal will depend upon commercial exploitation of the real estate in an around the railway stations.

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