Q1 21/22

Aug 14, 2021

Ladies and gentlemen, good day and welcome to GMR Infrastructure Limited conference call to discuss Q1 FY 2022 results. As a reminder, all participant lines will be in the listen only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. We have with us today Mr. Saurabh Chawla, Executive Director of Finance and Strategy. Before we begin, I would like to state that some of the statements made in today's discussion may be forward-looking in nature and may involve risks and uncertainties. Recording or transcribing of this call without prior permission of the management is strictly prohibited. I now hand over the conference to Mr. Saurabh Chawla for the opening remarks. Thank you, and over to you, sir. Thank you. Good afternoon, ladies and gentlemen. I welcome you all to the 1st quarter FY 2022 earnings call. I hope everyone on the call and their families are safe. As you know, India's economy, which was showing signs of early recovery until early 2021, after the 1st COVID-19 surge, was again hit by a 2nd wave of the pandemic. Most economic activity indicators which peaked in the month of March took a hit again during April and May. However, after peaking in mid-May, the 2nd wave conditions have abated faster than we all anticipated. COVID daily cases are now significantly down from the 2nd wave peak of 4 lakh cases a day to under 40,000 cases a day today. Given these conditions, our focus continues to be on, firstly, to ensure safety and welfare of our employees. We launched workplace vaccination centers in our offices for accelerated vaccination of all employees and their immediate family members. We continue to operate a war room to assist employees and family members with hospitalization, especially at the time of shortage of hospital beds. We ensured that adequate liquidity was always maintained in our operations. We completed offerings of non-convertible debentures at Delhi Airport and raised about INR 3,257 crore. The proceeds of the NCDs were utilized to refinance the outstanding debt of about $289 million due in fiscal year 2022 and to partly finance the phase 3A expansion. We completed the financial closure of Goa for a CapEx of a new greenfield airport, international airport, amounting to about INR 27 billion, INR 26 billion. We also completed divestment of the Kakinada Special Investment Region and have received the 1st tranche of consideration of INR 1,692 crores out of the total consideration of INR 2,719 crores. Additionally, about INR 1,027 crores is to be received in the next 2 to 3 years, which is contingent upon certain agreed milestones. As part of the agreement, 51% equity stake held in Kakinada SEZ through GMR SEZ and Port Holdings Limited is divested to Aurobindo Realty and Infrastructure Private Limited. Thirdly, we initiated cost-saving measures, mainly through consolidation and reopening of terminals as per the demand-supply dynamics. Due to 2nd wave, we closed terminal 2 in May 2021, which was reopened in October 2020, post the 1st wave of the COVID-19. However, as we speak right now, it has again been reopened in July as the traffic has recovered substantially since the trough of month of May. Fourthly, our focus continues to be on the completion of CapEx as per schedule. In Delhi, Hyderabad, and Goa airports, 47%, 62%, and 35% of overall progress has been achieved respectively as on July 31st, 2021. Lastly, and very importantly, we've been taking proactive steps to expedite activities for completion of the demerger within fiscal year 2022. In this regard, process for obtaining requisite approvals from the relevant stakeholders, especially the financial and operational creditors, were initiated. I'm happy to announce the approvals for the demerger from majority of the financial creditors is now in place. We just await the judicial process to be concluded by the NCLT to formally record the approvals from the financial creditors and shareholders in a NCLT convened meeting. Coming to the business front, GMR's businesses, which have been impacted by the lockdown measures of the government due to the second surge of COVID, is on a recovery path. I want to talk first on the airport business. The second wave of COVID significantly impacted traffic at our operation airports, bringing the domestic passenger numbers down to 20% of peak COVID levels in this May from a level of 70%. However, traffic has now recovered and has reached near post-first wave heights. To give you some perspective on airports performance, let me speak on how Delhi Airport is performing. Since reopening in May 2020, Delhi Airport daily average passenger peaked in February of 2021, when domestic and international traffic reached 71% and 31% of pre-COVID levels respectively. In May 2021, domestic and international traffic of passengers declined to 19% and 11%. As COVID cases subsided, domestic and international traffic has turned around and has reached a level of 67% and 21% during the week ended August 8th, 2021. Trend was similar for Hyderabad Airport as the domestic and international traffic peaked at 72% and 29% of pre-COVID level in February 2021, and declined to 18% and 10% respectively in May 2021, and now has quickly increased back to 67% and 19% during the week ended August 8th, 2021. Indian Airport traffic is supported mainly by the visiting friends and relatives, which contribute to almost 50% of total domestic passenger traffic. Whereas leisure travel has contributed between 20%-25%. The quick turnaround and surge in traffic is encouraging considering Government of India imposed curb on the capacity of airlines at 50% from June 2021, which was later revised to 65% from July 5th, and as on date, this has now gone up to 72.5%. Cargo business continues to be resilient and was not impacted much by the second wave, with the traffic at above 85% of pre-COVID level for both Delhi and Hyderabad airports. We expect traffic to gain further momentum with the reducing trend in COVID cases, lifting of government restrictions on airline capacity, and the increased pace of vaccination. India's daily new COVID cases remain stable and low while vaccination is picking up pace. About 52 crore vaccine doses have already been