....... r-- » t AIRPORTS AUT HORITY .O ·F IND IA REPORT ON FAIR RATE OF RETURN ON EQUITY , FOR INDiAN AIRPORT SECTOR ; . r ...... . \ ". r> , \ SBI -Capital Market s Limited Stric tly Private & Confidential (A Su bs idi ary of State B ank of In dia) New D elhi Office: 6'HFloor; World Trade Tower, B arakh am b a Lan e, New D el hi - 110001 Office: 202 J Maker Tower 2(Jh Flo01; Cuffe Parade, - 400005 February 2012 .
36
Embed
AIRPORTS AUTHORITY INDIAaera.gov.in/documents/pdf/SBI-CAPS-Report-FROR.pdf · Airports Authority of India ("AAl" or the "Authority") has appointed SBI Capital Markets Limited ("SBI
This document is posted to help you gain knowledge. Please leave a comment to let me know what you think about it! Share it to your friends and learn new things together.
Transcript
.......
r-- » t
AIRPORTS AUTHORITY .O ·F INDIA
REPORT ONFAIR RATE OF RETURN ONEQUITY,
FOR INDiANAIRPORT SECTOR
; . r ...... . \
" .
r> , \
SBI -Capital Markets Limited
Strictly Private & Confidential
(A Subsidiary ofSta te B ank ofIn dia)
New D elhi Office: 6'HFloor; World Trade Tower, B arakham b a Lane, New D elhi - 110001 H~ad Office: 202J Maker T ower 'E~ 2(JhFlo01; Cuffe Parade, M~bai - 400005
February 2012 .
f \
Private & confidential
i . '.-/
, ....~ ...
' ......... /
'-. _'
'-----':
i'-/
.... ..
IMPORTANT NOTICE
Tbis Report contai,iis. proprietary and strictlY confidential i!!f01771ation, wbicb has been prepared l!J SBI Capital Mark ets
Limited (' 'SBICAP'') as per the scope if services under the engagement .letter no ; AAI/CHQ / REV/20 10-11 dated
January 27, 20 12. By acceptinga copy if this Report, the recipient agrees to keep its contents and atry other information, which
is disclosed to such recipiept, co'!fide ntialp~ d shall no!divulge, distribute or disseminate atry information containedherein, inpart
or infull, without theprior written approval qfSBICAP. This Report and information containedherein or atry part qf it does
not constitute or purport to constitute investment advice in publiclY accessible media and should not be printed, reproduced,
transmitted, sold, distributedorpublished ry or on behalfqfthe recipientwithout theprior written approvalfrom SBICAP. The
recipient also agrees to indemnify SBICAR against atry claims. that mqy arise as a result cf a breach qf atry cotifidentialiry
arrangement; u(hich governs the contents qfthis Report.
T his Reporlqnd opinions.c;nta,ined therein have been prepared ry SBICAP, inter alia,- on the basis qf irformation and
documents available in ihepublic domain, data available on internet including datafrom Bloomberg, websites of Bombqy Stock
Exchange, National Stock Exchange, etc.. SBICAP has not carried out atry independent verification f or the accurary ~r
truthfulness or completeness cf the same and.hence, no representation or warranty, express or implied is madethat it is accurate,
authentic, f air, correct or complete. SBICAP or its affiliates or such persons do not accept atry responsibility or liabilityf or atry
such irformation or opinions and therifore, atry liabiliry orresponsibiliry is express(y disclaimed
This Report is for general information purposes onlY, without regard to specific objectives, suitability, fi nancial situations and
needs of atry partioular person and does not constitute atry recommendation, and should not be construedas an offer to sellor tbe
solicitation of an offtr. to buy, purchase or subscribe to atry ~ecu rities mentioned therein, and-neither this Report nor atrything
contained herein sh~/1 f01771 the basts of or berelied uponin connection with atry contract or commitmentwhatsoever. This Repor:
does not solicit any action based on the material contained herein. N othing in these materials is intended ry SBICAP to be
construedas legal, accounting, technical or tax advice. This Report and opinions, if any, contained therein shall in no wqy cast
any responsibility onit a; regard; compliance.with rel;vant statutory rules, regulations andguidelines, etc.
