Lack of proper business plan to monetise its real estate is expected to bring down the asset value of state-owned Airports Authority of India (AAI). The local arm of global consulting and accounting firm KPMG has estimated the asset of the airport operator in the range of Rs 20,000 to Rs 30,000 crore, nearly one-third of the value claimed by AAI ahead of its listing on the stock exchanges.
?The consultant has estimated the total asset value of AAI at around Rs 20,000-30,000 crore. We had expected the value to be much more than this. Since the airport operator has not presented a solid plan to commercially utilise its huge land bank, the valuation is on the lower side,? an official in the civil aviation ministry told FE.
AAI currently possesses a total land bank of about 45,000 acre across various airports in the country. It has an equity base of Rs 623 crore as on April, 2010. The country’s largest airport operator manages 128 airport in the country, which include 14 international airports, 25 civil enclaves and 8 customs and 81 domestic airports.
?The city-side development of non-metro airports are also not progressing on expected lines. AAI has also not placed a firm plan to enhance its non-aeronautical revenues (earning from activities such as hotel, retail and business complexes) if one compares the same with that of private airport operators. All these factors have an impact on valuation,? the official said.
A KPMG executive, however, declined to comment on the issue. ?We are yet to submit the draft to AAI. We can not share any details,? KPMG director (aerospace and defence) said.
AAI generates about 20% revenue from non-aero activities as against 45% in case of private airports like GMR group-led Delhi International Airport Ltd (DIAL). The private firms have set a target of taking the contribution of non-aero revenue to 70%. AAI decided to go for its asset valuation after civil aviation minister Praful Patel said the government was looking at amending the AAI act to corporatise the airport agency.
?We are also looking at listing the company to gather funds. Many private infrastructure firms, including those involved in the modernisation of airports, are listed companies and have a good standing in the financial market,? Patel had earlier said.
The airport operator is undertaking major expansion and modernisation works involving an investment of Rs 12,434 crore during the ongoing 11th Plan ending March 2012. It needs to raise its equity base to raise more funds for developing 35 non-metro airports besides upgrade of Kolkata and Chennai airports.