Airport Investments Summit 2017 June Delhi International Airport Ltd. (DIAL) Sidharath Kapur, President, GMR Airports Limited (GAL)

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1 Airport Investments Summit 2017 June 2017 Delhi International Airport Ltd. (DIAL) Sidharath Kapur, President, GMR Airports Limited (GAL)

Projects 2 Domestic Coal Blocks 2 Overseas Coal Blocks Large & diversified infrastructure player 5+ Airports 8 Highways* 2 Special Investment Regions 11 Power Plants / 3 Projects

2 GMR Group is a leading Infrastructure Conglomerate Creating Tomorrow, Today GMR Group was established in June Gaining momentum 5 (1) Airports 9 Highways* 2 Special Investment Regions 10 Power Plants / 4 Projects 2 Domestic Coal Blocks 2 Overseas Coal Blocks Large & diversified infrastructure player 5+ Airports 8 Highways* 2 Special Investment Regions 11 Power Plants / 3 Projects 2 Domestic Coal Blocks 2 Overseas Coal Blocks Entry into Infrastructure 200 MW IPP in Chennai (1) Includes recently won Goa Mopa International Airport & Kastelli Airport * includes Minority stake in 2 projects and HH Project (14.99% divested out of 51% stake awaiting NHAI approval for 2nd tranche of divestment 1

2003 Started the Hyderabad Airport development project with more than a decade of experience in the Airport Sector 2006 Commenced operations, management and development of Delhi Airport 2008

operations at Terminal 3, Delhi Airport Commenced operations at Malé Airport 2012 Malé Airport concession declared void by GoM a politically motivated decision * 2014 Signed the Concession for

3 2003 Started the Hyderabad Airport development project with more than a decade of experience in the Airport Sector 2006 Commenced operations, management and development of Delhi Airport 2008 Commissioned new airport in Hyderabad Commenced operations & development of Istanbul Sabiha Gokcen Airport 2009 Commissioned the new Terminal at Istanbul Sabiha Gocken Airport, Turkey 2010 Commenced operations at Terminal 3, Delhi Airport Commenced operations at Malé Airport 2012 Malé Airport concession declared void by GoM a politically motivated decision * 2014 Signed the Concession for Mactan-Cebu Intl. Airport in Philippines Divested stake in Istanbul airport Won Mopa Intl. Airport Project in Goa Won Male Arbitration Won Kastelli Airport * The International Arbitral Tribunal upheld the award of Male Airport Modernization and Operation project to GMR Male International Airport Limited (2014) 2

4 DIAL is GMR s flagship project under the PPP framework Delhi International Airport Ltd. (DIAL) is a Joint Venture Consortium led by GMR with a 64% stake. Other equity partners - Airports Authority of India (26%) and Fraport (10%) MAHB originally owned 10% stake which was purchased by GMR in May 2015 The GMR led consortium won the bid for the airport through a transparent ICB process Operations, Management & Development Agreement (OMDA) was subsequently signed between DIAL and AAI in April 2006 OMDA was a part of the pre-bid documents and the basis of bidding OMDA dictates all development work and service standards to be delivered by DIAL at IGIA Concession period of years Responsibilities of DIAL include Operations, maintenance, development, design, construction, up gradation, modernization, finance and management of the airport ATC, security, customs, immigration, quarantine and meteorological services provided by Government agencies Modernized IGIA is today counted as one of the largest infrastructure development projects to be executed in India post independence 3

DIAL - Key Concession Terms Start Date April 2006 Construction Completion Date Phase 1

7m pax) Saturation Phase 2036 (Airport capacity of 109mpax annually as per master plan)

concession terms, subject to nonoccurrence of a default) Phase 1 Development Cost ~INR

6 bn) Revenue share & Fee One-time upfront fee of INR 150 crs ( ~USD 35 mn) to AAI 45.

monthly instalments Right of First Refusal (ROFR) Commercial Property Development Until

most competitive bid received, if DIAL s initial bid is within 10% of such bid ~230