administered as on August 11, 2021 in India. Metro cities, which are core to our businesses, have recorded much higher vaccine coverage than the India average. Going forward, speed of vaccination is set to improve due to increased production of Covishield and COVAXIN vaccines. Additionally, rollout of Sputnik V and Johnson & Johnson doses will further strengthen vaccination program. The Government of India is working on vaccinating all citizens by December end of 2021. When I say vaccinating all citizens, I mean double doses wherever required. Globally, too, countries have resorted to fast vaccination measures to unlock economy, which will provide further boost to international traffic. Globally, about 450 crore vaccine doses have been administered so far. The effect of vaccination in other countries can also be seen from the fact that July 2021 was the busiest month for Britain's Heathrow Airport since March 2020, as the passenger numbers surged to about 1.2 million as travel restrictions were eased. Only this morning, U.K. has increased flights from India to 34 a week. Air bubbles arrangement will continue for the next few months, aiding the recovery of international traffic. Currently, air bubbles arrangements are with 28 nations, including U.S.A., U.K., Canada, Germany, France, et cetera. During COVID second wave, most nations had banned entry of Indian travelers. Post moderation of the second wave, various countries, including Netherlands, United Arab Emirates, U.S., U.K., Qatar, Germany, Lebanon, Maldives, France, Spain, and Cambodia, have lifted now ban on the Indian travelers. Additional driver for traffic is also expected to be fleet addition by major Indian airlines and entry of new airlines, including Jet Airways, which will aid expansion of the operating capacity. Media sources indicate that 4 entities, SNV Aviation, Turbo Megha Airways, Jet Freight Logistics, and SpiceXpress and Logistics, have applied for NOCs from the Ministry of Civil Aviation to start scheduled air passenger services and air cargo services. Market expansion from entry of new airlines suggests significantly higher potential for traffic growth in India. Based on all these key factors, we anticipate a return to pre-COVID level of traffic in our Indian airports by end of fiscal year 2022, driven primarily by the domestic segment. Coming to other sources of revenues for our airport business, CPD, for example, even during the ongoing pandemic, we were successful in monetizing land at the Hyderabad airport. Boston Living, an incubation venture of INCOR, signed definitive agreements with GMR Hyderabad to develop co-living and serviced residences. As part of agreement, GMR AeroCity Hyderabad will lease land to Boston Living to develop 0.5 million sq ft space. During quarter one of this fiscal year, we also executed industrial partnership with Groupe ADP, our 49% shareholders in the airport platform, demonstrating our intent to cooperate with each other with a shared global vision for the airport sector. This marks a new significant step to build the world's largest airport alliance to welcome passengers and leverage both groups' expertise to continuously improve operations. This industrial partnership allow us to systematically explore and seize the opportunities to design the future of our industry with the ambition to set the highest standards in terms of performance, operations, hospitality, and sustainability. I would like to highlight a notable development in the airport sector. Airports Economic Regulatory Authority of India Bill 2021 was recently passed in the Parliament. The bill amends the definition of major airport allowing tariff determination of group of airports. It would help encourage the development of smaller airports. This approach would help in the development of more airports through the PPP route, thus expanding the air connectivity to relatively remote and far-flung areas. We expect the bid opportunities to gain momentum in India due to this bill. On the energy business, power demand and coal supply are improving as the lockdown is easing up. In our power plant in Kamalanga, it clocked the best operational performance in Q1 fiscal year 2022 with a PLF of 83%. However, in July, the PLF was marginally down at 77%, basically impacted due to the maintenance of unit 1. In the Warora plant, the PLF of 54% in quarter one was impacted by lower supply of linkage coal from mines, lower rates on the exchange, and delayed realization from the SPPs. Our PLF in July 2021 improved to 67% due to improvement in the rates on the exchange and greater availability of coal. On Kamalanga, we have received a favorable order from APTEL. As per the APTEL order passed on August 6th, 2021, all the amounts due and payable to Kamalanga by Bihar PPA due to various changes in law events shall be paid along with the carrying costs in accordance with law within six weeks from August 6th, 2021. Kamalanga is entitled to recover expenditure involved in the procurement of alternate coal due to shortfall in domestic coal supply corresponding to scheduled generation pertaining to Bihar PPA, thereby restoring Kamalanga to the same economic position as before, as if there was no change in law event had occurred. PT GEMS, our investment in this Indonesian coal mining company, was able to showcase its strength despite COVID by reporting sales growth of 4% year-on-year and EBITDA margin of $14.6 per ton for quarter 1 fiscal year 2022. This is primarily driven by 16% year-on-year increase in realization. Per ton cost reduced by 11% year-on-year to $26.5 per ton in the quarter 1. This quarter has been significant due to the following. It is the best quarter in PT GEMS history in terms of PBT. It generated about $129 million. Highest coal production in a quarter since inception, despite adverse weather conditions. Robust EBITDA margins of $136 million, which is almost $14.6 per ton. Finally, a final dividend for calendar year 2020 of $75 million was declared in May 2021. Additionally, an interim dividend for calendar year 2021 of $75 million was declared in April of this year. The market prices of coal continues to be bullish with increased demand from China, which is