The spotlight for the Rs 16,000 crore Navi Mumbai Airport Project shifts to the GVK led consortium’s capability to raise more funds. The monitoring panel of the Maharashtra government has given a green signal to the financial bid of the group.
With the capacity to hold up 10 million passengers in a year, the first phase of the project is anticipated to need an investment of Rs 5,500 crore. Expected to reach its conclusion in 3 to 4 years, it will be actualized by the Mumbai International Airport Ltd (MIAL, run by the GVK group) with the help of a joint venture. They will have a share of 74 percent in the joint venture and rest will be held up by an agency of the state government, i.e., City and Industrial Development Corporation (CIDCO).
Moreover, as MIAL is deeply submerged in Rs 10,600 crore debt, its contribution towards the fund was earlier seen highly doubtful by some members of the project monitoring committee. Their inability to bridge loan gaps rose the concerns even more. Apparently, monetizing issues MIAL can construct around 194 acres in the periphery of Mumbai airport, out of which it has only been able to monetize a meager 2.5 acres.
Although, the bid for developing another 17 acres has been finalized this year. According to sources, “the development potential of these 17 acres is 0.34 million sq. meters (3.6 mn sq. ft). Bids have been won by construction companies and developers like Ashoka Buildcon, Neelsiddhi, Shrem and Karmvir. The lease rent potential is Rs 130 per sq. ft. per month.”
The credit rating agency, CRISIL said in its May-end report that cash flow from the 17 acres’ land parcels is expected to accrue results in FY18. It also said, “future proceeds would be utilized towards repayment of the securitized loan, as well as towards the airport project. Traction in real estate monetization would be a key rating sensitivity factor.”
In addition, a GVK group spokesperson refrained from a land monetization but noted that the Phase-I project was to be on the lines of the final masterplan with funding coming in through equity contribution by MIAL, CIDCO, and debt. He also added, “MIAL is fully confident of funding the project through its internal sources and debt.” Credit rating agencies, on the other hand, back the view that the companies would be able to raise the funds.