5 DIAL - Key Concession Terms Start Date April 2006 Construction Completion Date Phase 1 completed in March 2010 (Airport capacity of 62mpax against FY17 traffic of c. 57.7m pax) Saturation Phase 2036 (Airport capacity of 109mpax annually as per master plan) Concession Period 30 years + 30 years (extension at the option of DIAL at existing concession terms, subject to nonoccurrence of a default) Phase 1 Development Cost ~INR crs (~USD 2.6 bn) Revenue share & Fee One-time upfront fee of INR 150 crs ( ~USD 35 mn) to AAI 45.99% revenue share with AAI Projected revenue sharing shall be payable in 12 equal monthly instalments Right of First Refusal (ROFR) Commercial Property Development Until 2036, for a second airport within 150 kms of the existing airport Right to match the most competitive bid received, if DIAL s initial bid is within 10% of such bid ~230 acres available for commercial development Tariff Structure Regulatory structure is a Hybrid Till model with 30% cross subsidization from Non-Aeronautical revenues (excluding revenues from CPD ( ) 4

DIAL Key Milestones and Achievements Consortium was awarded the concession to operate, manage and develop the Delhi Airport following an International

operations Inauguration of new integrated terminal T3, to handle both international & domestic operations Monetized 45 acres of land for hospitality

2006 2008 2009 2010 2012 2015 2016 DIAL entered into Operations, Management and Development Agreement (OMDA) on April 4, 2006 with the AAI Newly built

Final tariff order for the 1 st regulatory period released by AERA in April 2012 Issued USD bond of 288mn which was first High Yield US dollar bond

6 DIAL Key Milestones and Achievements Consortium was awarded the concession to operate, manage and develop the Delhi Airport following an International competitive bidding process Completion of modernization works of the International Terminal (T2) IGI Airport s 3rd runway opens for commercial operations Inauguration of new integrated terminal T3, to handle both international & domestic operations Monetized 45 acres of land for hospitality Ranked #1 Airport globally in the mpax category for CY 2014 & major hotels operational in CPD including JW Marriott Hotel Jan Apr DIAL entered into Operations, Management and Development Agreement (OMDA) on April 4, 2006 with the AAI Newly built domestic terminal (T1) inaugurated and commenced operations Multiple JVs formed in the domain of cargo, food and beverages, retail, duty free shops etc Final tariff order for the 1 st regulatory period released by AERA in April 2012 Issued USD bond of 288mn which was first High Yield US dollar bond from Asia and India in 2015 Issued USD 522 mn bond, making DIAL financing completely based on bond structure Ranked #2 Airport globally CY 2016 Monetized 23acre land 5

7 Post winning the bid, GMR faced challenges & constraints on multiple fronts. 1 2 Extremely Short Deadlines Extensive Stakeholder Management 3 4 Availability of Trained Manpower Project Financing for such a large project Innovative & proactive approaches had to be adopted by GMR group to meet these tight deadlines and deliver a world-class airport in time for Commonwealth Games. 6

8 The project had a stiff deadline due to the imminent hosting of Commonwealth Games in Delhi. A traditional approach to execution was not feasible 7

endorsed by renowned consultants 20% Cost plus EPC contract, comprehensive project risk

9 Hence, GMR had to adopt an innovative project execution approach to deliver the project. DIAL adopted the Open-Book approach to Project Management which is timetested & globally endorsed by renowned consultants 20% Cost plus EPC contract, comprehensive project risk management and parallel process of Design and Construction enabled to cut around 12 months of time from total execution. 8

10 More than 50 Government Departments were involved, besides other stakeholders. Multiple stakeholders posed challenges GMR adopted a strong Project Management strategy Large number of stakeholders - involving 58 govt. departments Ministries of Civil Aviation / Defence / Transport / Environment Airport Authority of India Director General of Civil Aviation Several City & State Departments Non-existence of As-built drawings Relocation of ~2500 encroachments Translocation of a Rare Animal Species Managing transition through 24x7 operations Strong Project Management: Regular and accurate tracking of progress with continuous reporting to top management for decision making Progress Reports: Reports shared with related government / regulatory agencies to ensure speedy approvals and avoid bottlenecks Visit Invitations: Invitations to bureaucrats and politicians to visit the project site to take stock of progress Detailed Audits: Audits were done on the Project Cost, Project management process etc. by reputed consultants These intense stakeholder interactions required significant effort and planning. 9