reflected by PT GEMS profitability for the period. The market prices are expected to be in the current range for the next few months, as the spat between China and Australia is not coming to any resolution as we speak. Thermal coal continues and remains to be an important source of fuel for developing countries in Asia, and our business will remain well-positioned to benefit from this growing demand in the emerging markets. On the highway business, Hyderabad Vijayawada Expressway traffic increased by 61% year-on-year to 8.4 million vehicles during April 2021 to June 2021. Per day average volume decreased by 36% month-on-month in the month of May due to the lockdown, but bounced back by 30% month-on-month in June 2021 and 24% in July 2021 as the lockdowns were eased. Toll at Ambala-Chandigarh Expressway has been suspended since October 12th due to the farmer agitation. In this regard, GMR Ambala Chandigarh Expressway has declared a force majeure event under the concession agreement and has notified NHAI. As per the concession agreement, GMR Ambala Chandigarh Expressway is entitled to compensation for this force majeure event by way of extension in the concession period, reimbursement of O&M costs, et cetera. Claim for force majeure up to March 2021 has been filed by us. On the status of arbitration award on Hyderabad Vijayawada project, an independent expert appointed by the sole arbitrator has submitted his report on the quantification of claims. Arguments will be made from September 22nd for finalization of the claim amount. As for the management expectation, based on external legal opinions and valuation performed by independent experts, the recoverable amounts are in excess of INR 1,900 crores as at March 31st, 2021. On the dedicated freight corridor project, the construction work is picking up pace. As you know, GMR, along with its partner, SEW Infra, have been executing an EPC contract to construct a part of the eastern freight corridor, that is 181 km of Mughalsarai to New Karachana in U.P., and 236 km of New Karachana to New Bhaupur U.P. lines. Around 74% of package 201 and around 80% of package 202 has been completed. I would also like to briefly touch on the best practices and recognitions received by GMR Group on the ESG front. On the airports front, Delhi Airport received the Platinum Recognition in the Green Airports run by ACI Asia Pacific in over 25 million passenger category. It has been adjudged the best regional airport in India and Central Asia for the third consecutive year in 2021 by Skytrax. It is bestowed with the COVID-19 Airport Excellence Award for providing exemplary safety protocols during the global pandemic, making it the only airport in India to be described this category. Hyderabad Airport received ACI Asia Pacific Green Airports Gold Recognition in 2021 and adjudged the best regional airport in India and Central Asia by Skytrax. It also bagged the third rank as the cleanest airport in India and Central Asia category, fourth in the best airport staff in India and Central Asia, and sixth rank in the best regional airports in Asia category by Skytrax. Hyderabad Airport has also commissioned its 2nd 5-megawatt solar power plant in July 2021. On the energy business front, some of the safety performance highlights were Kamalanga plant's Lost Time Injury Frequency Rate, which is LTIFR, and Lost Time Injury Severity Rate, which is LTISR, of 0.00 in quarter one FY 2022. The same was achieved at the Warora plant for this particular quarter. In PT GEMS, corporate social and environmental responsibility programs are constantly aligned with the seven core subjects of ISO 26000 and support the UN Sustainable Development Goals. PT GEMS, through its subsidiaries, has won several awards certifications in the field of environmental management, which include green rating for PROPER to PT Borneo Indobara from Ministry of Environment and Forestry for achievement and performance in the field of management and monitoring of mining environment of subsidiaries for the period 2018 to 2020. Blue rating for PROPER to PT Kuang Tsing Inti Makmur from the Ministry of Environment and Forestry for the achievement of performance in the field of management and monitoring of mining environment of subsidiaries for the period 2018 to 2020. The presentation which we have sent to you with all the financial numbers are available with you. If not, you can download it from our IR section on our website. We are available to respond to your questions on this call and offline, post the call. Now I would like to open the forum where my colleagues from the corporate and the businesses can answer your queries. Thank you so much. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the attached phone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Reminder to the participants, anyone who wishes to ask a question may press star and one at this time. The first question is from the line of Mohit Kumar from DAM Capital. Please go ahead. Yeah. Good evening, sir, and congratulations on raising money, especially your financial close at Goa and raising ANCs at Delhi Airport. Of course, a very tough and challenging environment for us. My first question is, sir, on the rephasing of projects at DIAL and GIAL you mentioned in the PPT. Sir, can you just let me know the new commissioning deadline for DIAL and GIAL? GBS Raju, go ahead and take it, please. Yeah. As far as the DIAL is concerned, we have originally planned in April 2022, which has been last year itself we have shifted to June 2022. Because of the 2023 second wave, we expect to be by September 2023, as far as the DIAL is concerned. Hyderabad is getting closed by December 2022. Goa is August 2032. August 2022? Yeah. Okay. Sir, again, given that we are coming very close to demerger, is there a broad understanding between the financial creditors on the way our balance sheet will look like, and when can we expect it to be made public, in the sense we as an analyst community could see it? Well, you're right. There is an agreement in place, and their understanding is much better. Based on that understanding, they have given their in-principle approval for the demerger to go through. If you look at on