Key takeaways of the conference call

Consolidated sales of the company for the quarter was up by 8% to 791.92 crore but EBITDA was lower by 17% to Rs 241.01 crore. Hurt further by higher interest and depreciation cost, it was a loss of Rs 281.27 crore at PBT compared to a profit of Rs 0.22 crore in the corresponding previous period. The net profit (after minority interest) was a loss of Rs 209.12 crore compared to a loss of Rs 45.43 crore in the corresponding previous period.

Consolidated sales of Energy holding company for the quarter ended Dec 2014 was Rs 80.18 crore with EBITDA stand at Rs 1.22 crore. The net loss was Rs 66.72 crore. Sales of energy holding company are largely from Jegurupadu Phase I (J1) as the Jegurupaddu Phase II (J2) and Gautami is not operating. J1 was operational with the gas supplied from Oct 21, 2014 to Dec 31, 2014. Sales of J1 was Rs 80.18 crore with EBITDA and net profit being Rs 18.20 crore and Rs 14.70 crore respectively. J2 was currently preserved as there is not gas supply. Thus its sales and EBITDA was zero but its net was a loss of Rs 32.15 crore hurt largely by financial cost of Rs 17.25 crore and depreciation of Rs 12.20 crore. Sales of Gautami was also zero with its net loss being Rs 54.60 crore hurt by financial cost of Rs 26.26 crore and depreciation of Rs 24.79 crore. The cash loss of both J2 and Gautami are Rs 20 crore and Rs 30 crore only.

Transportation: Consolidated sales for the quarter ended Dec 2014 was Rs 76.57 crore and the EBITDA was Rs 52.99 crore. The net loss was about Rs 2.89 crore. The loss is due to debt borrowed at transportation holding company level to fund addition stake acquisition in both airports i.e. MIAL and BIAL. Interest of this debt is debited to P&L thus dragging the bottom-line of transportation vertical. Jaipur Kishangarh Express way performed well with as sales of Rs 76.5 crore (up 11%) for the quarter and its EBITDA stood at Rs 52.99 crore. The net profit was RS 16.78 crore. The traffic of Jaipur Kishangarh Expressway witnessed a growth of 7% for the quarter

Airport Operating Income is Rs 635 crore and the EBITDA was Rs 205 crore profit. But at net level it was a loss of Rs 122 crore dragged down largely by financial charges of Rs 248 crore. Financial charges is due to debt taken at holding company level to acquire additional stakes in both MIAL & BIAL.

MIAL: Sales for the quarter was Rs 601.18 crore and at bottom-line it was a loss of Rs 34.91 crore. But excluding depreciation MIAL registered a cash profit of Rs 90 crore. Loss is due to higher financial charges as Integrated terminal is declared commercial in Feb 2014 and higher depreciation debited to P&L account with Terminal 2 turning commercial.

BIAL: Sales for the quarter stood at Rs 242.72 crore and EBITDA was at Rs 163.77 crore. The net profit was Rs 10 crore. If non-cash items i.e. depreciation of Rs 51.68 crore and deferred tax liability of Rs 56.8 crore is added back the cash profit for the quarter was Rs 120 crore. For the quarter the aeronautic income was up by 67% with increase in traffic & tariff. Similarly the non aeronautic income was up by 27%. The cargo was up by 32%.

Consolidated debt as end of Dec 2014 is Rs 24063 crore.

Aloknanda (or Shrinagar) HEP (330 MW)in Uttarakhand : Construction is over and Cod of unit 1 is on March 7, 2015, Second is on March 15, 2015, third unit is on March 31, 2015 and fourth is by April 2015.

Govindwalsahib TPS (2X270MW) – Completed oil firing and the plant is ready to synchronize on coal. PPA defines fuel as domestic coal and source as Tokisud in Jharkhand. Tokisud the coal excavation has not happened. As the captive coal mine is now cancelled the company has issued force major notices to the contractors to stop work at mines. The Govindwalsahib TPS is issued with shorterm coal supply of 1.2 mln tone and that is enough for synchronization. In e-auction of cancelled coal mines, the company has already submitted bids for both Tokisud (in Jharkhand) and Emelia (in MP) coal mines. If the company gets one of these two coal mines that will be used to fire the Govindwalsahib TPS. In long-term linkage the plant which lost captive coal block and have no tapering linkage will be given preference. So if the bid is not successful the company will apply for long-term linkage.

Ratle HEP (850 MW) in J&K: The work is to recommence shortly.

Project cost in case of Aloknanda HEP and Govndwalsahib TPS is Rs 5686 crore and Rs 4122 crore respectively.

The transportation vertical has one operating road project i.e. Jaipur Kishangarh and two projects i.e. Deoli-Kota, Bagodara-Vasad under implementation. In case of Deoli-Kota road project the work is completed to the extent of 95% and balance is expected to get completed soon. The project will declare commercial operation and start tolling by May 2015 if completion certificate from NHAI is received on time. In case of Bagodara-Vasad the work is completed to the extent of 67%. The work is faced with hurdle in removing temple, utilities etc. The work will restart once that is done.

Equity commitment pending in case of Aloknanda HEP is Rs 66 crore and GovindwalSahib TPS is Rs 110 crore.

Out of Rs 24000 crore of debt most of them are sitting at SPV level and there is no concern on debt at SPV level. But the debt at holding company level is a worrisome for the company and it want to reduce it. The debt at Airport holding company is Rs 3000 crore and that in GVKPIL is Rs 400 crore.

In case of Airport holding company, the company is looking at 2 options. First strategy is to bring in a PE investor. If that is not working out alternatively it looks at Initial Public Offering (IPO). The DRHP is already ready and will be filed with SEBI. If PE investor is not coming in before SEBI approval of DRHP the IPO will be deferred. GVKPIL holds 100% equity in airport holding company. The company looks dilution upto 49%. In case of Debt at GVKPIL, a QIP placement is looked-at to retire the debt in GVKPIL books.

Moreover the company looked at the possibility of selling some assets including Jaipur Kishangarh road project, where the deal fell at last minute. The company restarted its process of looking for suitors for this road project and 2 company have already shown interest and given their termsheets, which is currently studied by the company.

There won't be any capex for MIAL & BIAL after Dec 31, 2015. In MIAL the company is yet to complete apron and aero bridge which are scheduled to be completed by Dec 2015 and June 2015 respectively.

MIAL land monetization: Second tranche is monetized and started discussion for third tranche. The security deposit of Rs 1000 crore is the key thing which will be used to complete the pending capital expenditure projects at MIAL. Not use the monetized amount to reduce the debt at MIAL.

In Airport vertical the company is to pursue the Bali model, which is an operation contract with little capex. The company is one of the shortlisted players in case of Navi Mumbai Greenfield Airport and the company has first right of refusal being the operator of MIAL. To bid for operational contract for Kolkatta, Chennai, Lucknow and Ahmedabad airports, where investment required is pretty low.

Lower interest at MIAL is due to reduction in debt compared to corresponding previous period.

The EMELIA mine is 300 km shorter in distance than Tokisud from Govindwalsahib TPS. The transportation cost is part of variable cost and it is pass through under PPA.