Consultation Paper No. 02/2024-25 In the matter of Determination of Aeronautical Tariff for Shirdi International Airport, Shirdi (SAG) for the First Control Period (1st April, 2022 to 31st March, 2027).

फा. सं. ऐरा/20010/एमवाईटीपी/एमएडीसी/शिरडी/सीपी-I/2022-27 F. No. AERA/20010/MYTP/MADC/Shirdi/CP-I/2022-27 परामिश पत्र संख् या 02/2024-25 Consultation Paper No. 02/2024-25 भारतीय शवमानपत् तन आशथशक शवशनयामक प्राशिकरण Airports Economic Regulatory Authority of India शिरडी अंतरराष्ट्रीय हवाईअड्डा, शिरडी (एसएजी) के संबंि में प्रथम शनयंत्रण अवशि (01 अप्रैल, 2022 से 31 मार्श, 2027) के शलए वैमाशनक टैररफ शनिाशररत करने के मामले में/ IN THE MATTER OF DETERMINATION OF AERONAUTICAL TARIFF FOR SHIRDI INTERNATIONAL AIRPORT, SHIRDI (SAG) FOR THE FIRST CONTROL PERIOD (1ST APRIL, 2022 TO 31ST MARCH, 2027) जारी करने की तारीख : 18 जून, 2024 Date of Issue: 18th June, 2024 ततृ ीय तल, उड़ान भवन/ 3rd Floor, Udaan Bhawan सफदरजंग एयरपोर्ट/ Safdarjung Airport नई ददल् ली/New Delhi – 110003 पऱामर्ट पत्र संख् य़ा 02/2024-25/Consultation Paper No 02/2024-25 पृष् ठ 130 क़ा 1/ Page 1 of 130Stakeholders’ Comments Stakeholders’ Comments Shirdi International Airport was notified as a Major Airport in accordance with the provisions of the AERA Act 2008, read with AERA (Amendment) Act 2019 & AERA (Amendment) Act 2021, by Ministry of Civil Aviation (MoCA) on 01st November 2021 through notification in Gazette No. S.O. 4596 (E). The annual passenger throughout / designated capacity of Shirdi International Airport in FY 2021-22 was less than 3.5 MPPA. Shirdi International Airport has been developed and commissioned by Maharashtra Airport Development Company Limited (MADC) on 1st October 2017. Shirdi International Airport was the first greenfield airport to be made operational by MADC. As the Shirdi Airport was notified as a Major Airport on 1st November 2021, in order to consider a full 5-year Regulatory Period, the Authority proposes to consider 1st April 2022 to 31st March 2027 as the First Control Period for the Airport. The Authority has also considered financial results for the period from the date of notification of the airport as a Major Airport (i.e. 1st November 2021) up to 31st March 2022 in the determination of the ARR for the First Control Period. MADC had submitted MYTP for aeronautical tariff determination in the following manner: • Determination of Tariff from 1st October 2017 to 31st March 2022. • Multi Year Tariff Proposal (MYTP) for First Control Period (FCP) starting from FY 2022-23 to FY 2026-27. For this Consultation Paper, the Authority has considered the audited figures submitted by MADC for FY 2022- 23. Accordingly, the Authority’s proposals on various aspects of the Tariff determination process have been explained in detail in this Consultation Paper. Further, the audited figures for FY 2023-24 have not been made available by the Airport Operator. The Airport Operator is advised to submit the audited figures for FY 2023-24 during the stakeholders’ consultation process. The Authority, after considering all information currently available and analyzing various scenarios and the views of the Airport Operator (MADC) has reviewed the necessary adjustments in various building blocks. However, these adjustments would be finalized only after consideration of the comments from the stakeholders. The Authority shall consider written evidence-based feedback, comments and suggestions from all the stakeholders on the proposals made in the Consultation Paper and pass a suitable Order determining the tariff for aeronautical services. The Authority would like to emphasize that the consultation process timelines are sacred and hereby requests the stakeholders to provide their comments/ inputs within the timelines specified in this Consultation Paper, beyond which the same will not be considered by the Authority. Thus, in accordance with the provisions of Section 13(4) of the AERA Act, 2008, the written comments on Consultation Paper No. 02/2024-25 dated 18.06.2024 are invited from the Stakeholders, preferably in electronic form, at the following address: Director (P&S, Tariff) Airports Economic Regulatory Authority of India (AERA), 3rd Floor, Udaan Bhawan, Safdarjung Airport, New Delhi – 110003, India Email: director-ps@aera.gov.in, satish.kr@aera.gov.in, trilok@aera.gov.in copy to secretary@aera.gov.in Consultation Paper No. 02/2024-25 Page 2 of 130Stakeholders’ Comments Stakeholders’ Consultation Meeting 02.07.2024 Last Date for submission of comments 18.07.2024 Last Date for submission of counter comments 27.07.2024 Comments and Counter Comments will be posted on AERA website www.aera.gov.in For any clarification / information, Director (P&S, Tariff) may be contacted at director-ps@aera.gov.in. Consultation Paper No. 02/2024-25 Page 3 of 130Table of Contents Table of Contents List of Tables ............................................................................................................................................................ 7 List of Abbreviations .............................................................................................................................................. 12 1 BACKGROUND ....................................................................................................................................... 14 1.1 Introduction ........................................................................................................................................... 14 1.2 Profile of Shirdi International Airport .................................................................................................... 14 1.3 Cargo Facility, Ground Handling and Supply of Fuel to the Aircraft (CGF Services) ............................. 