our IR website, there is a kind of a pro forma balance sheets of both the demerged entity and the original entity available there. That's still a pro forma one. Because as debt reduces, these numbers will continue to change. Any capital raise that happens, these numbers will subject to change. There is a general pro forma guidance that is already given there. Sir, lastly, on the corporate debt, which was $45 billion at the end of June 2021, we have received $17 billion from Kakinada land parcel. I'm guessing it's post June 2021. Has this money been used to reduce the corporate debt further? Is my understanding right? Some part of it has been used for reduction of corporate debt, and some part has been used for investment in some of our projects which are under development. For example, the Bajoli Holi project of ours, the hydro project, required some further investment from the corporate. It's a multitude of end use that has been affected on the sale proceeds of Kakinada as well. Understood, sir. Thank you, and best of luck, sir. Thank you. Thank you. The next question is from the line of Abhiram Iyer from Deutsche CIBC Centre. Please go ahead. Hello, can you hear me? Yes, we can hear you. First of all, congratulations on the good set of results despite the pandemic. My questions are 3-fold, primarily related to the Delhi airport. 1 is, can you give a bit more details on the Bharti deal, how it has sort of progressed from where we had the discussion last time around. I don't think there's been no specific update on movement since the last call. The 2nd is, when would we expect the cash from the Bharti deal to then come in and sort of alleviate the balance sheet? Cash has gone down for Delhi International Airport while repayments upcoming and CapEx requirements are obviously still on. Is there any specific funding plan for the Delhi airport as well? Could you just elaborate on that? I'll leave the detailed answer to be given by JK garu, but just generally the deal with Bharti is on. There were certain delays because of certain approvals that were yet to be received, which have now been received, and the cash flow from Bharti is expected to kick in imminently very, very soon. JK garu, if you want to highlight any other aspect of it on the questions. I think we are expecting Bharti deal shortly. As far as the DIAL funding plan is concerned, the total project cost has already been tied up through debt what we have raised and also internal cash, and we have also had a lease financing. As of now, once the Bharti money also is a part of our expansion cash, once the Bharti money is received and lease financing is tied up, we may not need right now any further cash for expansion. We are looking into further details because of the delay of the project by 1 year, 3, 6 months. There may be an increase in interest during construction. To that extent, we may have to tie it up. Right now we are not looking into that, but we may look it up after about 6 months. Got it, sir. Good to know. Just one last question. There was a hearing on the AAI arbitration with respect to the fees due to the AAI, which we are obviously contesting on the force majeure. Has there been any update, and when would be the next hearing? The case was heard on 11th August. AAI has raised certain points, but the court has adjourned the case, the division bench to 17th September 2021, and the single judge case is posted to 28th September 2021. Got it, sir. Thank you very much for the clarification. Thanks. On the line of Atul Tiwari from Citigroup. Please go ahead. Thanks a lot, sir. One more question on the corporate level debt and other liabilities. After the receipt of this money from Kakinada ACA sale, how much is our corporate debt left as of June, broadly? As far as the corporate debt is concerned, as of June, the corporate debt is close to INR 4,500 crore. If you look at in March, was about INR 4,600 crore. There's a reduction of corporate debt. That reduction, what just now Saurabh also mentioned was because we received some money from the Kakinada, that money was used to repay our corporate debt. Corporate debt as of June is INR 4,500 crore. Okay. This Kakinada money has come in after June, right? That has reduced the corporate debt further, right? Yes. Okay. Has there been a substantial reduction from that INR 17 billion that came? Any idea about how much of that was used to pay down the corporate debt? If you see this money was coming over a period of time, we had received major portion by March itself. By March, a major portion was utilized for debt payment and other activities, which was highlighted. From March till June, in Q1 we received ₹130 crores. The total amount was used to repay our corporate debt. Okay. After June, there has not been much of a reduction, right? Like between June and August. Right? It has broadly been the same level, because I thought that a bunch of that money came in August and July. That's not right. Right? The numbers is as of June, not August. Okay. The second very broad question is, now that we are very close to the demerger, and if I look through notes to accounts, obviously the holding company has given corporate guarantees for energy assets as well, some debt and some different shares, et cetera. What is the total corporate guarantee and what is the understanding with the lenders on that issue? Will that corporate guarantee be crystallized, or how do you plan to take care of it? Will going ahead, the new airport entity continue to have that corporate guarantee on the balance sheet? Yeah. In some cases there will be continuing corporate guarantee. It is not going to crystallize because the agreement is already there in place. The underlying assets continue to service those debts, right. As those debts come off, obviously, we will be working towards reducing those limited corporate guarantees that will continue. That is the way forward. That is what has been agreed as a path with the lenders, and based on that is where in principle approvals are in place. Just for example, those assets where because of lack of fuel, like for example Rajahmundry, et cetera, which have about INR 2,000 crores of corporate guarantees. If that corporate