MUMBAI: Reliance Infrastructure is looking for buyers for its unit that handles non-metro airport projects, people close to the development told ET.
The company, promoted by billionaire Anil Ambani, has invested about Rs 100 crore in five non-metro, brownfield airport projects in Maharashtra through its subsidiary Reliance Airport Developers Private Ltd (RAPDL). Reliance Infrastructure is now considering selling the business as it has shifted focus to larger projects, the persons, including a civil aviation ministry official, said.
Reliance Infrastructure, which in the past has failed to bag any project for modernisation of the airports at Delhi and Mumbai, has maintained that it will consider bidding as part of an international consortium for larger projects, including those at Nagpur and Pune. Besides, the returns from the non-metro projects have not been as per the company's estimates.
Lalit Jalan, the chief executive officer of Reliance Infrastructure, however, said: "We would not like to comment on market speculation."
Reliance Infrastructure, which in the past has failed to bag any project for modernisation of the airports at Delhi and Mumbai, has maintained that it will consider bidding as part of an international consortium for larger projects, including those at Nagpur and Pune. Besides, the returns from the non-metro projects have not been as per the company's estimates.
Lalit Jalan, the chief executive officer of Reliance Infrastructure, however, said: "We would not like to comment on market speculation."
separate entities with the aim to create value for our shareholders," Jalan said, adding, "We will look at value unlocking in different businesses when the time is right."
Reliance Infrastructure operates regional airports at Nanded, Yavatmal, Baramati, Latur and Osmanabad. The company acquired the lease rights to develop these airports for 95 years from the Maharashtra government for Rs 63 crore. It has since invested about Rs 10 crore in each of the airport for upgradation, people close to the projects said.
Reliance Infrastructure is incurring an expense of Rs 2 crore a month for each of these airports, one of the persons said.
People in the know said the company could seek valuation upwards of 150 crore. "Since the company has invested close to Rs 100 crore and got the airports functional with improved airstrips and ATC towers, along with licences and terminal buildings, RInfra would look for anything between Rs 150 crore and Rs 200 crore," the source said.
Reliance Infrastructure had planned to rope in a private equityplayer for its airports business but has not succeeded so far. Although Jalan denied giving the mandate for a stake sale to any firm, the people quoted earlier said consultancy major KPMG has done a preliminary valuation for the business.
A person familiar with the airports business, who did not wish to be named, said, "The move indicates that RInfra has not been able to develop this business. Infrastructure projects have long gestation period and for meaningful returns to come it takes time. RAPDL wanted quick returns."
In 2010, consultants Louis Berger Group and Knight Frankhad prepared a development plan for the five airports, which, according to Reliance Infrastructure, entailed an investment of about Rs 500 crore till 2014. However, the plan has remained only on paper and the company has not been able to recover operational costs. Among the airports operated by Reliance Infrastructure, Nanded is the only one where scheduled commercial flights operate. GoAir operates 12 flights a week, connecting the pilgrim town to Mumbai and Nagpur. Operations at the airport are driven mainly by fuel sops offered by the Maharashtra government. Budget airline SpiceJet now plans to withdraw flights from Nanded due to poor load. The other airports operated by RAPL receive only small private aircraft and helicopters.
Reliance Infrastructure reported a 2 per cent rise in consolidated net profit for the first quarter of the current fiscal at Rs 412 crore. Its consolidated income was up 4 per cent at Rs 5,383 crore.
Reliance Infrastructure operates regional airports at Nanded, Yavatmal, Baramati, Latur and Osmanabad. The company acquired the lease rights to develop these airports for 95 years from the Maharashtra government for Rs 63 crore. It has since invested about Rs 10 crore in each of the airport for upgradation, people close to the projects said.
Reliance Infrastructure is incurring an expense of Rs 2 crore a month for each of these airports, one of the persons said.
People in the know said the company could seek valuation upwards of 150 crore. "Since the company has invested close to Rs 100 crore and got the airports functional with improved airstrips and ATC towers, along with licences and terminal buildings, RInfra would look for anything between Rs 150 crore and Rs 200 crore," the source said.
Reliance Infrastructure had planned to rope in a private equityplayer for its airports business but has not succeeded so far. Although Jalan denied giving the mandate for a stake sale to any firm, the people quoted earlier said consultancy major KPMG has done a preliminary valuation for the business.
A person familiar with the airports business, who did not wish to be named, said, "The move indicates that RInfra has not been able to develop this business. Infrastructure projects have long gestation period and for meaningful returns to come it takes time. RAPDL wanted quick returns."
In 2010, consultants Louis Berger Group and Knight Frankhad prepared a development plan for the five airports, which, according to Reliance Infrastructure, entailed an investment of about Rs 500 crore till 2014. However, the plan has remained only on paper and the company has not been able to recover operational costs. Among the airports operated by Reliance Infrastructure, Nanded is the only one where scheduled commercial flights operate. GoAir operates 12 flights a week, connecting the pilgrim town to Mumbai and Nagpur. Operations at the airport are driven mainly by fuel sops offered by the Maharashtra government. Budget airline SpiceJet now plans to withdraw flights from Nanded due to poor load. The other airports operated by RAPL receive only small private aircraft and helicopters.
Reliance Infrastructure reported a 2 per cent rise in consolidated net profit for the first quarter of the current fiscal at Rs 412 crore. Its consolidated income was up 4 per cent at Rs 5,383 crore.
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