15 2 TARIFF DETERMINATION OF SHIRDI INTERNATIONAL AIRPORT ......................................... 16 2.1 Tariff setting principles ......................................................................................................................... 16 2.2 Authority’s Orders applied in Tariff Proposals in this Consultation Paper .............................................. 17 2.3 Control Period ....................................................................................................................................... 18 2.4 Past tariff determination history ............................................................................................................. 18 2.5 MYTP submission by MADC ................................................................................................................ 18 2.6 Revenues from Air Navigation Services (ANS) ..................................................................................... 20 2.7 Construction of this Consultation Paper ................................................................................................. 20 2.8 Authority’s proposal regarding Control Period ....................................................................................... 21 3 DETERMINATION OF TARIFF FOR THE PERIOD FROM 1ST NOVEMBER 2021 TO 31ST MARCH 2022 ........................................................................................................................................... 22 3.1 Background ........................................................................................................................................... 22 3.2 MADC’s submission on shortfall for the period from FY 2017-18 to FY 2021-22 .................................. 22 3.3 Authority’s examination of period (prior to FCP) for which over/ under recovery is determined............. 23 3.4 Traffic ................................................................................................................................................... 24 3.5 Capital Expenditure (CAPEX), Depreciation and Regulatory Asset Base (RAB) .................................... 25 3.6 Return on Land...................................................................................................................................... 30 3.7 Fair Rate of Return (FRoR) ................................................................................................................... 32 3.8 Operating and Maintenance (O & M) Expenses ..................................................................................... 33 3.9 Non-Aeronautical Revenue (NAR) ........................................................................................................ 41 3.10 Aeronautical Revenue............................................................................................................................ 43 3.11 Taxation ................................................................................................................................................ 45 3.12 Aggregate Revenue Requirement (ARR) for the period from 1st November 2021 to 31st March 2022 ..... 49 3.13 Authority’s proposal regarding Aeronautical Tariff for the period from 1st November 2021 to 31st March 2022 ........................................................................................................................................... 50 4 TRAFFIC FOR THE FIRST CONTROL PERIOD ................................................................................ 51 4.1 MADC’s submission regarding Traffic for the First Control Period ....................................................... 51 4.2 Authority’s examination regarding Traffic for the First Control Period .................................................. 51 4.3 Authority’s proposal regarding Traffic for the First Control Period ........................................................ 58 5 CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FIRST CONTROL PERIOD ...................................................................................... 59 5.1 Background ........................................................................................................................................... 59 5.2 MADC’s submission regarding Capital Expenditure (CAPEX) for the First Control Period ................... 60 5.3 Authority’s examination regarding Revised Capital Expenditure (CAPEX) for the First Control Period . 64 Consultation Paper No. 02/2024-25 Page 4 of 130Table of Contents 5.4 MADC’s submission regarding Depreciation and Regulatory Asset Base (RAB) for the First Control Period.................................................................................................................................................... 79 5.5 Authority’s examination regarding Depreciation and Regulatory Asset Base (RAB) for the First Control Period ....................................................................................................................................... 80 5.6 Authority’s proposal regarding Capital Expenditure (CAPEX), Depreciation and Regulatory Asset Base (RAB) for the First Control Period ................................................................................................ 81 6 RETURN ON LAND FOR THE FIRST CONTROL PERIOD .............................................................. 82 6.1 MADC’s submission regarding Return on Land for the First Control Period .......................................... 82 6.2 Authority’s examination regarding Return on Land for the First Control Period ..................................... 