Hope to file DRHP for airport biz in FY16: GVK Power

Isaac George, director- finance, GVK Power and Infrastructure, says the company has readied the Draft Red Herring Prospectus (DRHP) for its airport business, but is waiting for a particular transaction to take place before filing the DRHP.

Speaking to CNBC-TV18, George says the airport business is doing well across cities. Mumbai's passenger traffic has risen 16 percent at 9.8 million passengers in Q2FY16 while Bangalore has outperformed with a 21 percent growth in traffic at 4.6 million passengers.

For the next quarters he expects the cities to log in 20 percent and 30 percent passenger growth, respectively.

Buoyed by this optimism, George expects Mumbai airport to report profits by the end of FY16.Below is the verbatim transcript of Isaac George’s interview with Latha Venkatesh and Sonia Shenoy on CNBC-TV18.Latha: Let me start with your Q2 numbers. You saw 16 percent traffic growth in Mumbai and a 21 percent growth at your Bangalore airports. Now with the air carriers apparently witnessing better passenger load factors, what kind of traffic growth can you forecast for Q3 and for the whole year? A: Something similar to what we had experienced in Q2. I think that is the kind of growth that we are expecting. On an average if you ask me, I think Mumbai would grow at around 20 percent as far as passenger growth is concerned. Bangalore as a percentage will fare much better. Bangalore we expect the growth to be around 20 percent. Sonia: How do you plan to fund the upcoming projects? With the IPO market ripe again do you think it is a good time to float the airport business IPO anytime soon? A: As far as we are concerned, the Draft Red Herring Prospectus (DRHP) is ready and we can very well file it but then what we are doing is, we are waiting for one transaction to be completed before we actually file it. That is the reason for the delay in filing the DRHP. However, hopefully we should be filing it as soon as this transaction gets completed.Latha: How much money are you planning to raise? A: I suppose it should happen this financial year. As far as the quantum is concerned I think we will have to make up our mind as far as the quantum is concerned because it is a function of valuations, etc. So, quantum will be decided later but right now, what we are doing is that we are filing with a number in it but I will not be in a position to reveal it because there are still discussions that have got to happen on that. Sonia: Moving to your power business now, we understand that Andhra Pradesh government plans to buyout the Jegurupadu plant post the power purchase agreement (PPA) expiry; any substance in that news?  A: It is right, what you have heard is right. The Andhra Pradesh government has triggered in the buyout clause under the PPA and the have confirmed to us that they intend buying that plant. Valuation they appointed a valuer, the valuation has been fixed and it has been communicated to us. I am given to understand that even the Andhra Pradesh Cabinet has approved this buyout. We are just waiting for the transaction to close. There are small little things that are being discussed but I hope the government will not go back and the buyout will happen very shortly; that is what I believe in. Latha: Does the valuation look fair to you and by when do you expect the buyout to be concluded? A: I suppose the PPA provides that it has got to be valued by an independent valuer. So, they had gone as per the PPA, appointed an independent valuer and then it has been valued accordingly. So, the amount is fair that is what I personally believe. So, if it gets paid, nothing like it, government will have to speed up the entire process because this was supposed to happen by the end of June but it has now got delayed and  hopefully we believe that this transaction should be consummated before the end of this calendar year.