11 Sourcing skilled global talent for a worldclass project proved to be a challenge. Such a unique project posed many talent issues GMR adopted a multi-pronged strategy Nascent sector in India; hence there was a talent crunch Building global expertise to create a world-class infrastructure project Complex and diverse skill requirement for airport projects Significant competition from other relevant and emerging sectors like real estate for the limited talent Managing 2,160 existing AAI employees with legacy productivity and talent issues 22,000 workers including 1,000 skilled workers supervised by 1,665 personnel working round the clock Global talent: Brought in global leaders in airports sector as part of its team (manpower from ~ 25 countries) Training: Focused training programs in India, Germany and Malaysia for skill enhancement with our partner Fraport Best in class consultants: Built a team of world-renowned consultants Partnership approach: Worked with all contractors to ensure complete talent availability more than 30,000 workers were engaged for T3 project Seamless transition: Operational readiness & Transfer (ORAT) team from Munich was deployed for the transfer from old facility to new 10

12 Financing one of the largest infra projects (amidst regulatory uncertainty) was a daunting task. There were multiple challenges & uncertainties in project financing Largest single location capital project in India ever - over Rs. 12,500 Crore project cost (~ USD 2.6 Billion) Due to aggressive timelines, the project cost was not fixed and was susceptible to commodity price rises Price of key commodities soared between (steel & cement prices increased by over 35%) In fact, many other companies had postponed projects High level of regulatory uncertainty on the expected returns and treatment of project cost We adopted an innovative project financing approach Equity and Internal Accruals were utilized Maximum possible Term Loans were raised Combination of Rupee Term Loan & External Commercial Borrowings used to reduce the debt cost. Global financial meltdown added to challenges Refundable Security Deposits were raised through monetization of land parcels and this amount was infused into the project Airport Development Fees (ADF) was sought and obtained Financing sources such as ECBs, refundable deposits, land lease deposits enabled us to make project viable. 11

13 Despite all the Challenges, DIAL was able to deliver projects in a timely manner New Runway operations September, 2008 Capable of handling A 380 handling - Eased congestion and capacity T1 D commissioned in April, 2009 De-congestion of domestic traffic and increase in ASQ rating Commencement of commercial operations from T3 July, 2010 Airport Capacity, mppa Floor sqm Const. months Cost per sq mt (US$) London Heathrow (T5) , ,614 Madrid (T4) , ,895 Bangkok (Suvarnabhumi) , ,973 Kuala Lumpur (T1) , ,337 Beijing (T3) , ,222 Delhi (T3) , ,306 Delivered in phases, development and upgrade of IGIA has redefined benchmarks of airport development projects Source: Jacobs Benchmarking study,

14 and DIAL has demonstrated healthy performance across all critical KPIs Passenger Traffic (in mn) Domestic CAGR: 12% International CAGR: 9% Total CAGR: 11% ATM Traffic (in '000) Domestic CAGR: 8% International CAGR: 7% Total CAGR: 8% FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 Domestic International Total FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 Domestic International Total Cargo Traffic (in '000) Domestic CAGR: 10% International CAGR: 7% Total CAGR: 8% FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 Domestic International Total Revenue (INR Crore) Aero Revenue CAGR: 30% Non Aero Revenue CAGR: 19% Gross Revenue CAGR: 25% FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 Aero Non Aero Total *CPD & Other Income are included in Non-Aero Revenue

230 acres of Aerotropolis Development Aerotropolis Development Plan Hospitality District Layout Core Airport Infrastructure Area for CP development Central Business District (CBD),

45 acres land was monetized with a potential development of 6.12 Mn. sft.