This R'eport constitutes an opinion expressed ry SBICAP and each party concerned bas to draw its own conclusions on making
independent enquiries and verifications and SBICAP cannot be heldliablefor atryfinancial loss incurred l!J anyone based on this
report. Neither SBICA P and its affiliates, nor its directors, emplryees, agents or representatives shall be liablefor atry damages
~hether dirett 'or indirect, incidental, special or consequential including lost revenue or lost pro/its that mt[Y arise from or in
connection with the use of tpis R..eport. Further, ry accepting a copy this Report, the recipient accepts the terms qf this N otice,
tubicb f01771S an integralpart qf this Report and the recipient shall be deemed to have agreed to indemnify SBICAP against atry
claims that mqy be raisedagainN SBICAP asa result qfor in connection with the data and opinionspresentedin this Report.
I?e delivery qfthis Report at any time does not implY that the itiformationin it is correct as qfany time after the date set out on
the cover page hereof, orJhat there has been no change in the status of the suqject or atiJone else since that date. .Analysis and
results under tbis Reportare specific to theparpose of this Reporl. It mqy not be validfor any other purpose or as at atry other
(late. A lso, it mqy not bevalid if done on beha![of any otherentity. SBlCAP, however, has no obligation to update this Report
f or events, trends or transactions relating to themarket/ economy ingeneral and occurring subsequent to the date qfthisReport.
.,
I'
Private & confidential
'--.. : .... Further, risk free T rate if return, risk premium, leveraging if business and betaare subject to uncertainties concerning the iffects
\ .... ' that changes in legisiation or economic orfinancialmark'et or'other circumstances mqy baue on1uture events, and different people
mqy have a different view infuture..
There will usuallY be differences ~etween estimated and actual results because events and circumstances mqy not occur as expected,
and those differences mqy-bematerial. U~der the circumstances, no assurance can beprovided that the assumptions or data upon
w~ich a'!Y estimates have been based are accurate orwhether these estimates will actuallY materialize.
< ,
Neither SBICAP, norState Bank if India or a'!Y if its associates, nora'!Y if theirrespective directors, employees or advisors or
controlling-persons make a'!Y expressedor i~plied representation' or warranty and no responsibility or liabiliry whether direct or
indirect, express or implied, contractual, tortuous, statutory or otherwise, is accepted by a'!Y if shem with respect to the accuracy,
~ompleteness or reasonableness of thefacts, opinions, estimates, forecasts, or other information setforth in this Report or the
. underlYing assumptions'on which thcy are based'or the at'Curacy if a'!Y computer model used orfor any errors, omissions or
misstatements orfor a'!Y loss / damage be it ttmgible or intangible, howsoever arising, from the use if this Report and nothi~g
contained herein is, orshallbe relied upon as"a promise orrepresentation regarding the historic or current position orpeiformance
ofthe airport sector ora'!Y specific company oranyfuture events.
This Repo;tis divided into sections & sub-sections onlYfor thepurpose if reading convenience. A'!Y partial reading 0/this Report
mqy leadto irferences, which mqy beat divergence with the conclusions and opinions based on the entirety of this Report. Neither
this Report; nor the irformation contained herein, mqy be reproduced orpassed-on to a'!Y person or usedfor anypurpose other
than statedabove.
This Reportis issued by SBI CapitalMarkets Limited without a'!Y liabiliry./ undertaking / commitment on thepart of itse!f
or State Bank of India or any other entity in the State Bank Group, except where it is explicitlY stated Further, in case ofany
commitment on beha!f of-State B"ank if India orany-other entity in the State Bank Group, such commitment is validonlY when
separatelY confirmed by that enti(y.
'-" ,
.. Page 3
Private & confi dential
Table of Contents
Background :: ~ :.: : 6
Airport Sector - an In fras tructure play 7
2.1 Rangarajan Co mmission's notion of Infrastructure (2001) 7
2.2 - Reserve Bank of India (RBI) circular on definition of Infrastruct ure 7
2.3 Income Tax D epartment :.. ~ 9
2.4 \'(forld Bank 9
Methods for computing Rate o f Return on E quity 1b
3.1 Capital As+s et Pri cing Model ("CAPM") _ : : 10 ,'A . '
3.2 Multifact or Model 12
-r-3.3 Build-Up Model 12
4. Determi nati0n of Rate of Return on Equity ~ 14
4.1 Risk Free Rate : 14 .
"_
4.2 Equity Risk Prerniurri jfi.RP) , 15 "
4.3 . Beta 18
5: Risk Analysis 24
6. Computation of Rate of Re turn on Equity 26 \,
7. Rate of Return pr evalent in other Infrastructure Secto rs 7 28
7.1 Roads & Highways 28
7.2 Power ~ 28
7.3 Por ts :: : 28 , .'
7.4 Oil and G as 28
8. Determination of Rate of Return on Quasi E quity 30 ',-, '
9. Conclusion .: : 31
Annexure 32 ,_ . '
Page 4
, Private & confidential". ,.
