The Hindu Business Line : GMR Infrastructure

This is with reference to "GMR Infrastructure — Pockets of turbulence" (Investment World, Business Line, July 30): I could see from the prospectus that several revenue streams would open up for the company from the airport and road projects besides the power segment.

While there is no comparable outfit in India, globally all such companies — Macquarie Infrastructure, Transurban (Australia's toll roads), and Fraport Airports — are all valued only on Discounted Cash Flow basis. Also, unlike construction contracts, GMR Infrastructure has unique features including fixed long-term concessions from 20 to 60 years; concession driven and mostly assured revenues with stable cash flows; power capacities already contracted for long periods; road annuities guaranteed irrespective of the traffic; and huge opportunities in developing land built into the road and airport projects.

There is huge amount of upside in the airport business.

The Hyderabad International Airport Project is the best growth driver for GMR, which has to pay only 4 per cent share of revenues as concession fee.

Since Delhi airport is already operational and the Hyderabad airport will be by end of FY-08, from 2008-09, the mix of revenues will be more from airports than from power (85 per cent now) and road (15 per cent).

So the long-term opportunities for non-speculative gains are large from the GMR model.

R. Srinivasan

Chennai

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GMR Infrastructure