guarantee remains on the books of the airport entity, then what happens to that? Is that asset servicing debt? If it is not, then what happens? Obviously, if we are unable to service the debt, the legal position will remain that the corporate, whichever is holding that guarantee, which is given that guarantee, will be liable to pay. As I said, other than 1 or 2, which we just now mentioned, Rajahmundry 1, which is not an operating asset as of now. That corporate guarantee is continuing. We expect that gas to start to flow. If you look at all the announcements, we have also gone to the courts that the gas should be now allocated to us. As soon as these gas plants start generating energy, electricity, obviously they will start to service their debt and there will be a dilution in the corporate guarantee going forward. Okay, got it. Thank you. Thank you. The next question is from the line of Rushabh Sharedalal from Pravin Ratilal Share and Stock Brokers. Please go ahead. Yeah. The first question is on the annual fee front that we had to pay to Airports Authority of India. This time around, we have not recorded them in our books of accounts. If we were to record them in our books of accounts, what would that amount be? GRK, right? Yeah. The amount that we have not recorded in the current quarter is about ₹201 crores. The previous quarter is about ₹336 crores. Okay. On an annual basis, would this amount be like ₹800-₹1,000 crores that we were to pay to AA? Yeah, it depends upon the total turnover of the company. Yes. The last year the total amount was about ₹750 crores. If this year the traffic goes up and the business is good, it could be around ₹800-₹900 crores. The second question is on the Delhi Airport front. We have a lot of land parcel around the Delhi Airport, and as a company, we also plan to utilize that land. How much land are we going to sell in this quarter to properly utilize it? There is no plan to sell any land in Delhi Airport during this quarter or this fiscal year. Last year itself or actually last fiscal year, we had already, through an auction mechanism, monetized development FSI of about 10 million sq ft in two different phases, 5 million in first phase and 5 million in second phase. In that open auction, Bharti was the best bidder. They have the right at this stage to build out commercial spaces in Delhi Aerocity. During this year or going forward on an immediate basis, we have no plans to further monetize any of the land parcels that we keep in Delhi Airport. There may be one land parcel, which is Silver Resorts, which we have taken back in hospitality district. Yeah, that's more of a adjustment. You're right. Please highlight that. Yes. There is another five acres of the land, which was taken back from the Silver Resorts because they did not pay the fees. Through a court process, we have taken back that land parcel. That is likely to come back to the market in this financial year. Maybe, we are looking for another four or five acres of monetization before the 12th. That is what as of today's plan. Okay. One more question on the demerger plan. We have admitted, the scheme has been filed with NCLT on 5th of March, but when is the next hearing date for NCLT? Why don't you announce such dates as your corporate announcements on BSE and NSE as a part of good corporate governance? Honestly speaking, the date has not been announced by NCLT, so how can I announce it on the NSE and BSE? Okay. No. I was just asking. in your presentation, you do mention that you expect to even receive the order by the end of Q3 FY 2022. I am sure that, presently we are in Q2 FY 2022, so maybe we are expecting a date to come very soon, or are we not? Yes, we are expecting a date to come very soon. As soon as that date is announced, we will be informing the stock exchanges. There is no two ways about it. We have to go as per the pleasure of a judicial court. I cannot predict and presuppose what date they are going to announce. We are pursuing the matter. We have filed application with NCLT for an expeditious hearing. They have agreed to hear it on an expeditious basis. Hopefully, I think next week, there will be some movement by the court to give us an appointed date. As soon as we get it, we will surely let the markets know. Okay. Fair enough. Just one last question on the Kamalanga order that you received on the 6th of August. What is it exactly about, and what is the expected amount that we would receive from that? Ashish, do you want to say it, sir? Basically, this order is regarding full cost pass through. As you would know, whole India had shortage in coal supply. There was a presidential directive long back saying if shortage in supply is there and the power producers to meet the CPA requirement have to buy coal from the market, the incremental coal cost will be passed through. While in our case, there was this added aspect that we had the share of a captive coal mine, which also got canceled. While we got an order, the cost of coal incurred to bridge the gap of this captive coal mine supply not coming was not cleared by CERC. It's a wrong interpretation of an APTEL order. APTEL had laid down the principle, CERC have interpreted it differently. We challenged that. APTEL has upheld our challenge, which means that we would be able to get reimbursed the entire coal cost differential, including the carrying cost. This has already been booked in revenue. The impact would be on the cash flow. In terms of amount, while it is being reconciled, it will be INR 150 crore plus. Okay. We do expect to receive INR 150 crores from this order. Is my understanding correct? Yes. That's very correct. INR 150 crore plus. Okay. Just one last follow-up on the annual fee portion of the INR 200 crore that you said that we have saved by not providing in the books of accounts. You do mention on your slide 18 of the investor presentation that we use the cash thus conserved for additional resources for the current operation. Where is this INR 200 crore being exactly used? If you can just highlight some points on that. The funds are being used. We have not kept anything separately, all the funds. Whatever amount of collections that we have, the entire