GMR Group will proceed with caution when competing for airports.
GMR Airports Infrastructure Ltd, India’s largest private airport operator, will maintain a conservative approach to bidding for airports put out by the government under the next phase of public-private partnership (PPP).
Despite losing the bids to operate six airports of the Airports Authority of India under PPP, GMR is expected to continue to pursue growth aggressively while maintaining a conservative balance sheet, people aware of the strategy said.
The company had taken a conservative approach in its bid for Jewar airport. The airport company is expected to follow a similar strategy when the government puts up bids for 11-13 airports after the 2024 parliamentary elections.
Zurich Airport International AG won the Jewar bid, and the Adani Group won bids for the six airports—Ahmedabad, Lucknow, Guwahati, Jaipur, Mangalore and Thiruvananthapuram—that were bid out in 2019. The winners were decided based on revenue per passenger paid by the private company, and the Adani group’s offers were much higher than the second-highest bid—it was more than double the second bid in one case.
The bids submitted by the GMR group were 52-84% lower than the bids submitted by the Adani group for the six airports. While GMR Group submitted revenue per passenger of ₹18-85, those submitted by the Adani group were in the range of ₹115-177. Despite aggressive competition from the Adani group, the group is eyeing profitable expansion rather than just size.
“Size is not of importance. Profitability is for the group as the larger strategy is that it wants to be the most profitable large airport operator,” a second official aware of the matter said.
GMR first entered the energy business and evolved into an infrastructure conglomerate interested in energy, highways, and airports.
“The group has learnt lessons the hard way, especially in the energy business wherein the balance sheet was leveraged based on certain assumptions and business outlook. The group does not want to repeat those mistakes in the airport business,” a second person aware of the matter said.
The group is eyeing airport opportunities in India and abroad.
In 2020, Paris-based airport operator ADP purchased a 49% stake in GMR Airports Ltd, a unit of GMR Airports Infrastructure Ltd, with the GMR Group holding the rest. In March, the two partners decided to merge GMR Airports with the group holding company GMR Airports Infrastructure. Once the merger is completed by March 2024, GMR Group will remain the largest stakeholder in the listed entity GMR Airports Infrastructure with a 33.7% stake, while Groupe ADP and the public will hold 32.3% and 34%, respectively.