82 6.3 Authority’s proposal regarding Return on Land for the First Control Period ........................................... 84 7 FAIR RATE OF RETURN (FRoR) FOR THE FIRST CONTROL PERIOD ....................................... 85 7.1 MADC’s submission regarding Fair Rate of Return (FRoR) for the First Control Period ........................ 85 7.2 Authority’s examination regarding Fair Rate of Return (FRoR) for the First Control Period ................... 85 7.3 Authority’s proposal regarding Fair Rate of Return (FRoR) for the First Control Period......................... 86 8 INFLATION FOR THE FIRST CONTROL PERIOD ........................................................................... 87 8.1 MADC’s submission regarding Inflation for the First Control Period ..................................................... 87 8.2 Authority’s examination regarding Inflation for the First Control Period ................................................ 87 8.3 Authority’s proposal regarding Inflation for the First Control Period...................................................... 87 9 OPERATING & MAINTENANCE (O&M) EXPENSES FOR THE FIRST CONTROL PERIOD ..... 88 9.1 MADC submission regarding Operating & Maintenance (O&M) expenses for the First Control Period .. 88 9.2 Authority’s examination regarding Operating & Maintenance (O&M) expenses for the First Control Period.................................................................................................................................................... 89 9.3 Authority’s proposal regarding Operating and Maintenance Expenses for the First Control Period ....... 103 10 NON-AERONAUTICAL REVENUE (NAR) FOR THE FIRST CONTROL PERIOD ...................... 104 10.1 MADC’s submission regarding Non-Aeronautical Revenue for the First Control Period ...................... 104 10.2 Authority’s examination regarding Non-Aeronautical Revenue for the First Control Period ................. 105 10.3 Authority’s proposal regarding Non-Aeronautical Revenue for the First Control Period ....................... 112 11 TAXATION FOR THE FIRST CONTROL PERIOD .......................................................................... 113 11.1 MADC’s submission regarding Taxation for the First Control Period .................................................. 113 11.2 Authority’s examination regarding Taxation for the First Control Period ............................................. 113 11.3 Authority’s proposal regarding Taxation for the First Control Period ................................................... 114 12 QUALITY OF SERVICE FOR THE FIRST CONTROL PERIOD..................................................... 115 12.1 MADC’s submission regarding Quality of Service for the First Control Period .................................... 115 12.2 Authority’s examination regarding Quality of Service for the First Control Period ............................... 115 12.3 Authority’s proposal regarding Quality of Service for the First Control Period ..................................... 115 13 AGGREGATE REVENUE REQUIREMENT (ARR) FOR THE FIRST CONTROL PERIOD ........ 116 13.1 MADC’s submission regarding Aggregate Revenue Requirement (ARR) for the First Control Period .. 116 13.2 Authority’s examination regarding Aggregate Revenue Requirement (ARR) for the First Control Period.................................................................................................................................................. 116 Consultation Paper No. 02/2024-25 Page 5 of 130Table of Contents 13.3 Authority’s proposal regarding Aggregate Revenue Requirement (ARR) for the First Control Period... 119 14 SUMMARY OF AUTHORITY’S PROPOSALS PUT FORTH FOR STAKEHOLDERS’ CONSULTATION .................................................................................................................................. 120 Chapter 2: Tariff Determination of Shirdi Airport ............................................................................................... 120 Chapter 3: Determination of Tariff for the period from 1st November 2021 to 31st March 2022 ........................... 120 Chapter 4: Traffic for the First Control Period .................................................................................................... 120 Chapter 5: Capital Expenditure (CAPEX), Depreciation and Regulatory Asset Base (RAB) for the First Control Period.................................................................................................................................................. 120 Chapter 6: Return on Land for the First Control Period ....................................................................................... 121 Chapter 7: Fair Rate of Return (FRoR) for the First Control Period..................................................................... 121 Chapter 8: Inflation for the First Control Period .................................................................................................. 121 Chapter 9: Operating & Maintenance (O&M) Expenses for the First Control Period ........................................... 121 Chapter 10: Non-Aeronautical Revenue (NAR) for the First Control Period ....................................................... 121 Chapter 11: Taxation for the First Control Period ............................................................................................... 121 Chapter 12: Quality of Service for the First Control Period ................................................................................. 121 Chapter 13: Aggregate Revenue Requirement (ARR) for the First Control Period ............................................... 121 15 STAKEHOLDERS’ CONSULTATION TIMELINE............................................................................ 