Mumbai: Close on the heels of Bangalore-based infrastructure developer GMR Infrastructure Ltd winning airport modernization business contract overseas, its competitor GVK Power and Infrastructure Ltd is planning to bid for similar airport projects in Europe and America.
Hyderabad-based GVK Power, which currently runs Mumbai’s Chhatrapati Shivaji International Airport, is actively looking at more than two airport upgrade and modernization projects abroad, people familiar with the development said.
Meanwhile, Cochin International Airport Ltd (Cial), the company that built the new international airport in Kochi, India’s first to be built by a private sector firm, is also looking at exploring the possibilities of building airports in Sri Lanka, Ghana, Angola and Papua New Guinea.
Slow market: The Chhatrapati Shivaji International Airport in Mumbai. Developers are increasingly looking at overseas airport projects as there is no new modernization project coming up immediately in India. (Photo: Madhu Kapparath/ Mint)
A senior GVK Power executive, who did not want to be named, declined to disclose the names of airports that are under the group’s radar, citing business confidentiality reasons. “The logic behind entering the international market is not only the profitability parameters, but also maximizing the shareholders’ wealth. We are currently finalizing the business model for overseas entry,” he added.
“Quite a few airport projects are coming up in the US and Europe. Participating in the international projects will give an edge to GMR and GVK to become eligible for bidding similar projects alone in India as well as abroad,” said Vishwas Udgirkar, executive director with leading consultant PricewaterhouseCoopers.
Both companies have already developed skill sets and expertise by associating with international airport developers while executing projects in India, he said.
As a part of India’s airport modernization programme, GVK had won the contract to modernize Mumbai’s airport. It floated a company, Mumbai International Airport Ltd or Mial, with state-run Airports Authority of India and Airport Company South Africa, for the same.
GVK is among India’s largest infrastructure developers with experience and expertise spanning power, roads, airports and urban infrastructure. It has invested at least Rs5,000 crore in infrastructure projects and has some Rs12,000 crore worth of projects in its pipeline.
Last year, the consortium lead by GMR Infrastructure, along with Limak Insaat Sanayi San Ve Tic A S Turkey and Malaysia Airports Holdings Berhard, had won the contract for modernizing and managing Sabiha Gokeen International Airport (SGA) in Istanbul, Turkey. The contract, based on build-operate-transfer, is for 20 years.
The GMR group, which runs the Delhi International Airport and is building a new airport in Hyderabad, is also planning to bid for Prague airport in Czech. “Why would we restrict ourselves to India when there are opportunities abroad? We are certainly examining the prospects of Prague airport,” said Madhu Terdal, executive vice president (international business) of GMR group.
Terdal said airports outside India offer better operating profit for the developers.
“Another reason for looking at overseas airport projects is there are no new modernization projects coming up immediately in India. Instead of waiting for something to come up in India, we would like to be proactive by entering international market,” Terdal added.
At least a dozen airport modernization projects are in the offing in Europe and in the US following strong growth in passenger traffic. Once the third busiest and one of the few remaining privately owned large airports in the UK, London Southend is also up for sale. Last month, Sri Lankan president Mahindra Raja Paksa had preliminary discussions with Cial’s managing director S. Bharat about the possibility of setting up a new airport in southern Sri Lanka on the lines of the Kochi airport.