04-oct-2016

India Ratings and Research (Ind-Ra) has affirmed Mumbai International Airport Private Limiteds (MIAPL) bank loans
as follows:

- - INR42.31bn long-term bank loans: affirmed at IND A+; Outlook Stable

- INR2.5bn fund-based limits: affirmed at IND A+; Outlook Stable
- INR5.9bn non-fund-based limits: affirmed at 'IND A+'; Outlook Stable
- INR18bn additional long-term bank loans: affirmed at IND A+; Outlook Stable
- INR6.5bn term loans against real estate deposits: affirmed at IND A+(SO); Outlook Stable
- INR26.48bn (INR22.84bn outstanding as on 30 June 2016) long-term bank loan: affirmed at IND A+(SO); Outlook
Stable

KEY RATING DRIVERS

Better-than-expected Revenue: MIAPL achieved higher revenue growth in FY16 than the agencys base case
estimates. The total income increased 2.8% yoy to INR27.56bn, largely driven by a 6.8% yoy increase in aeronautical
revenue which was tempered by a lower-than-expected real estate income from the monetisation of land parcel
envisaged during the last review. Annual passenger enplanements increased to 41.67 million (13.76% yoy) in FY16
comprising a 19.25% increase in domestic passengers and a 1.66% increase in international passengers. Among all
the Indian airports, MIAPL was foremost in international cargo tonnage with a 30% share and ranked second in the
total cargo tonnage.

The domestic segment continues to be around 70% of the total passenger throughput.MIAPL has demonstrated
consistent revenue growth in line with growth in international and domestic enplanements since FY08 (except a
marginal dip in two years for the latter segment). The total revenue grew at a CAGR of 18.6% over FY11-FY16. MIAPLs
margins have been robust historically, clocking an average of 34.72% between FY11-FY16.

Real Estate Monetisation: MIAPLs credit metrics depend upon real estate monetisation which is likely to be built
up in a phased manner up to FY23. Stress case scenarios of a delay in monetisation plans still demonstrate MIAPLs
ability of timely debt servicing. Real estate revenues are projected to fetch around 2.9% of the total income between
FY17-FY20. MIAPL in November 2015 availed an INR6.5bn loan to bridge the gap in funding due to a delay in receipt
of real estate deposits; INR5.5bn of this has been drawn down till 2 September 2016. MIAPL launched five plots with
a total developable area of 3.635 million square feet acres for monetisation in August 2016 and expects the process to
be completed by March 2017.

Continued Regulatory (Price) Risk: MIAPL faces regulatory (price) risk since a tariff order for the second regulatory
period (FY15-FY19) is pending and is likely only in 3QFY17. Ind-Ras base case projections, based on the consultation
paper circulated by Airports Economic Regulatory Authority (AERA), factor in a decrease of 7.2% in tariff charges in
FY18 and 53.2% decrease in FY20 (start of third control period).

Robust Cash Flow: The cash flow is a combination of aero, non-aero revenue and real estate monetisation. Debt
service coverage ratios appear resilient to various stress scenarios and changes in key rating variables such as
delayed/deferred real estate monetisation and reduced traffic growth. The debt service reserve account, for term debt,
has been funded in the form of a bank guarantee of INR1,750m.

Improving Debtor Days: The total receivables from various airlines as on 29 February 2016 were INR3,055.19m, of
which 67.77% was accounted for by the Air India group. Initiatives such as agreement with International Air Transport
Association and rigorous follow-ups led to an improvement of receivables days to 47. 66 days in FY16 from 78.87 days
in FY13 (FY15: 42.69 days). MIAPL has entered into a tripartite agreement with Air India group and IATA to ensure
ADF collection within a fortnight, in line with the collection period of other airlines.

ADF Prepayment: The bank loan rating, secured against the levy of airport development fee (ADF), reflects sustained
ADF collections and prepayments for an additional year (FY16). MIAPL had prepaid INR454.9m in FY14, INR573.3m in
FY15 and INR464.3m in FY16. A 6.1% higher payment in FY16 followed a 4% higher payment in FY15. The collections
are mainly based on higher-than-expected passenger enplanement levels of 41.67 million passengers in FY16 against
36.63 million in FY15.
Mandatory Pre-payment Provision: MIAPL has mandatorily prepaid its ADF loan up to October 2017 based on the
provisions of financing documents and is consistently ahead of the scheduled repayment by one year. The debt service
reserve account, for ADF debt, has been funded in the form of a bank guarantee of INR770m.
Additionally, MIAPL maintains one-month equivalent interest in ADF escrow account. The interest rate on ADF has been
revised downwards from the last review. The actual cash realisation of ADF revenue depends on traffic at MIAPL and
is subject to payments being made by airlines on a timely basis (ADF is billed by airlines as part of the ticket price).

Tail Risk: AERA has, in the order, tentatively estimated ADF collection to be completed by April 2021. However, the
ADF loan repayment assumes that ADF collection shall be allowed beyond the current indicative period of April 2021
since the last instalment for ADF loan is scheduled to be re-paid in March 2025. This remains a lesser concern since
the time frame decided by AERA for ADF collection is indicative and is subject to change depending on the traffic
performance observed at periodic reviews.

RATING SENSITIVITIES

Positive: Favourable regulatory ruling and sustained revenue performance in line with Ind-Ras expectations could
result in a positive rating action.

Negative: A negative rating action could result from any material delay in the monetisation of land parcels, an adverse
regulatory ruling and any material changes in leverage, coverage, or liquidity.