GMR looks to foreign shores for expansion
GMR Infrastructure is looking to expand its international footprints before its demerger, after which its airport arm would be listed as a separate entity.
The group has bid for the redevelopment project of U-tapao Airport in Pattya, Thailand and Hang Nadim Airport in the Batam region of Indonesia.
The group is also looking to raise its stake in a joint venture with Terna Group, which is going to build and operate Heraklion Airport at Crete island in Greece.
Currently, the group is fourth-largest airport operator in the world, handling around 325 million passengers annually. "We are bullish about our international projects. Along with good projects in India we will always keep looking for good opportunities outside," said an executive. The $94 billion redevelopment of U-tapao aims to upgrade the airport as the third international airport of Thailand after Suvarnabhumi and Don Mueang. The expansion project is aimed at making the airport capable of handling 15 million passengers annually in the next five years and increase it to 30 million within 10 years. Currently, it handles around 2 million passengers per year.
In Indonesia, Batam's close proximity to the logistics hub of Singapore is an advantage for maintenance, repair and operating businesses, and its location farther north than Jakarta makes it easier to access other Southeast Asian nations.
"Crete is one of the most visited islands in Greece. This airport is the second-largest in Greece and its registered traffic growth at a compound annual growth rate of 10 per cent per annum over the past three years. The current airport is facing severe capacity constraints and will be replaced by the new airport," Saurabh Chawla, chief financial officer of GMR Group said in a recent interaction with analysts.
Swift execution of the Crete project will also bolster GMR'S status as an operator in the European region, helping it to bid for projects in the future. "The Europeans are extremely choosy about who runs their airport. The Crete project will help us to boost that image," the executive said. To raise money for the projects, the group is looking to hive off its projects in the road sector.
The projects that have been put on the block are the Hyderabad-vijayawada Expressway, Ambala-chandigarh Expressway, Pochannpalli Expressway and the Chennai Outer Ring Road. The first two are toll projects while the others work on the annuity model.
The company, which owns and operates the international airports in Delhi, Hyderabad and Cebu in the Philippines, will shift focus to expanding its existing airports and securing new projects in the sector. "There is a management decision to focus on the airport sector and grow that business. No one is being able to make money in power and roads. We see the future in airports," the executive said.