GMR Infra in the limelight

GMR Infra has been amongst the top gainers on the BSE since yesterday. Today too, it is up in the top five gainers. Intra day, the stock rose 6% at Rs.14.40 and continues to remain around 4% up now.

It looks like the ugly fracas in Maldives has finally been closed. The company’s subsidiary, GMR Male International Airport was awarded a compensation of approximately $270 million by the 3 member international arbitral tribunal. The compensation covers the debt, equity invested in the project along with a return of 17% and also termination payments and legal costs.

The compensation is net of taxes that GMIAL may be required to pay in the Maldives.

If one may recollect, way back in 2010, this subsidiary had signed an agreement with the Maldives Govt for modernizing the airport.

Everything was going hunky dory since GMP won the bid in 2010 to operate and expand the Male airport and the agreement was signed by the then President – Mohammed Nasheed. Well, he had to resign in Feb’12 in what he has described as a coup. He is facing charges of abuse of power. People were as such miffed with the payment of an Airport Development Charge (ADC) fee of $25 per passenger. The right-wing extremist party, Adhalaath party has been protesting against this fee the loudest. Another opposition party, Divehi Quami Party filed a civil case blocking GMR from collecting ADC. So collection of ADC stopped and to keep up with the tenets in the contract made to GMR, the Govt had to pay up, so Mr.Naseer offered to pay the ADC from the government’s share of concession fee. Thus from being a revenue earner for the Govt there, it became a money loser. And the colloquial final nail in the coffin was when Mr.Nasser was ousted in Feb and a coalition of Opposition parties took charge.  Opposition from people grew stronger and the ADC issue went to international courts. It went for arbitration to Singapore courts and it got an order to restrain Maldives Airports Company Ltd, the Maldive Govt’s airport company from going to a civil court in Maldives. But courts apart, the opposition to GMR got onto the streets and it became a battle against an “Indian” company. So much public support was galvanized that GMR was finally given the ultimatum last week.

And then in 2012, , Maldives Civil Aviation Authority informed GMR that its license to operate the airport will turn invalid after Dec 6 and the immigration department stated that it will not renew visas and work permits for employees.

Apart from this news, there is unconfirmed news that GMR Airport had bid for Rs 4Kcr greenfield project in Greece. The stock exchanges have sought a clarification and the company is yet to revert back.