The lukewarm response to the proposed real estate development around the Delhi airport has put its Rs 8,940-crore modernisation in a financial bind. An equity shortfall of over Rs 1,500 crore now faces the developer, Delhi International Airport Ltd (DIAL). Banks and financial institutions, on their part, are demanding that the equity money be brought in before loans are disbursed any further.
Loans worth Rs 4,950 crore, including a foreign currency component of $350 million, were sanctioned for the ambitious project. Out of this, between Rs 2,500 crore and Rs 3,000 crore has already been disbursed.
As against this, DIAL’s promoters (Bangalore-based GMR, Fraport AG of Germany, Malaysia Airport Holdings, Indian Development Fund and Airports Authority of India) had committed to bring Rs 1,250 crore as equity and an additional Rs 2,750 crore as quasi-equity.
This money was to be raised from refundable deposits from developers of hotels and business centres spread over 45 acres of land adjacent to the airport. DIAL had called for bids for these projects by December 15. Though around 50 companies had bought the bid documents, only around 15 are learnt to have submitted their bids. As a result, said GMR sources, DIAL is expected to raise deposits of only around Rs 1,200 crore, which would create a shortfall of over Rs 1,500 crore.
The sources said that had the auction been done last year as originally proposed, there would have been no shortfall. But the auction faced stiff opposition from the civil aviation ministry as DIAL refused to share the lease deposits with the Airports Authority of India (AAI).
According to the chairman of a leading bank which has taken an exposure to the project: “Banks and financial institutions have disbursed a substantial part of the sanctioned loan amount. It is normal to expect that the promoters would also bring in their contribution of equity or quasi-equity on a proportionate basis for loan disbursal.”
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A top GMR executive said that the company has now approached the ministry of civil aviation for infusion of additional equity: “We have approached the government to bridge the gap that has now been created due to the poor response to the real estate project. However, the issue is still being debated since AAI, which holds 26 per cent in DIAL, is reluctant to put in any additional equity."
| THE DIAL FILES | |
| Shareholders (in per cent) | |
| GMR | 50.1 |
| Fraport AG | 10.0 |
| Malaysia Airports Holding | 10.0 |
| Indian Development Fund | 3.9 |
| Airports Authority of India | 26.0 |
| IMPORTANT MILESTONES | |
| Privatised on: May 3, 2006 | |
| Projected deadline for completing first phase: March 2010 | |
| FINANCE PLAN (in Rs crore) | |
| Debt | 4,940 |
| Quasi-equity | 2,750 |
| Equity | 1,250 |
An AAI official, however, said that DIAL needs to look at other options first. “We can agree to put in some marginal equity) until some alternate source of funds is available. But we have said that bridging the entire gap through additional equity is not possible and should be looked at as the last resort,” said he.
“Though these things are not cast in stone, it is obvious that if there is a gap in the equity structure, which is not insurmountable, it will impact the debt structure as well. The company is trying to find ways to fill that gap so that the loans come in,” said another GMR executive.
DIAL has also applied to the ministry for an airport development fee to be levied on domestic and international passengers. If approved, it could fill a part of the financial gap. However, it will take at least two years, while DIAL faced a shortage of working capital in the current scenario.