15 230 acres of Aerotropolis Development Aerotropolis Development Plan Hospitality District Layout Core Airport Infrastructure Area for CP development Central Business District (CBD), right in the heart of NCR with: Effective Connectivity Demand Proximity Master plan by YRM, UK & PF To be developed in phases In , Approx. 45 acres land was monetized with a potential development of 6.12 Mn. sft. 11 Hotels & 3 Commercial Assets Participation from all the major hospitality groups 4,800 rooms planned Currently over 3,100 rooms already operational enjoying 70-80% occupancy rate. In 2017, 23 acres & 1 acre have been monetized for Integrated Retail development and Airbus training & simulation facility respectively 14

16 Delhi Airport s Transformational Journey Old Terminal [2006] with congested & limited entry points Out-dated, and old Check-in Counters at Terminal 2 Terminal 3 State-of-the-art façade and 16 entry points 168 Check-in Counters at Terminal 3 with Common User Terminal Equipment [over 500,000 m 2 area] 15

17 Delhi Airport s Transformational Journey Limited F&B, Retail and Duty Free options at Terminal 2 [2006] Parking woes and traffic troubles at Terminal 2 Vast Food Court and immense possibilities to explore at Retail and Duty Free at Terminal 3 India s largest multi-level car parking at Terminal 3 with a capacity of 4,300 cars 16

to walk at Terminal 2 [2006] Only 9 Aerobridges

buses at Terminal 1B and Terminal 2 [2006]

18 Delhi Airport s Transformational Journey Passengers with heavy baggage had no option but to walk at Terminal 2 [2006] Only 9 Aerobridges at Terminal 2, passenger boarding primarily by buses at Terminal 1B and Terminal 2 [2006] Comfort and convenience at Terminal 3 with 92 automatic walkways, 63 elevators and 34 escalators 78 Aerobridges for passenger embarkation and disembarkation at Terminal 3 17

19 Delhi Airport s Transformational Journey Old Apron Control at Terminal 1B [2006] Basic amenities and aesthetics Hi-tech Airport Operations Control Centre at Terminal 3 with the biggest video wall in Asia Aesthetics at its best at Terminal 3 18

20 Delhi Airport s Transformational Journey Limited passenger seating space No dedicated kid s play areas Ergonomically designed seating available across all Passenger Terminal Areas Kid s play area with activity zones 19

21 Delhi Airport s Transformational Journey Dis-organized Black & Yellow Taxi allotments Limited greenery in the ambience Dedicated Taxi Parking bays for passenger convenience Pleasing ambience with greenery 20

22 Despite privatization, Delhi Airport charges were reasonable As per the study by Leigh Fisher, comparison of DIAL charges post increase of charges in 2012 Total domestic charges per round trip (in INR) Total medium haul international charges per round trip (in INR) 21

23 Benefits to Stakeholders 22

24 Better infrastructure has resulted in smoother and faster passenger movement at the airport Before Now Benefits Car Park 1,420 6,850 City Connectivity Cabs holding capacity Note: Only key aspects are compared; Figures include data from Terminals T1, T2 & T3 4 lane road 8 lane road + Metro Hassle free car park, including dedicated slots for PRM No traffic congestion; Increased number of options including Metro, Radio Taxi & Bus Seamless travel to heart of the city 1,050 2,350 Availability of public transport Large Scale Landscaping (sq. mt.) 6,500 3,41,851 Pleasing commute; Environment friendliness Immigration Counter Boarding Bridges 9 87 Check-in counters Capacity to cater to increased pax; Faster processing Saving of resources (e.g. Bussing charges); Environment friendliness Seamless processing of passengers including Self Check-in Kiosks i.e. CUSS (28) 23