amount has been utilized for our operations only. There is no specific head that has been used, but entire cash has been used for our operations. Okay. Thank you, and all the best. Thank you. The next question is from the line of Apoorva Bahadur from Investec. Please go ahead. Hi. Thank you for the opportunity. Sir, wanted to understand a couple of things. Firstly, I believe, as part of our deal with ADP, we were supposed to receive INR 10 billion as earn-outs on achieving EBITDA milestones. Based on this FY 2022 run rate so far, do we expect to meet this milestone for the year and receive the due amount? Yeah. We are expected to get about INR 1,060 crores in totality as cash run-outs. This is divided into 3 years. We will not get the full INR 1,060 crores this year if we achieve those milestones. Every year it will be tested with the EBITDA that is achieved for that respective year, and then the earn-out will be determined. As on date, we expect a part of that earn-out to come based on the current trend lines that we have for this current fiscal year. Okay. This trend line is existing for the amount which is under litigation for the AAI. Am I correct? Again, if you can restate the question. What I meant is in the unfortunate event, if we do not get that AAI litigation our way. Currently, we are not booking a part of the revenue share. Okay. If we have to reverse that, even then, are we eligible for the earn-out? We have to test it at that particular point of time. As on date, yes, as I said, even if we were to adjust that, we will achieve our run-out. We really cannot give a full guidance because there is always a possibility of a third wave and some impact coming to play. A little uncertainty over there. In our belief with respect to our litigation on the force majeure, we are on a very strong footing. I would urge you to read the OMDA. The OMDA very clearly states that it is at the election of the concession entity. It is not dependent upon an agreement that is to be agreed by the government or by the regulator or AAI over here. It is at this election and purely from any judicial stance, the defense that is being put up by Airports Authority is not great at law. Yes, we can't decide for any other authority or a judicial authority. As and when that decision comes, it will be clear at that particular point of time. Right. Sorry. I also want to highlight. You see, last year, the government itself had declared force majeure conditions. Right? After declaring force majeure conditions, they cannot go back on their own declaration. I just wanted to highlight that aspect also. No, makes sense. When during the year is this cash expected to be approved from cash earn-out? Typically, I believe it will be at the end of the year, FY 2022. Yes, it will be at the end of the fiscal year. The accounts will be drawn up. EBITDA levels that have been agreed will be tested, then that earn-out, which is accrued for that particular year, will be paid out. It is also a range. It is not digitally zero and one. If it is within that range, and let's say you achieve 70% within that range, you will get 70% of the cash that is supposed to accrue to you. Okay. Currently you are meeting the 100% requirement? Currently we are, but let's keep our fingers crossed. Fingers crossed. Yeah. That we are currently primarily meeting because of the map dispensation. Right. Sir, on the AAI front, how much is the total amount which is under litigation? I believe INR 200 odd crores this quarter, INR 330 previous one, I think it was INR 400, I think INR 1,000 odd crores? No. Till June it is about INR 537 crores. July and August all put together, maybe around INR 700 crores. Okay. Fine. You mentioned that at Hyderabad we have entered into a realty agreement with Boston Living. Can you share how much should be the recurring income from this? It is a license-free concept where the airport operator will get our money in upfront. The valuations, I don't have exact number. We can get you that. Otherwise, on year-over-year basis, it will be a nominal increase. Okay. It will be an upfront payment. Okay, got it. Yeah. Yes. Fine. Sir, I also wanted to know on this PT GEMS is doing quite well over there. Obviously, the robust support is very strong. We have roughly around $150 million in dividends over the last year in this financial. How do we intend to use that cash, and where can we use that cash? Can we bring it to India? I mean, dividend tax is quite high if I'm not wrong. The investment in PT GEMS was also a leverage investment. We had taken an offshore loan, or our subsidiary offshore had taken a loan to put that investment. It was almost $500 million. Today, that number is down to about $250 million. Primarily, all the dividend proceeds that come are going towards servicing the interest and principal payments of that loan. That's the current usage. We expect, given the trend lines that we see and the agreement with our majority partner there is to maximize dividend flows to both the shareholders. We expect that actually surplus cash to start accruing to us in next two to two and a half years. We are also working towards actually refinancing that loan, to see if we can term out that liability through an an international bond issuance that we are trying to evaluate. Nothing concrete right now, that is something that, given the current momentum in the debt capital markets all over the world, can we do something of that kind? That is also under evaluation. If we succeed in that, then there'll be a decent flow of dividends coming back to the corporate. It's a very valuable asset, PT GEMS, as an investment, and we feel quite good. We had been patient for its performance to start flourishing, and as you see now for last 12-18 months, we can see very good trend lines. These trend lines are, honestly speaking, will continue to improve given the demand that we have from China and other emerging markets, developing markets, and also the spat between China and Australia, where China is not procuring its contracted supplies from Australia. Given these trend lines, there is buoyancy as far as this business is concerned. Right. Sir, if I'm not wrong, we were looking to monetize this in