122 16 ANNEXURE ........................................................................................................................................... 123 Consultation Paper No. 02/2024-25 Page 6 of 130List of Tables List of Tables Table 1: Technical and Terminal Building details of Shirdi International Airport submitted by MADC ..................... 14 Table 2: Sequence of events with regard to submission of MYTP by MADC ............................................................ 19 Table 3: MADC’s submission of shortfall for the period from FY18 to FY22 ............................................................ 22 Table 4: Basis of apportionment of various building blocks between the period from 1st April 2021 to 31st October 2021 and the period from 1st November 2021 to 31st March 2022 ................................................................ 24 Table 5: MADC’s submission on Passenger Traffic and ATM for the period from FY18 to FY22 ............................. 24 Table 6: Difference in actual traffic between MADC’s Submission and AAI website for the period from FY18 to FY22 .......................................................................................................................................................... 25 Table 7: Domestic Passenger Traffic and Domestic ATM proposed by the Authority for the period from 1st November 2021 to 31st March 2022 ............................................................................................................ 25 Table 8: MADC’s submission of Average RAB for the period from FY18 to FY22 ................................................... 25 Table 9: Breakup of Capital Expenditure for the period from FY17 to FY22 as per MADC’s submission .................. 26 Table 10: Asset category wise breakup of depreciation for the period from FY17 to FY22 as per MADC’s submission .................................................................................................................................................. 26 Table 11: Comparison of classification of assets as on 31st March 2022 as per MADC and the Authority .................. 27 Table 12: Ratio for segregating common assets into aeronautical and non-aeronautical considered by the Authority . 28 Table 13: Aeronautical CAPEX proposed by the Authority for the period from FY18 to FY22.................................. 28 Table 14: Statement of Utilization of Grant received from Shri Saibaba Sansthan Trust as submitted by MADC ....... 28 Table 15: Aeronautical depreciation recalculated by the Authority ............................................................................ 29 Table 16: Regulatory Asset Base as proposed by the Authority for the period FY18 to FY22 .................................... 30 Table 17: MADC’s submission on Return on Land for the period FY18 to FY22 ...................................................... 30 Table 18: MADC’s submission on the basis of computation of Return on Land for FY18 to FY22 ............................ 30 Table 19: Details of land area in use as of November, 2021....................................................................................... 31 Table 20: Return on land proposed by the Authority for the period 1st November 2021 to 31st March 2022 ................ 32 Table 21: FRoR submitted by MADC for the period FY18 to FY22 .......................................................................... 32 Table 22: Operating and Maintenance (O&M) expenses submitted by MADC for the period FY18 to FY22 ............. 33 Table 23: Gross Block Ratio proposed by the Authority for the period from 1st November 2021 to 31st March 2022 .. 35 Table 24: Allocation Ratios proposed by the Authority for the period from 1st November 2021 to 31st March 2022 ... 35 Table 25: Break up and nature of Administration and General (A&G) Expenses for FY 22 as submitted by MADC .. 36 Table 26: Aeronautical Administration and General (A&G) Expenses for FY22 as per MADC submission and as proposed by the Authority ........................................................................................................................... 36 Table 27: Break up and nature of Airport Operating Expenses for FY22 as submitted by MADC .............................. 37 Table 28: Airport Operating Expenses for FY22 as per MADC and as proposed by the Authority ............................. 38 Table 29: Aeronautical Employee Expenses for FY22 as per MADC submission and as proposed by the Authority .. 39 Table 30: Repair and Maintenance Expenses for FY 22 as proposed by the Authority ............................................... 40 Table 31: Adjustments to Total O&M expenses proposed by the Authority for FY22 ................................................ 41 Table 32: Aeronautical Operating & Maintenance (O&M) expenses proposed by the Authority for the period from 1st November 2021 to 31st March 2022 ........................................................................................................ 41 Table 33: MADC’s submission on Non-Aeronautical Revenue for the period from FY18 to FY22 ............................ 41 Table 34: Non-Aeronautical Revenues proposed by the Authority for FY22 .............................................................. 42 Table 35: Reconciliation of Non-Aeronautical Revenue for FY22 between MADC submission and the Authority’s proposal ...................................................................................................................................................... 