25 Airside Improvements have led to higher operational efficiency Before Now Benefits Capacity: 35 ATMs / Hr Capacity: 75 ATM s / Hr; Max 82 ATM s / Hr Enhance ATMs during Peak hours; Reduced hovering / holding time Runway & Taxiways Code E (B ) compliant 2 runways with 1 end ILS CAT-III compliant, 2 ends CAT-1 compliant and 1 end without ILS Code F (A380) Compliant 3 runways, with 3 ends ILS CAT-IIIB and 3 ends CAT 1 compliant Ability to handle new generation aircrafts A380, Dreamliner Instrument approach is possible at any time; during low visibility, 3 ends can cater till RVR is 50 mtr 4 Rapid Exit Taxiways (RET) 11 RET s and a 4.43 km parallel taxiway Enhanced operational efficiency of airlines Apron & Aircraft Parking Stands 2 Aprons 9 Contact stands 89 Remote Stands 7 Aprons; 6.30 lakh m 2 additional area 48 Contact Stands 101 Remote Stands Enhancement of aircraft handling area Ability to handle new aircrafts A380, Dreamliner Apron Control 2 separate Apron Control units and manual allocation State of the art Control Centre AOCC Modern application tool to increase efficiency and accuracy of resource allocation Airside Improvements including NATS (UK) Recommendations have helped IGIA record 82 ATM movements, as against 35 at the time of taking over 24

26 resulting in significant monetary benefits to the airlines Benefit By how much? The Impact Increase in ATMs per hour Reduction in Hovering time Reduction in Holding time Increase in transfer traffic Maximum movements per hours has been increased from 35 to 75 (Max 82). 831 extra ATMs in a week due to increased capacity mins mins Domestic transfer traffic growth of 73% as compared to overall domestic traffic growth of 22% International transfer traffic growth of 69% as compared to overall international traffic growth of 12% Additional revenues of appx INR 4,500 Cr. p.a. (~USD 650 mn) for the airlines who operate during these peak hours. Savings of Rs thousand per landing at the peak hours Annual cost reductions of INR crs (USD 50 mn USD 70mn) Savings of Rs thousand per aircraft during the peak hour Annual cost reductions of INR crs (USD 15 mn USD 25mn) Transfer traffic increased from 5% at time of opening of T3 to current 21% Additional revenue of ~ INR 892 crs (~USD 130 mn) for airline industry The infrastructure added also leads to overall improvement in fleet utilization through hovering / holding times savings, improved OTP etc. 25

27 and a marked improvement in Departure On Time Performance (OTP) Departure On Time Performance 80% 83% 82% 82% 74% 76% * 77% # 64% FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 * Lower OTP is due to Air India & Spice Jet # Lower OTP is due to severe Low Visibility period Enhanced operational efficiency has resulted into higher departure OTP, leading to greater airline and passenger satisfaction 26

28 DIAL joint ventured with some of the best brands and names across the world Rs Cr. Non Aero Revenue ( in Rs Cr) FY 07 FY 08 FY 09 FY 10 FY 11 FY 12 FY 13 FY 14 FY 15 FY 16 FY 17 Non Aero Revenue DIAL joint ventured with some of the best brands and names across the world to run and operate F&B, Duty Free, Car Park, Advertisement,Cargo and Fuel Farm JV with specialized players helped to imbibe global best practices, higher revenue, operating efficiencies and improve overall passenger experience. Helps to bring business sustainability, business control with risk mitigation 30% cross subsidy rationalizes aero charges 27

Indian Airport to be IATA e-freight compliant 50,000 sqft Cold/Pharma Facility 1,000 sqm of dedicated Common User Transshipment Warehouse on Airside Air Cargo Logistics Center (ACLC)

29 DIAL along with its partners has developed a cargo handling capacity of 1.5 million tonnes DIAL along with Celebi (JV) and CSC have upgraded and modernized its cargo facilities Only Airport in India with 9 Freighter Parking Bays with 3 Code F Facilities 1 st Indian Airport to be IATA e-freight compliant 50,000 sqft Cold/Pharma Facility 1,000 sqm of dedicated Common User Transshipment Warehouse on Airside Air Cargo Logistics Center (ACLC) ~10,000 sqm of Warehousing space for Freight Forwarders and Logistics Players Only airport to have dedicated Transshipment Excellence Center on airside DIAL is the busiest cargo airport in India handling ~30% of country s total air cargo traffic, surpassing Mumbai to become the largest Indian cargo airport 28 28