'-.... .
. . l.ist of Tables '
Ta ble 1: .In frastru cture definition by various committees : 9 .
Table 2: Ay,
erage of D aily Annu alized Yield ; 15
Table 3: Average of D aily Annualized Yeild during different tim e period 15
Ta ble 4: Summary ofERP estimate: 17
T~ble 5: D e:ailed calcul ation of Adjusted Ass et Beta ~ 20 \" ....~
Table 6: Summary o f average Adjusted Asset Beta ~2
Table 7: Adjusted Asset Beta in other infras tructure sectors 23 j ....
Table 'S: Rate of Return on E quity ~ : ~ 27 '<,.. :
Table 9: Rate of Return on Equity - Scenario Analysis 27
Table 10: Return aliowed in oth er infrastructure sectors : 29
'..,~
List of Figures
Figur e 1: Annual Average of D aily Annualized yield ; 14.
Figure 2: Quasi Equity Instrumen ts and Expecte d Return 30
..... ~ ..
Page5
"- "'"__ ..- '1- / -,.c. . r
- 'J:, b D, '
Private & confidential
1. Background
"-....
Airports 'playa significant ro le in globalization, connecting cities and countries. Airports are a major
part of , a country's infrastructure and foster economic activities ' by encouraging international
~onunerc e and tourism and gen erating employmen t.
\ ~ ,
\ '-
\
,
.~
In l ndia, tra ffic at airports have witnessed a robus t growth over last deca de and has also attracted
significant investment in capacity enhancement. Government of India (" G O I") has initiated several
policy mea~ures to. facilitate time -bound creation of world-class airports in- India. As on date,
airpor ts at Co chin, Bangalore, Hyderabad, Delhi and Murnbai airports have been developed und.er . ,
Public Private 'p ar tnership ("PPP" ) model. The GOI aims to attract more private sec tor investment
in airp or t infrastructure to ens ure development of airp ort with international quality standards.
'
Airports Authority of India ("AAl" or the "Authority") has appointed SBI Capital Markets Limited
(" SBI CAP") vide ;heir Letter No: AAIicHQ/REV /2010-1'1 dated January 27, 2012 as Financial
Advisor ~or providing an opinion on the fair Rate of Return on 'Equ ity ' and 'Quasi E q u ity ' for
investor on its investment in airports under PPP model. The Scope of Work in ter-alia includes
following
a. Determinat:io~ of fair Rate of Return on Equity using the appropriate method available for
- computation.
b . Comparison o f the fair Rate of Return on Equity as computed in this Report with re turn as
considered in other in fras tructure sectors.
Co
d.
Review of risk involved in development of airports and its impact on fair Rate o f Return.
Determination of fair Rate of Return on Quasi Equity.
.',
The objective of this Report is to determine a fair Rate of Return on 'Equity' and 'Quasi Equity'
for investors on their investmen t in the airport sec tor in India based on the overall risk and return
profile of the sec tor- taki n~ into ~ccoun t the to tal revenue from various sources.
-0 Page 6 •
Private & confidential .
~ I ' 2. Airport Sector - an Infrastructure play --:;--::-----------------_._---------------------
The significance of airports in-overall development of an economy is well established worldwide.
~overnment of India and other statutory authorities including the committees set up at different
IJmes have also acknowledged the contribution elf airp ort sector towards overall growth of economy
and have classified airport sector as an infrastructure item in the definition of Infrastructure. These
are discussed below:
2.1 Rangarajan Commission's notion of Infrastructure (2001) .\ ...,- , The RangarajaEJ. Commission indicated following six characteristics of infrastructure sectors:
\,-, ..
