From THE HINDU group of publications
Saturday, November 24, 2001


Cochin Intl Airport picks -- SBI Caps for rights issue

G. K. Nair

KOCHI, Nov. 23

COCHIN International Airport Ltd (CIAL) is said to have decided to appoint SBI Capital to complete its rights issue and private placement of the 25 per cent shares divested by the State Government.

The offer of SBI Capital was the lowest at one per cent royalty and hence the CIAL board had decided to appoint it, Mr C. V. Jacob, one of Directors of the company and member of the monetary committee formed to market the shares told Business Line. The formalities would be completed once the CIAL Managing Director returned from abroad, he said. SBI Capital had agreed to complete the operations by December 31, he said.

Following the State Government's decision to reduce its stake in the company to 26 per cent, 25 per cent shares would be available for private placement. The Government, he said, had to pay around Rs 20 crore which it had agreed to invest before March 31, 2002.

Already four NRI Directors had agreed to raise their share in the company by Rs 20 crore, leaving a balance of Rs 90 crore to be mobilised by SBI Capital, he said. The CIAL board had, some two years ago, decided to enhance its capital base to Rs 200 crore from the existing Rs 90 crore through 1:1 rights issue. Since the Government insisted on holding 51 per cent of the stake in the company, the public shareholders were reluctant to subscribe to the rights issue.

According to him, once the capital base was enhanced to Rs 200 crore, the company would be able to liquidate part of the high-cost loans to the tune of Rs 95 crore and that alone would result in a saving of Rs 15.5 crore hitherto doled out towards interest per annum. Still, there would be a balance loan liability of Rs 120 crore at the interest rate of Rs 14.5 per cent, and this, CIAL had decided to repay by taking a loan at 11 per cent interest and that would help the company to make a saving of around Rs 3 crore per annum on difference of interest. The airport was currently making a loss of around Rs 8 crore per annum, he said.

He said that once it was extricated from the heavy interest burden, CIAL, the first international airport in the private sector in the country, would start making substantial profits.

More foreign airlines are expected to operate to and from Nedumbassery from next year, he said.

Oman Air had already commenced operations, while Silk Air, which had started operations recently with two flights a week to Singapore, would double it by January 2002.

Similarly, Kuwait Airways was expected to commence its operations before December-end.

The earnings from a foreign airline operating four flights a week to Nedumbassery would come to about Rs 2.5 crore per annum, he said.

Currently, the airport handled 114 flights a week of which 56 were domestic. Passenger traffic was estimated at two lakh per annum. Besides, daily 15 tonnes of cargo were also being handled now, the Airport Director said.

He said that the duty-free shop would become operational by December-end, and by then, the cargo complex would also be ready for operations.

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