GMR plans no-frills airline, power plant in north

The Rs 2,500 crore GMR Group is planning to join the growing list of corporates foraying into the low-cost airline sector.

The company is understood to have initiated talks with a European carrier for the purpose. In addition to this diversification, the Group is also drawing up plans to set up a thermal power generation plant in North India. This, if it materialises, will be its fourth power generating unit in the country.

Sources close to the Group said that senior directors of GMR Group have recently been in Europe to have detailed discussions with a low-cost airline there to secure the necessary expertise.

"The Group is also likely to have equity partnership with the European carrier," investment banking sources said. This is a logical step for the company keeping in mind its core competencies in the infrastructure and transportation sectors. The company is also the major promoter of the new international airport being built at Hyderabad.

"Quite a few companies are entering this sector after the runaway success so far of Air Deccan and this seems to be a promising business for the companies such as GMR," sources noted.

Sources indicate that the capacity of the proposed North Indian thermal power plant of GMR Energy is yet to be firmed up and a decision to this effect will be taking within next two quarters.

GMR Energy currently has two active power plants in Karnataka and Chennai while the third one is being set up in Vemagiri in Andhra Pradesh. The aggregate generation capacity of the three existing plant is about 820 mw based on different technologies and fuel mix.

The company during the end of last fiscal got Rs 100 crore funding from India Development Fund and is also planning for an IPO during the current fiscal. The issue is likely to be worth Rs 300-400 crore.

The Group is also actively pursuing opportunities in distribution and acquisition of existing power plants to take advantages of the new enactments in the power sector.

Branching out

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• Group in talks with a budget airline in the European Union

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• Mapping out plans to set up a thermal power generation plant in the north

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• Will be a major promoter of the new international airport coming at Hyderabad

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• Planning an initial public offering during the current fiscal