KOCHI: The country’s first airport company in the public-private partnership space, Cochin International Airport Ltd, has rewarded its single largest investor — the Kerala government — handsomely over the years. CIAL enters its silver jubilee year this week.On an initial investment of Rs 95 crore, the state government, which owns a nearly 34% stake in the company that runs Nedumbassery airport, has received Rs 291.54 crore in dividend payouts alone in the last two decades or so.
CIAL shares are not publicly traded. Taking into account the most-conservative estimate of Rs 40 per share, based on the pricing of a recently-concluded rights issue, the state government’s 16.48 crore shares in the company are worth roughly Rs 660 crore. Some of the other big stakeholders in CIAL include Lulu boss Yusuffali M A (around 10%), Kochi-based Synthite Industries (6.53%), central PSUs BPCL (3.43%), Housing and Urban Development Corporation (3.285%) and the State Bank of India (3.267%). There are another 18,000 small investors, whose combined ownership is less than 10%.
“The project was started with just Rs 20,000,” says V J Kurian, former managing director of CIAL, who also led the project in the 1990s. “But I was sure that CIAL will turn profitable and exceed Kitco’s projections. We pooled a lot of new ideas in raising funds and later formed a company floating equity. When we mooted the project in 1993, all we had was Rs 20,000. The actual airport project cost at the time of commissioning in May 1999 was Rs 308 crore,” said Kurian.
CIAL registered a loss of Rs 71 crore between 1999 to 2002. But it turned things around with new ideas and paid its first dividend in 2003. “When the PPP model was mooted in 1992, people laughed at us. Now this model has been adopted by Bengaluru and Hyderabad airports,” said Kurian. “Kitco’s initial study visioned the airport becoming profitable within 10 years of commissioning. We bettered it,” he added.
The acquisition of 1,253 acres of land from 3,824 owners was the biggest challenge. “CIAL always stood by the people who lost their land. It made every effort to enhance their standard of living. All 822 people who lost their homes have been provided with employment at the airport,” a CIAL official said.
Though the initial target for the project was Rs 200 crore, the proceeds amounted to just Rs 4 crore. Kurian, then CIAL MD, came up with an innovative funding idea, which was greenlit by then CM M Karunakaran. Though Kurian’s initial proposal to raise funds did not go as planned, he came up with a new plan — financial restructuring by floating a company.
Accordingly, a public limited company was formed, which would enable the project to pool funds through equity shares from public investors and the government. The authorised initial capital of Rs 90 crore, comprising nine crore equity shares of Rs 10 each, was incorporated by Kochi International Airport Society.
High-flier
On May 25, 1999, the Kochi airport was inaugurated by then President K R Narayanan.It began commercial operations on June 10, 1999, by receiving its first aircraft.
It is the first in the country to be developed on PPP model
Rs 660 cr worth of government’s 16.48 crore shares in CIAL, based on the pricing of a recently-concluded rights issue