30 Reaching the top position globally for two years in a row is a testimony to world class services Passengers Handled in CY (mn) OMDA requirement of ASQ (3.75) nd Airport in World (overall & >40 MPPA cat) in st Airport in World in its category (25-40 MPPA) in 2014 & 2015 Global Ranking (Rank/Total Airports) / /127 32/140 12/154 Sep rd Runway commissioned April 2009 T1D commissioned 06/179 04/199 July 2010 Terminal 3 commissioned 05/235 05/300 02/268 02/268 When GMR took over in it was ranked 101 out of 125 airports globally. After just 8 years IGIA held #1 rank for 2 consecutive years 2014 and 2015 (25-40 MPPA) and now holds #2 rank in 2016 in category (> 40 MPPA)

31 Benefits to AAI post privatization 30

32 DIAL has paid Rs. 13,214 (~USD 2 bn) Crore as Revenue Share to AAI since taking over the operations of Delhi Airport AAI Revenue Share Revenue Share (45.99%) of Rs.13,214 Crore (~USD 2bn) to AAI, since taking over the operations of IGIA 2,304 Rs. Crore 2,635 1,838 1,968 1, FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 The revenue share flows directly to AAI s bottom-line as AAI does not incur any operating or capital costs. In many ways, DIAL s revenue share has paid for the development of other airports undertaken by AAI 31

33 Benefits to Country and State post privatization 32

34 Delhi Airport s development and modernization has had a huge socio-economic impact Economic impact (Value added) of IGI Airport estimated to be Rs.80,724 (~USD 12 bn) Crore during (increased from Rs.29,470 (~USD 6bn) Crore during ) Contribution of 0.70% to the national GVA (which was 0.45% to the national GDP in ) Delhi airport's operation contributed 2.83 mn jobs in (which was 1.57 mn jobs in ) Contribution to national employment 0.56% (which was 0.34% in ) Economic impact of IGIA by is expected to be ~ Rs.2,40,356 Cr (~USD 37 bn) (about 0.60% of the estimated national GVA) In terms of Employment, the impact would be 4.02 mn (about 0.58% of total estimated workers) in Source: Economic Impact Assessment of Delhi International Airport, NCAER 33

35 The achievements and impacts have been despite regulatory challenges and uncertainty At the time of privatization ( ) no tariff regulation existed. Airport Economic Regulatory Authority (AERA) established in 2009 which was much after the first airports were privatized AERA come with first order for Delhi Airport in 2012 which was delayed by 3 years. Certain aspects of the order such as cost of equity, return on security deposit etc were not properly treated. DIAL filled the appeal against the above aspects in AERAAT which are still pending in AERAAT. In last 5 years, there have been three separate benches hearing the appeals. After pending in AERAAT for 5 years, Govt of India has now notified to merge AERAAT with TDSAAT. Returns to shareholders have been significantly delayed. No dividends for 11 years due to losses. This lead to high variability in our tariff and makes regulatory risk amongst the primary risk in Indian airports 34

Sustained high level of performance through deep expertise has won multiple awards for DIAL Skytrax World Airport Awards 2017 : Best Airport in India & Central Asia ACI ASQ Awards for 2016 : 2 nd

(CSR) 2016, in the aviation transport sector category and many more CII National Energy Management Award 2012 Excellent Energy Efficient Unit Golden Chariot Award, 2011 for Best Airport, from

36 Sustained high level of performance through deep expertise has won multiple awards for DIAL Skytrax World Airport Awards 2017 : Best Airport in India & Central Asia ACI ASQ Awards for 2016 : 2 nd Best Airport by size over 40mppa : 2 nd Best Airport by Region Asia Pacific First Airport in Asia Pacific region to achieve Carbon Neutral accreditation Golden Peacock Award for Social Responsibility (CSR) 2016, in the aviation transport sector category and many more CII National Energy Management Award 2012 Excellent Energy Efficient Unit Golden Chariot Award, 2011 for Best Airport, from Transport Ministry of the Russia SKYTRAX World Airport Awards 2012 Best Airport India First Terminal in World to get LEED Gold Certification Routes Airport Marketing Award 2012 for Excellence in Airport Marketing for Asia Region 2012 Asian Annies 2011 for Airport with most new non-regional routes CNBC Aawaz Best Managed Airport Award

37 Thank you

GMR Group s Airports Journey. Emerging Airports Show, Kuwait October 2015

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