a.' Natural Monopoly;
b. High Sunk Cost;
c. Non Tradability of output;
d. Non rivalness in consumption;
e. Possibility of price exclusion; and
f: Bestowing externalities on society -
Based on' these features (except b, d and e), the commission recommended inclusion of the. ,
following in infrastruc,ture in the first stage:
• Railway tracks, signaling syste,m, station;
• Roads, bridges, runways and other airport facilities;
• T & D of electricity;
• Telephone lines, telecommunications network;
',.-.- • Pipelines for water, crude oil, slurry, waterways, port facilities; and
• Canal net:"0rks for irrigation, sanitation or sewerage
2.2 Reserve Bank ofJndia.(RBI) circular on definition of Infrastructure
As per the RBI master circular no. RBI/2011-12/58 DBOD. No. Dir. Be. 7/13.03.00/ 2011-12
dated 1st July, 2011 on exposure norms, a credit facility is treated as "infrastructure lending" to a
> borrower company which is engaged in developing, opera ting and maintaining, or developing,
"Disclosure ifForecast Total Revenue Requirement and Demand Forecasts pursuant to clause 2. 10(3) if fhe Commerce Ad (Specificd A irport Scrvices Information Disclosure) Determination 2010" dated
10 Yr Gol Bond Annual Average of Daily AnnualizedYeild
14.00 J. 12.00\ ...
10 .00
8.00 I ~~.~:
~ ~L . I6.00
4.0 0
2.00
0 .00 ()) o .--l N cY) "'" Ll) to r- co ()) o .--l N ()) o o o o o o o o o o .--l .--l .--l ()) o o O. o o o o o o o o o o .--l N N N N N N N N N N N N N
China I ~ ..~.l~l.~ L"'~L••~~~•• _ L~~~~"~~' ~ .- . I 0.961 0.235 0.82 . 25%
0.784 0.003 . 0.78 25%
0.854 0.027 0.84 25%
0.805 0.033 0.79 25%
0,819 0.131 0.75 30%
Mexico I l,.mono Aeroriortuario del Pacifico SAB I 0.783 0.042 0.76 30%
0.643 0.047 0.132 30%
Malaysia Malaysia Airport Holdings Berhad 0.891 0.284 0.74 30%
Thailand Airports of Thailand PCl, 1.111 0.832 0.70 30%
TAV Havalimanlari Holding AS .
Turkey 0.893 2.765 0.28 20%
0.71 ~~'¥~1~~.." ~~.•. .. 0
0.825 0.835 0.507 25%
0.761 0;826 0.463 22%
0.891 1..173 1 0.499 33%
0.992 0.923 0.6071 31%
Italy I L.~L-JJJL-L'~ ~ . _.L~~._ •.•~-~ • _.- JJJ•• I 0.687 0.396 0.540 31% I • ,, ' r-0 0
~ . I 0.412 0.289 0.344 31%
0.498 0.193 0.440 31%
i
W .--l.l .s:
Page 20 • ~~
~~, ~ ,
J( .. ,I"' " ( ,/ •
Privafe & confidential _
1.038 0.536 0.755
France Aeroport de Faris 0.916 . 0.878 0.577
I Denmark ,
] a,pan
Australia
K obenhavn s Lu fthavne (Co penhage n Airport)
[ap an Airp ort T erminal Co. Ltd.
Sydney Airpor t Corporation Ltd.
I
0.531
0.766
0.989
1.012
0.447
'1.114
0.302
0.605
0.556
0.52 I .
Averaze - Overall (Source: Bloomberg and JBlCAP analYsis)
I vv· -J
, \ -
Page21 o • :'il ~A~
. ,
Private & confidential
• Summary of average Adjusted Asset Beta estimates is .shown below:
. Table 6:.~u:mmaty of average Adjusted Asset Beta
Particulars I
Emerging Mar~et
Mature Market
Overall Market
, I 5 Year Adjusted Asset Beta I _ I
0.71
0.52 ', .0.61-
-''--- '• Considering the limitations in sourcing data for 10 year Beta analysis, estimates as derived
using 5 year ~ata is assumed. for analysis herein.
Since, India is an emerging economy; proxy Asset Beta estimate for Indian Airport Sector
has been arrivec! based on the average ofAdjusted Asset Beta oflisted airports in emerging
market.
\ ,
. ,
Private & confidential
,'
'-. .:
.'-..-.'
I ''-.,.-"
i........ ' "
' _. '
'.........
• An attempt has also been m ade to compa re the above estimated proxy Asset Beta for allport
sector in I ndia with asset beta (based on 5 year period) of other infrastructure companies listed
in India.
