GMR Hyderabad International Airport Acquires MAE’s Stake: JV 50:50 No More
GMR Hyderabad International Airport Acquires MAE’s Stake: JV 50:50 No More
GMR Hyderabad International Airport/GHIAL has acquired a 44.61% stake in Partner Malaysia Aerospace Engineering SDN BHD/MAE in a joint venture company called MGAE or MAS GMR Aerospace Engineering Company.
JV Becomes Wholly Owned Subsidiary
With the acquisition of the stake held by its partner, GHAI now owns MGAE/MAS GMR. The latter which had been incorporated as a 50:50 JV has now become a fully owned subsidiary of GHIAL.
About MGAE/MAS-GMR
MAS-GMR Aerospace Engineering Company is situated in a 250 acre GMR Aerospace Park SEZ. This commissioned an Airframe MRO facility famed MGAT or MAS GMR Aero Technic Limited at the Hyderabad Airport in the month of November 2011 for operating the MRO business while physical infrastructure was lease rented to MGAT.
Sponsors GMR Hyderabad International Airport and Malaysia Aerospace Engineering/MAE have infused R 41 Crore in FY2014, in addition to initial project equity of R 77 Crore and R 83.4 Crore equity additionally infused in the previous fiscal year. Infusion was advanced to MGAT.
Previous Agreements
This company had previous agreements with few airline operators and aircraft leasing companies for providing MRO services. Size of the aircraft maintenance market in the nation was estimated at around USD 700 million and by the year 2020, the complete Indian fleet will double to 1000 planes so the aviation market is really looking good right now, as per the March KPMG report quoted by media.
Deal Value Not Disclosed
GMR did not reveal the details of the deal to the public. It did indicate that it was for nominal consideration. The deal value involved 9.67.50,000 shares of face value of Rs. 10 each. The Union Commerce Ministry has also agreed to the buyout of the MRO unit in the SEZ close to the Hyderabad airport.
Statutory conditions were laid down for GMR and its partners. Malaysian Aerospace Engineering indicated its inability to introduce new funds into the loss making MRO facility. The MRO facility was established in 2011 with investment of Rs. 350 crore and losses of Rs. 240 crore in March 2014, according to ET.
With the disappearance of the flight MH370, Malaysia Airline Systems had been facing a tough phase and had to let go of the MRO facility, the daily has also reported. Post the purchase of the stake, the MRO will now be known as GMR Aerospace Engineering Company Limited.
Conclusion
The new MRO facility will no longer be a JV and this will hopefully cut down on its losses. Malaysia Airlines Systems will also be able to pull back and recover following the sale of the stake.
