GMR to incur heavy losses from Maldives fiasco

Infrastructure company GMR Ltd is likely to incur heavy losses from the cancellation of its contract to develop and run the Male airport. The Indian Development Finance Corp's latest report says that since GMR can no longer accrue profits from the airport in the Maldives, it is revising GMR's net loss estimate to Rs430 crore in 2012-13 from the earlier estimate of Rs350 crore and to Rs370 crore in the next fiscal from Rs160 crore, a CNBC-TV18 report points out.

IDFC adds that GMR will also have to continue to provide for the airport consortium GMIAL's interest liability on its books for some time to come. The blow from the loss of the airport is increased when the cost of the airport to GMR is taken into account.

So far, GMR has made an upfront payment of $78 million to the Maldives government under the concession agreement. In addition, it has paid around $33 million a year for two years, and a fixed cost of $3 million to the Maldivian government since 2010. That works out to a total of $147 million to date.

Sources at GMR say that in the second quarter, the airport's revenues stood at Rs330 crore and since GMR owned 77 per cent of the airport consortium, its share works out to around Rs250 crore. So the full impact of the loss of the airport will be felt in the fourth quarter.

GMR's creditors have already begun pressing for repayment of their loans for the Maldives contract, according to the report.

(Also see: GMR lenders Axis Bank, IOB anxious over recovery and 'Cheated' GMR demands $800 mn from Maldives)