Table 7: Adjusted Asset Beta in other infrastructure sectors
Particulars I
I
I.\
I Adjusted Asset Beta I
Power Ta ta'Power Company Limited - ~ 0.51 NTPC Limited 0.54 .Gujarat Industries Power Company Limited 0.62 Jaiprakash Power V.en ture Limi ted 0.59 T orren t Power Limited 0.63 NHPC Limited - 0.55 CE SC Limited 0.69 Average 0.59
Telecom Bharati Air tel Limited 0.61
' Idea Cellular Limited 0.56 Relian ce Communication Limited 0.81 Tata Teleservices Maharashtra Limited 0.98 MTNL Limi ted 0.84
-Average ~ ~
0.76 Roads
N oida Toll Bridge Company Limited 0.84 . Ports
Adani Por ts and Special Economic Z one Limited 0.60
"As can be observed from th e above table, the proxy As set Beta estimated- for airport sector in India
can be considered compa rable with th e ad justed asset bet a of th e other listed infrastructure players
in India.
Jtmi:r:: "Mn017 "rr
Page 23
,
Private & confidential
5. Risk Analysis '--"
The major risks as could be associated with airport sector have been presented in the table below:
.--.,.....-.
\ _....
Risl<: Facto1' I 0' I ' ,. Description " I' , I
Construction • Appropriate development planning is critical to ensure following: . .,/ Timely completion of construction;
~ . .,/ Mitigate chances of costescalation; • . .,/ Development of asset in accordance with applicable standards; .,/ Ensure optimum utilisation of assets;¥
Land Acquisition • Availability of total land as required is utmost critical to avoid delays in completion
. • Since construction period in infrastructure is generally long, any delay in . acquisition of land has a significant impact on implementation
. Environmental • , Delay in procuring envirorunent clearance and other approvals cause ' Clearances and delays in achieving financial closure and starting of construction works other approvals Funding Risk . • Unprecedented growth ill au traffic has necessita ted huge capital
investment in creation of additional capacities.
• Debt funding in India is generally available for a tenor of 10 - 15 years
- · as -agai~st long concession period Of 30 years or more. Traffic Risk • The airport industry in India operates in a very dynamic envirorunent.
• Traffic at airport comprises of passengers, cargo and air traffic
- movements.
- • In- India, passenger traffic comprises of majority of domestic traffic and is mainly confined to six major airports .
- . • Demand is very volatile ar;d highly sensitive jo prices of tickets. . .
Any economic slowdown, increase in air ticket prices, increase in fuel- • .. charges -is likely to affect the traffic growth significantly thereby
impacting the airport revenue and profitabili~
Airlines financial • Current financial performance/ status of airlines will have an impact on condition the overall airport sector. .. Regulatory Risk • India Airport sector is in initial stage of re~ation.
. Political Risk e . In the current political scenario, a high risk is generally perceived' in . relation to policy framework, coordination between centre and state
administration., . Competition Risk • Airport development requires huge capital investment upfront with
returns accruing over a long period.
• Development of new airport around an existing airport without proper - -
dl{e diligence is likely to impact the existing airport and may jeopardize the profitability or returns for the investor
- ._---'--,-- "
Page24
':
Private & confidential
, ,
Infrastructure sector and / or various companies within a particular sector are generally exposed to
. ~ rnany.risks relating to development, construction, funding, operations and management, demand/'-.. ./
traffit/ ~arket, regulatory risk,. te\mination paym~nt, competition and political risks etc. However,
the weight ~s could be allocated to a specific risk based on its possible impact on sector or company
varies acras.s, sectors arid a;nongst different companies .)-Vithin a sector. . .
• Asset "Beta as can be computed for an individual company or a sector as whole is a fair
representative of risk and return relationship as exist in any company or sector. The Beta for airport
sector as arrived when compared to other infrastructure sub" sectors brings "out the comparable
degree of risk.
\.. .,
..
'\._..
<; ...
Page2S
, ,",,~. ..,-~\~~ O
- 3g I)
Private & corfidentia!
6. Computation of Rate ofReturn on Equity ·
t •
'. In order-t o estimate the Rate of Return on Equity, the Adjusted Asset Beta is requited to be re. . levered,using a target QER for the sector to arrive at the Adjusted Equity Beta. Higher debt in a
, ~
oapital structure incre~ses the expected Rate of Return .on Equity which is reflected in increase in the
value of Adjusted Equity Beta.
