The Airports Authority of India (AAI) will meet about 60 percent of its total outlay for the next financial year through debt, as they pay 100% of their Profit After Tax (PAT) to the government as dividend.
The Budget has shown an outlay by AAI of Rs 4,086 crore for the next financial year and about Rs 2,500 crore will be raised from the market. “The money will be invested in airport upgrade and about 60% of it will be raised as debt while the rest would be our equity into the projects,” AAI Chairman Guruprasad Mohapatra said today.
A senior aviation ministry official added that this would be the first time that the state-owned airport operator would raise debt to fund airport upgrade scheme.
“Any healthy company should use a combination of debt and equity to fund schemes, which was not the case with AAI. It is great that they are raising money as debt this year,” said a ministry official adding that this will surely increase the cost of capital for AAI.
ET had reported in January that AAI will have to pay its full Profit after Tax (PAT) for fiscal 2017 and 2018 as dividend with the government after the government rejected its request for an exemption asking them to leverage their cash reserve.
Finance Minister Arun Jaitley also announced in the Budget on Thursday that the finances of AAI will be leveraged to fund a part of the airport upgrade plan.
“Of the Rs 1,000 crore under the RCS head, about 890 crore is for upgrading RCS airports and the rest would be to fund connectivity within the northeastern states,” said a senior ministry official.