MIAL raises Rs 1,400 cr to fund capex plan

The funds will be also used to repay a bridge loan of Rs 800 cr

This article has been modified. Please see the clarification at the end.

Mumbai International Airport Ltd (MIAL) has raised Rs 1,400 crore of long-term debt from Axis Bank and IDBI Bank for capital expenditure and repayment of debt.

MIAL’s plan to monetise real estate around the airport here have faced delay. The airport operator is expecting to garner about Rs 1,000 crore of deposits from real estate monetisation.

Credit rating agency India Ratings & Research has assigned an A- rating, with stable outlook to MIAL’s long term debt. The rating factored in an expected 47 per cent rise in MIAL’s revenue due to the new rates decided last year, the timely execution of construction projects, fast-tracking of real estate monetisation and improved recovery of dues.

After receiving the final sanction for the loan of Rs 1,400 crore (Rs 700 crore each from Axis Bank and IDBI Bank), MIAL drew down Rs 700 crore from Axis Bank at the end of March. The funds will be used to repay a bridge loan of Rs 800 crore; part of it will be used for capital expenditure.

An MIAL spokesperson said, "The loan is for funding the airport project (domestic part of T2 and apron etc). It is not linked to land monetisation or Airport Development Fee."

A senior executive from a public sector bank said the company was raising additional debt due to cost escalation and the inability to raise funds from other sources.

According to a report by the rating agency, MIAL has initiated steps to improve receivables, in partnership with the International Air Transport Association (IATA). So of January-end, 66.5 per cent of the airport’s receivables were on account of Air India; 75 per cent of the remaining amount was due in next three months.

The report said through an agreement with IATA, MIAL would get about Rs 10 crore from the pool of Air India collections.

The GVK group-led MIAL is executing a Rs 12,380-crore modernisation programme at the airport here. The project has recorded cost and time overruns. Initially, the cost of the project was estimated at about Rs 9,800 crore, but the cost rose to Rs 12,000 crore due to delays in construction of the new integrated terminal and the inclusion of additional works.

It was planned the project would be funded through a mix of debt (Rs 4,200 crore), equity (Rs 1,200 crore), internal accruals (Rs 1,000 crore), airport development fee (Rs 3,400 crore) and deposits from real estate development (Rs 1,000 crore).

Though MIAL had hoped to earn the deposits from real estate by March 2013, the plan didn’t materialise. It has invited bids to lease eight-10 acres near the new terminal for hotels and real estate.

CLARIFICATION
An earlier version of this article had said that MIAL had declined to comment. This version incorporates MIAL's quote.