'-- . .
I ,-
Average I?ER of listed airport in emerging markets in the Data Set over a period of 5 years 1S
estimated at 0.47:1. However, the same may not reflect the target DER for India, as infrastructure
projects in India are generally financed at a much higher DER. In this context a comparable could
be brought out by taking into account the fa,ct that a notional DER of 1.5~;l has been considered by
regulators? of Sy~ey airport and Heathrow airpor t for determination of cost of equity.
In Indian context, projec! fina~cing is h.appening normally i.n the range of 1:1 to 2:1 taking into
account various risk associated with the project, sector, sponsor, financing structure with inclusions
- of instruments other than pure debt or equity. Considering the nature of investments and risk profile
of airport sector a target DERpf 1.5 :1 has been assumed to arrive at the estimated Rate of Return
on Equity for investment in Indian airport sector. Accordingly, the proxy Asset Beta of 0.71 for
airports as ' arrived .in earlier chapter is levered by D Ell of 1.5:1 to arrive at adjusted levered Beta
(Adjus.ted Equity Beta) for Indian Airports at 1.43.
Considering gen erally accepted principles that market return and risk free rate be based on ave rage
of long period to ensure mitigation of volatilities attached to such data, risk free rate as estimated
based on average of daily annualized yield of 10 year GOI bond over a period of 10 years (period
reflecting a range bound movement) and market return as calculated during a period of 21 years post
refor~s for Sensex index could be considered reasonable for estimation of Rate of Return on
\' . Equity. Accordingly the same works out to 19.52% (say 19.5%) as shown below:
7 "Economic R egulation 0/H eathrow and Gatwide Airports (2Q08-20 13))} UK Civil Aviation Authoriry (CAA) decision
dt. 11 Marc'h 2 008 and "Aeronautical Pricing Proposal" Australian Competition and Consumer Commission's decision f or
. fldnry .Airporzs Corpo~ation Limited in M qy 200 1.
The s=ost of a 'Quasi Equity' instrument would vary fro m each o ther because o f difference in risk
being shared , security o ffered, pay~ent terms etc. 'Therefore in order to determine cost of a particular quasi . .
£quiry instrument, it wouldpe necessary to analYze the details oftransaction and under~ing agreements.
\ "
'- ,.
Page 30
•
Private & confidsntiai
"-. , ,. 9. ConclusionI ' Airports 'play a significant role in globaliza tion, connecting cities and countries, Airports are a major
'- ' part of a country's infrastructure and foster economic activities by encouraging international
commerce, tourism and generating employment.
Airports Authority of India has appointed SBI Capital Markets Limited for providing an opinion on
the Fair Rate of Return on 'Equity' and 'Quasi Equity' for investor on its investment in airports. - -~
SBICAP has estimated the Fair'Rate of Return on 'Equity' based on the Capital Asset Pricing
• _Model (CAPM). SBICAP has also analyzed the return considered by various Government
authorities in other infrastructure ~ector while estimating the Rate of Return on equity for Indian ~
airport sector . The rate of return on 'Quasi Equity' would depend on the type and features of
ln struments.being used fo~ such form of finance .
The Rate of Return on Equity based on the estimates of various factors as detailed in earlier chapter
works out to about 19.5%. However, taking into account the variation in the airports in terms of
' , ,, J
capacity, size, loca~on, classification, capital structure, risks perception etc ., ~t mcry be prudent that
concerned ;/Uthotitics have jlexibiliryoffixing Rate ofReturn on Equity imestments, for thc airport project as a whole}
\.~ / Within a range. For tbeprescnt purpose} a range of (±) 5% i.e. 18.5% to 20,5% could be considered reasonable. It may be mentioned that the rate of return ofrered by Government agency}s normally the maximum
rate it would co~sider to allow for a sector and or a project in particular with actual return thereafter \'..... '
arrived through competitive price discovery mechanism.
A Rate of Return on Equity to an investor on its original investment in airport project may be
• considered taking into account the aggregate returns from the project and efficiencies of the
finanCing structures in the ord~r of range as abo','e. The sp ecific return for any particular airport
project may,be considered taking into account the following factors :
"" ...
