DIAL may reduce minimum annual guarantee by duty-free operator

New Delhi: Delhi International Airport Ltd (DIAL) might agree to a reduction in the minimum annual guarantee (MAG) paid by duty-free operator, Alpha Future, a joint venture between international company Alpha and Kishore Biyani promoted Future Group.
In 2006, Alpha Future had undertaken a 39-month contract with DIAL for a minimum annual guarantee of $93 million (Rs 372 crore) in Delhi airport. Around August last year, the company had asked for a revision of the MAG to $54 million (Rs 216 crore).
Also, on the basis of Alpha’s downward revision of its projected sales from $381 million in November 2006 to $209 million in 2007, the concession fee was asked to be reduced from $132 million to $68 million.
If agreed to, this would mean DIAL’s revenues from duty-free operations would go down by $39 million (Rs 156 crore). Earlier, DIAL had refused to agree for a reduction and there were talks of them terminating the contract and go for rebidding.
But yesterday, top DIAL executives said that negotiations are on and there is no question of terminating the contract. Instead, they might look at reducing the MAG.
11/01/08 Anirban Chowdhury/Business Standard

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Categories: Airports Jan 2008