Hyderabad: Hyderabad-based IVRCL Infrastructure and Projects Ltd is looking to bid for airport development projects in small cities and towns, joining a growing list of firms wanting to tap the aviation boom in the country.
The company has already made a beginning with a bid to develop the Amritsar airport.
Confirming the news, E. Sudhir Reddy, chairman and managing director, IVRCL, said the company had “partnered with a Spanish airport development” firm for the purpose, but declined to name it.
“We have submitted bids for the development of Amritsar International Airport in Punjab,” said Reddy adding, “we have partnered with a Spanish airports development company to bid for the Amritsar airport project.”
IVRCL isn’t keen on being the developer for all such projects, Reddy said, adding, “we are not necessarily interested in owning airport assets. We are keen on bidding for the airport projects as building contracts. We will bid for those projects where the size of the contract is attractive. The contract sizes of passenger terminals at Chennai and Kolkata are above Rs1,000 crore.” The company is evaluating other non-metro projects.
IVRCL has built the passenger terminals at the existing airports at Hyderabad and Bangalore in the past decade (new airports in both cities are due to open shortly).
The company has also bid to build new passenger terminals at the Chennai and Kolkata airports, said Reddy.
IVRCL is the fifth infrastructure firm from Andhra Pradesh to enter the airport development business, even as the government opens up this business in metros and smaller cities to private companies.
The companies include GMR Infrastructure Ltd that operates the airport in New Delhi and is building the new airport at Hyderabad, GVK Power and Infrastructure Ltd that runs the Mumbai International Airport, and the Nagarjuna Construction Company Ltd-Maytas Infra Ltd combine that has won contracts to build new airports in Shimoga and Gulbarga in Karnataka.
Lanco Infratech Ltd, another Hyderabad-based infrastructure company, has also announced its plans to enter the airport development business. In August, it won the rights to modernize the airport at Varanasi in Uttar Pradesh, which includes expansion of the runway and improvement of passenger amenities.
IVRCL is among the 23 companies that have bid for the Amritsar airport. Other bidders include Reliance Energy Ltd, Ansal Properties and Infrastructure Ltd, Larsen and Toubro Ltd, GMR Infrastructure, GVK Power and Infrastructure, Lanco Infratech and NCC-Maytas Infra combine.
India needs to spend over Rs40,000 crore in developing airports by 2013-14, according to estimates of a government panel on infrastructure headed by the Prime Minister. The private sector is expected to contribute an estimated Rs31,100 crore through public-private partnerships such as the one planned for Amritsar.
Gurcharan Bhatura, an aviation analyst and director general of Foundation for Aviation and Sustainable Tourism, New Delhi, says there is not much business opportunities in non- metro airports in view of low air traffic. According to him, close to 85% air traffic in India is accounted for by the top 10 airports in the country. Even from the “city-side development” perspective—where companies developing the airport also get to develop real estate, retail, and hospitality projects—“only 8-10 of these airports may offer better commercial opportunities,” Bhatura added.
IVRCL ended 2006-07 with revenues of Rs2379 crore and a net profit of Rs141.4 crore. On Monday, shares of the company fell 2.67% to close at Rs457 on the Bombay Stock Exchange, on a day when the benchmark index of the exchange lost 208.88 points to close at 18,152.78 points. The stock’s 52-week high was Rs575 and low, Rs241.15.