TRIVANDRUM, 17 August — A delegation led by Kerala Finance Minister K. Sankaranarayanan will visit the Middle East to attract additional equity participation by rich non-resident Keralites (NRKs) in the debt-burdened Cochin International Airport Limited (CIAL).
The decks have also been cleared for the Airports Authority of India (AAI) to take up a 26 percent equity stake in CIAL.
The delegation is expected to visit the Middle East after the AAI agrees to pick up the 26 percent.
These decisions were taken at a CIAL board meeting held here yesterday under its new chairman, Kerala Chief Minister A.K. Antony.
At the meeting it was also decided that a delegation of directors would visit New Delhi and hold final rounds of talks to speed up the process of the AAI’s investment in CIAL. This visit is to take place in September.
The delegation would also take up the issue of restructuring of the loan given by the Housing and Urban Development Corp. Ltd. (HUDCO) to CIAL. Non-resident Indians in general and NRKs in particular are expected to be more interested in picking up CIAL stock now, since the Reserve Bank of India (RBI) and the Foreign Investment Promotion Board (FIPB) have permitted repatriation of income on CIAL shares.
At its second meeting, the CIAL board under Antony last September had decided that the only way out of the present financial crises for CIAL was to reduce the stake of the state government from 51 percent to 26 percent. The AAI investment is thus crucial for CIAL.
CIAL created history by becoming the country’s first privately funded airport when it opened on May 25, 1999. But with revenues remaining low and interests on loans mounting CIAL found itself sitting on a debt 2.1 billion rupees, bearing an annual interest of 330 million rupees.
The company decided to increase its capital base from 900 million rupees to two billion rupees in August 2000 through a rights issue. The rights issue, which opened in November 2000, was to close on March 31, 2001. But the state government was unable to subscribe to its portion of the rights issue, amounting to 51 percent of the increased capital base, due to its poor finances.
The state government has already subscribed to the CIAL rights issue. It now wants that all the directors also subscribe to the rights issue before Sept. 30.
At present the state government, including a few state-owned public sector undertakings, holds 320 million rupees worth of CIAL shares, followed by 240 million rupees with almost 10,000 non-resident shareholders, including the directors of CIAL.
Air-India and Bharat Petroleum Corp. Ltd. (BPCL) hold 50 million rupees worth of CIAL stock each, while various banks like the Federal Bank, Dhanalakshmi Bank and the India Overseas Bank hold another 70 million rupees of CIAL equity.
With the number of weekly flights increasing from just 70 when CIAL commenced functioning to 120, and with more international airlines expected to commence operations, CIAL is hoping for better times ahead.