-, ' ,/ 'Micro level scenarios in relation to risks and capital structure of any airport; ,/ Need to attract private investment considering the limited budgetary resources of
• Government to finance the development of airport infrastructure; ,/ User fee / airp ort charges which could be passed on to user; and ,/ Overall viability of airport;
SBI Capital Markets Limited
February 2012
Page 31
sm Ca p Ut" Mo rkolu UmlUlCl
I
Private & confidential
... -
~_ .-.
';......
" . ...
-, .• .!
<::
Annexure
Brief Profile of Airports considered in Data set
1. Beijing Capital International Airport Co Ltd (China) ,
Beijing Capi tal International Airpor t Co._Limi ted operates b? th aero nautical an d non-aeronautical
busin~s s in the Beijing airport" The Company provides aircraft movement and passen ger service
~ facilities, safe ty and security services, fire- fighting servi ces, an d ground handling services. In
addi tic n . jt ope ra tes duty free and other retail shops and leases properties . . ,
, ~. Guangzhou Baiyun International Airport Co Lfd (China)
Guangzhou Baiyun International Airport Co. Limi ted op erates the Guangzhou Baiyun International
Airport and provid es related transportation services, including gro und, pa ssenger , storage, airp lane
main tenanc e an d rryair, and o ther services, T he Company also provides food, space rental, and
advertising servic es.
3. Shanghai Jnternational Airport Co Lt~ (China)
Shanghai International Airpor t Co , Ltd, opera tes Pudong. Airport in Shanghai. T he Company
provides a full range of services including air traffi c control, terminal management, cargo handling,
advertising, space rental, ;nd o ther relateef services .
4. Xiamen International Airport Co Ltd (China)
Xiarnen "International Airport - Co . Ltd. opera tes' and maintains Gaocp Airport. The Company
provides terminal transportation service, ma in tains airport waiting halls,_operates airport shopping . . ,
malls, as well as offers adver tising and airpor t mec ha nical engine ering servic es,
5. Shenzhen Airport Co. Ltd.
Shenzhen Airport Co. Ltd. is pri ncipally engaged in the operation of Shenzhen' Airport, China. T h e
Com pa ny opera tes its bu sine sses through aviation gua rantee and airport services, avia tion logistics
busin ess and avia tion value -adde d services.
Page 32
--... ,.J.... 1 3 ·~
~gi
Private & confidential
6. Hainan Meilan International Airport Co Ltd (China)
Hainan Meilan International Airport Company Limi ted provides airfield 'servi ces, terminal facilities,
gro und handling services, pas senger and cargo handling services. The Compan y also leas es
commercial and retail space at the Meilan Airport , op erates airp ort-related bu sin ess franchising,
advertising, car parking, tourisrrr'services , and sells du ty-free and consumable go ods .
7. Grupo Aeroportuario del Centro Norte SAB de CV (Mexico) \',,_.. • q-rupo A-eroportuario del Centro N orte, S.A.B. de C.V. (OMA) op erates in ternational airports in th e . .
north ern and central regions of Mexico . The airports serve Monterrey, Acapulco , Mazatlan,
' . , :6ihuatanejo' and several other regional cen ters and border cities.
8. Grupo Aeroportuario del Pacifico SAB de CV (Mexico)
G rupo Aeroportuario del Pacifico SAB de CV operates and maintains airports in the Pacific and
central regions o f Mexico.
\ . . .' 9. Grupo Aer?p.ortuario del Sureste SABde ~V (Mexico)
G rupo Ae roportuario del Sureste S.A.B. de C.Y. operates airports in Mexico. The Company holds
50 year concessions, beginning in 1998, to manage airports in Cancun, Cozumel, Merida, O axaca,......'
Veracruz, H ua tulco, T apachula, Minatitlan, and Villahermosa.
10. Malaysia Airports Holdings ~hd (Malaysia) '....... " :
Malaysia Airports Holdings Berhad is an investment holding company. The Company, through it s
subsi dia ries~ provides . tii.ar:agement, maintenance, and, operation of designated airports . Malaysia -.
Airports also op erates du ty-free an~ non-duty free stores as well as provides food and beverage
outle ts at the airp or ts.
11. Airp<,?rts of Thailand PCL (Thailand)
Airports of Thailand Public Company L td. operates the Bangkok In tern ational Airpor t (Don
Muang). T he .Cornpany also operates provincial airports in Chiang Mai, Chiang Rai, H at Yai, and
Phu ket. It is developing the New Bangkok Interna tional Airport (Suvarnabhumi).