last quarter. Any progress on that? No progress as of now. We always are open to any suggestions, any offers, but nothing concrete as of now so far. Okay, got it. One last question, if I may, and this is on the government's cap on air capacity. If there were to be no cap, how do you see the recovery emerging? Oh, it will be much faster. It will be much faster if there is no cap on capacity and there is no cap on pricing. You see, that will allow more aircrafts to fly. ATMs will go up. Dynamic pricing, people will of course seek the best price. People who plan well in advance will pay a reasonable amount, people who are last-minute travelers will pay a higher amount. I think while the government has opened up capacity, bringing it up to about, what are we, 72.5%, I think personally our take is that they should remove the cap on the capacity. Okay. Right, sir. Thank you so much. All the best. Thank you. The next question is from the line of Sreemant Dudhoria from Sree Capital. Please go ahead. Yes. Am I clearly audible? Yes. Thanks for giving this opportunity. This question is regarding progress in Goa airport. As per earlier communication, you mentioned that the Goa airport is ready to be scheduled by August 2022. As per your latest presentation, there is only 1% progress each month from May to June and then to July. That is from 33% to 34% and then to 35%. Still 65% is pending. Are we on track to complete it in the next 12 months? VRK, do you want to highlight about the monsoons in Goa? Can you repeat? Yes, I hope you know that the intensity of monsoons in Goa is quite high. Yes, I am. Yes. During this period of time, usually you do not have much progression on the construction activity. Okay. As soon as the monsoon starts to subside, then the construction activity will pick up. Yeah. Thanks for the clarification. My second question is, we have approximately 1,700 acres of land in Hyderabad and Delhi Airport. If I'm not wrong, we're operating these airports from around 10 to 15 years. You mean to say that this land is vacant for 15 years without utilizing, and then the land lease is going to expire by 2068? Means we wasted 15 years of time. Is my understanding right? Your understanding is absolutely wrong. You're absolutely right from the time aspect of it. We have another 50-55 years to monetize the land and earn these rentals from it. Real estate is not a commodity business. Real estate is a business where you have to work hard to make the land mature before you start to monetize, and it takes time to create mature parcels of land. That's why these are very long cycle businesses. Investors who really make big money in real estate are not public market investors because they are on the very short end of it. They look at only the next few quarters of earnings. When the asset matures, then it makes great sense for them. Private investors make much more money because they have patient capital to look at 4-5 years tenure on any real estate development. As we speak now, our strategy was more as a landlord in Delhi. We leased out the land and earned lease rentals out of it. Now that land has matured, hence in the next round of monetization, we're seeing much compelling values coming to Delhi Airport. To Hyderabad Airport, although Hyderabad Airport is still behind the curve as far as creating a mature land parcel over there. Delhi is slightly ahead. In next 10 years' time, we will see most of these land parcels being fully developed, that's where the next trend line of your earning of lease rentals will really kick in large quantities. Okay. Thanks for this. My third question is, during GMR and ADP deals, if I'm not wrong, in one of our investor presentation, you mentioned that ADP has access of getting loans at a rate of 1%, and subsequently they will also get access to cheaper funds. Why are we still raising capital at high interest rates? Well, I'm sure you also know that ADP is also an airport operating entity, correct? Their airports, especially their main airports in France, are also shut down during the current pandemic. In these circumstances, no management will give out loans when their own house is burning. First they will stabilize their own businesses and then look at expanding or allocating more capital to their other businesses or subsidiaries or joint ventures. As on date, if you look at last whole year of ADP, they were at a much worse position. They also had to raise substantial amounts of capital in the debt capital markets. I think if my memory corrects me is right, they have raised almost EUR 5 odd billion from international capital markets just to maintain their own liquidity levels in shut down airports. Right? Would, as a management, they give out a loan when they themselves in need of liquidity? No. Yes, in normal circumstances, that was an agreement, and we stand by that agreement. If tomorrow, the COVID conditions abate and traffic is rolled out in normal circumstances, our strategic relationship, these agreements that we have with them will be surely let through. Okay. Thanks a lot. Thank you. Ladies and gentlemen, please limit your questions to 2 per participant. Should you have a follow-up question, we would request you to rejoin the question queue. The next question is from the line of Mohit Kumar from DAM Capital. Please go ahead. Thanks for the opportunity. Only one clarification. What is the status of Hyderabad tariff order? Hello? You are clear. Hello? This is the operator, Mr. Babul. Please go ahead. Am I audible? Yes, sir. You are audible. Yes. Okay. As far as Hyderabad is concerned, the consultation paper has already come out. All stakeholders have given their views. We are expecting by end of this month the final tariff order of the Hyderabad. Understood, sir. Thank you. Thank you. The next question is from the line of Atul Tiwari from Citigroup. Please go ahead. Yeah. Thanks a lot, sir, again, for the opportunity to ask the question. Sir, the second part of the question about the corporate guarantee that I wanted to find out was, I did see the pro forma balance sheet on your website. It gives a good idea about the shape of the balance sheet of the airport entity. Any idea about what is the size