Istanbul is GMR's first airport project outside India

Mumbai: The deciding factor in the GMR consortium's favour in bagging the Sabiha Gokcen International Airport was the Indian infrastructure company's capability to handle rapidly growing traffic, said GMR Group chief financial officer (CFO) Madhu Terdal.

Yesterday a consortium of GMR Infrastructure Limited, Limak Insaat Sanavi and Malaysia Airports Holdings had won the bid for Istanbul's second airport - Sabiha Gokcen International Airport (SGA) offering to pay a licence fee of €1.9 billion for Istanbul's second airport, to the Turkish government over 20 years. (See: Malaysia Airports-GMR Group consortium wins bid for Istanbul's second airport)

GMR Infrastructure Ltd. said the consortium led by it won the tender amidst intense competition from global airport majors including Fraport (Germany), Venice Airport (Italy), TAV (Turkey) and Chicago Airport (USA).

The current international terminal will be converted to an all-domestic terminal, subsequent to construction of the new terminal.

The deciding factor in GMR's favour was the Indian infrastructure company's capability to handle rapidly growing traffic at the airport, said GMR Group chief financial officer (CFO) Madhu Terdal.

"We are seeing a similar kind of growth at the Delhi and Hyderabad airports as SGA. Turkey is seen as the China of Europe with an 8 per cent growth in its gross domestic product (GDP). This airport, which was started five years back, has been growing at 50 per cent over the last two years," said Terdal.

"Its passenger traffic has grown from two lakh to 3.5 million in the last five years. This situation is very similar to the airports we are developing in India, so we can apply our learning to this project," Terdal said.

A strong local partner (Limak) and topping the $2.6 billion licence fee offering of highest bidder also swayed the bid in the consortium's favour.

"Limak is a Turkish construction company, which has successfully completed projects in roads, highways, dams, hydroelectric power stations, industrial buildings, ports and airports. We also topped the highest bidder's offer of $2.6 billion)," said Terdal.

This is GMR Infrastructure's first airport project outside India, but the company is looking at more such opportunities, particularly in Europe.

"We now have 8-9 years of experience in airport business, which sufficiently qualifies us to seek business abroad," says Terdal.

The Bangalore-based infrastructure company is expecting revenues from airport business to overtake earnings from other business — power, ports, roads, etc - by 2010.

SGA last year (2006) reported earnings of Rs484 crore (€88 million), which is growing at an annual rate of 50 per cent, Terdal said.

For the SGA airport project, GMR and Limak hold equal stakes of 40 per cent each while Malaysia Airport Holding has 20 per cent stake.