'., . .
o Page 33
S8' Co'lpUOI M Olkol:.l LlmltoCl
Private & confidential
" -'
12. TAV Havalimanlari Holding AS (Turkey)
TAV Havalimanla rr I-Iolding A-s operates terminals at airp orts in Turkey and Georgia. Through
subsidiaries, the Company offers terminal, duty-free, group handling, catering, and other services.
! , '-"--,
"
~3.Fltighafen Wien AG (Austria)
FlughafenWien AG manages, m aintains, and operates the Vienna Int~rnational Airport and the
. Voslau Airfield. The Com pany offers te rminal services, air-sid e and land-side cargo handling, and
the leasing o f sto re, restaurant, and hotel airport building space to third party operators and
businesses.
\
~4. Flughafen Zuerich A~ (Switzerland)
Flughafen Zuerich AG operates the Zw:i ch Airport. The Company constructs, leases, and maintains
airport structure ~ 'and equipm ent.
15. Fraport AG Fr~nkfu!t AifJ.?ort Services Worldwide (Germany)
Fraport AG Frankfurt Airport Services Worldwide (Fraport) o ffers airpor t services. The Company
- operates the Frankfurt-Main , F'rankfurt-Hahn and other airports in Germany, the airport in Lima,
Peru, an-? th e international terminal in Antalya, Turkey, Fraport also provides 'services to domestic
and international carriers including traffic and terminal management, groWld handling, securi ty, and
~eal estate and facility -management.
16. Gemina S.p.A (Italy)
Gemina S.p .A. is a holding company. The Company's subsidiaries -are ac tive. in the operation of
airports, •du ty fre e shops , helicopter rescue servi ces, parking facilities, advertising, catering, and
subletting in Italy. G emina's aviation activities include airport rights, handling, security and other
services ,
,'_ ..
" ,
Page34
Private & confidential
17. Aeroporto di Venezia Marco Polo S.p.A - SAVE (Italy)
SAVE S.p.A operates the Marco Polo Airport in Venice, Italy. The Company operates through a
concession from Italy's Ministry"of Transport. ........ .
18. Aeroporto di Firenze SpA (Italy) . .
Aeroporfo, di Firenze S.p.A. manages the Amerigo Vespucci Airport in Florence, Italy. The
Company derives revenues from fees from airlines, renting retail spaces, soncessionaires such as car
.rental firms and shuttle bus operators, and advertising.
'" ..-'
19. Societa Aeroporto Toscano Galileo Galilei SpA (Italy)
Societa Aeroporto Toscano S.p .A . manages the Galileo Galilei Airport inPisa, Italy. The Company
manages and finances the to~al development of the airport.
20. Auckland International Airport Ltd (New.Zealand) \ ' Auckland International Airport Limited owns and operates the Auckland International Airport. The
Airport includes a sipgle r~nway...' an interr:ational terminal and, two domestic terminals. The Airport
also has commercial facilities which include airfreight operations, car rental services, commercial
- banking center and office buildings.
21. Aeroports de Paris~(France)
" . ' A erop orts de Paris (ADI') manages all the civil airports 10 the Paris area. The Company also
develops and operates light aircraft' aerodromes. ADP offers air transport related services, and
business services such as office rental.
22. Kobenhavns Lufthavne (Denmark)
Kobenhavns Lufthavne A/S (Copenhagen Airports A/S - CPH) owns and operates Kastrup, the
international airport in Copenhagen, and Roskilde airport. The Company provides traffic
management, maintenance, and security services, as well as manages the airport shopping Center and
allport projects. Kebenhavns Lufthavne.also has investments in airports in Mexico, England, and
China,
........- ..
Page35 • ~..~
Private & confidential ....
." ....
23. Japan Airport Terminal Co Ltd (japan) '..... ..,.!
Japan.Airport Terminal Company Limited constructs, manages and maintains passenger terminals
and airpor t facilitie s at H aneda and N arita airports. The Company operates parking-lots, souvenir
shops, and duty-free stores. Japal} Airport T erminal, through its subsidiaries, manages restaurants
and in-fligJ::t m eal services,
24. Sydney Airport Corporation Limited (Australia)
Srdney Airport Corporations Limited operates the Sydney airport 111 Australia. T he Company
develops_and maintains the airport in frastructure and lease s terminal space to airlines and retailers. ; .