of corporate guarantee that the airport entity will have given from the non-airport entity. Out of that corporate guarantee, how much is for the assets which are operational, and how much is for the assets which are not operational as of today? I think the right time for that question would be once we have the demerger order, after the court has given full consideration to the petitions made by all the financial creditors. I've given some insight into that there will be some guarantees that will be continuing, like Rajahmundry One. Majority of them will not continue. We have to wait for that period of time for me to give you a much accurate and firm answer on that front. Okay. Thank you. Thank you. The next question is from the line of Apoorva Bahadur from Investec. Please go ahead. Thank you for the opportunity again. Just continuing with the previous question. I am sorry if I am harping on this corporate guarantee thing, just wanted to know this Rajahmundry One guarantee, will this be at the GMR Airport level or will it be at the GIL level? Again, there will be two entities that will be formed in the demerger. One will be GIL and the other will be GPUIL. You will see it on our website and also in our presentation will be two entities that will emerge. Both the entities will be giving the corporate guarantee for any loan that is residing into GPUIL, if it is to be given. Okay? At a point of time, the guarantee from GIL level, which is the airport entity, that will fall off, and that is where we are continuously working with our lenders, so that as the levels of debt comes down, they are able to remove that contingent liability on the airport side of it. Okay? With respect to Rajahmundry, which is what I highlighted earlier, currently it is a plant which is mothballed. It's not an operating plant. As soon as it starts to operate and starts to generate its own cash and reaches a good level of operations, automatically we guarantee. Not automatically, we are in dialogue with the banks from a principal perspective, that that guarantee will then get dropped off and the GPUIL guarantee will continue. These are very early days to talk about specifics. Let the scheme get notified. I can't predict and give you a wrong trend line. I'm just giving you an insight into it. Right. Sure, sir. Very useful. Thanks a lot. Thank you. Ladies and gentlemen, we will take the last question from the line of Rushabh from Pravin Ratilal Share and Stock Brokers. Please go ahead. Yeah. Thanks for the opportunity again. Just one clarification. Correct me if my understanding is wrong, but you said that as far as the case regarding the annual fee to AAI that is pending in Delhi High Court is concerned, you said that the 11th August hearing is adjourned and now it is on the 21st of September. Is my understanding correct? That's correct. Your understanding is correct. Actually, the Delhi High Court in single judge actually have given on 5th January 2021, a stay order from payment of annual fee. On that, Airports Authority of India has gone to the division bench for appeal. That is why the hearing is postponed to the 17th September of 2021. Okay. Just one more question, again, on the annual fee front only. You said that the amount that is under litigation is roughly close to INR 500 crore, and as far as our payment that if an outgo comes, then it will be close to INR 800 crore-INR 1,000 crore. Is it fair to assume that the remaining part of that INR 800 crore, that leaves like INR 250 crore-INR 300 crore, that will come in our books of accounts at a later part of the financial year? See, this annual fee is payable on month-on-month basis, basing on our turnover. That is the 45.99%. What we mentioned was till the last quarter, the amount not paid was about INR 836 crore. The current quarter, June quarter, is about INR 201 crore. Because of the stay that we are having it, we continue not to pay, so the amount continue to accumulate. What will be the final amount depends upon when the case will get closed. Estimate is by March, it could be including the last quarter of the last financial year. This can be around INR 1,000 crore-INR 1,200 crore. Entire amount will be under litigation only, right? If we were to pay, then we'll have to pay full amount, and if we don't have to pay, then we don't have to pay 1 INR. Now is the understanding correct? That's correct. If the case is disposed of. The thing is now Delhi High Court role is limited to stay order only. Simultaneously, there is a tribunal which has already been constituted because it is a dispute that AAI has raised. When we said, as Saurabh has already explained, that under force majeure clause, either of the parties to the agreement is entitled, the word is entitled, to seek waiver of their obligation in case of force majeure. We have sought the waiver, but AAI has agreed that there is a force majeure, but they say they will not agree for a waiver, we will say only the deferment. That is where dispute has started. That dispute has already been referred to a tribunal. Tribunal has already been constituted with a three-member retired Supreme Court judges. They have started hearing already a case. They have already filed our statement of claim and statement of defense already filed by AAI. That is what they will decide final case, whether we are entitled for the waiver or we are entitled for the deferment. Okay. I guess the amount of INR 500 crores is coming from the fact that in the last quarter it was roughly INR 300 crores and this quarter it is INR 200 crores. Under litigation at present it is INR 500 crores, right? Yes. Okay. Thank you very much. Thank you. Thank you. Ladies and gentlemen, that was the last question. I would now like to hand the conference over to Mr. Saurabh Chawla for closing comments. Thank you so much everybody for joining our quarter one call. We are available offline. You have the contact details available with you to reach out to Amit and his team, and any questions that you may have, we can answer them offline. Thank you so much. Be safe. Stay healthy. Thank you. Thank you. Ladies and gentlemen, on behalf of GMR Infrastructure Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.