43 Consultation Paper No. 02/2024-25 Page 7 of 130List of Tables Table 36: Non-Aeronautical Revenue proposed by the Authority for the period from 1st November 2021 to 31st March 2022 ................................................................................................................................................ 43 Table 37: Aeronautical Revenue submitted by MADC for the period FY18 to FY22 ................................................. 43 Table 38: Reconciliation of Aeronautical Revenue for FY22 between MADC submission and the Authority’s proposal ...................................................................................................................................................... 44 Table 39: Basis of split for Aeronautical Revenue for FY22 between the periods 1st April 2021 to 31st October 2021 and 1st November 2021 to 31st March 2022 ................................................................................................ 44 Table 40: Aeronautical Revenue proposed by the Authority for the period from 1st November 2021 to 31st March 2022 ........................................................................................................................................................... 44 Table 41: MADC’s submission on Taxation for the period from FY18 to FY22 ........................................................ 45 Table 42: Breakup of Aeronautical O&M Expenses .................................................................................................. 47 Table 43: Useful life considered by MADC for existing assets for computing IT Depreciation .................................. 47 Table 44: Depreciation rates used by the Authority for re-computation for Income Tax depreciation ......................... 47 Table 45: Income tax depreciation recomputed by the Authority ............................................................................... 48 Table 46: Aeronautical losses carried forward proposed by the Authority as on 31st October 2021............................. 48 Table 47: Aeronautical Tax proposed by the Authority for the period from 1st November 2021 to 31st March 2022 ... 49 Table 48: ARR and Shortfall proposed by the Authority for FY 21-22 (for the period from 1st November 2021 to 31st March 2022) ............................................................................................................................................... 50 Table 49: MADC’s submission of Passenger Traffic, ATM, Belly Cargo and Air Cargo and corresponding growth rates ............................................................................................................................................................ 51 Table 50: Past trend in growth of Traffic at Shirdi International Airport (based on AAI Data) ................................... 51 Table 51: Difference in actual traffic between MADC’s Submission and AAI website for the period for FY23 ......... 52 Table 52: Passenger Traffic for the period FY 2019-20 and FY 2023-24 ................................................................... 52 Table 53: Passenger Traffic proposed by the Authority for First Control Period ........................................................ 53 Table 54: ATM for the period FY 2019-20 and FY 2023-24 ..................................................................................... 53 Table 55: ATM proposed by the Authority for First Control Period ........................................................................... 54 Table 56: Historical Scheduled and Non-Scheduled ATMs ....................................................................................... 54 Table 57: Apportionment of ATMs proposed by the Authority on the basis of Historical trend .................................. 55 Table 58: Scheduled ATRs exempted for the purposes of computation of Landing Charges ...................................... 55 Table 59: ATMs considered for computation of Landing Charges ............................................................................. 55 Table 60: Belly Cargo Volume proposed by the Authority for First Control Period ................................................... 56 Table 61: Air Cargo Volume proposed by the Authority for the First Control Period ................................................. 57 Table 62: Traffic proposed by the Authority for the First Control Period for Shirdi International Airport................... 57 Table 63: MADC’s submission on Capital Expenditure (CAPEX) for the First Control Period for Shirdi International Airport ................................................................................................................................... 60 Table 64: Asset Category wise breakup of the CAPEX submitted by MADC for the First Control Period .................. 61 Table 65: Justification for CAPEX Projects for the First Control Period as submitted by MADC............................... 61 Table 66: Status of WIP CAPEX for the First Control Period as submitted by MADC .............................................. 62 Table 67: MADC’s proposal of Aeronautical additions to RAB for the First Control Period for Shirdi International Airport ........................................................................................................................................................ 63 Table 68: Comparison of the revised capex costs vis-à-vis the original capex costs as submitted by MADC for Shirdi International Airport for the First Control Period ......................................................................................... 63 Table 69: Comparison of classification of assets considered in FY23 as per the Authority ......................................... 65 Table 70: Cost components of the project “Development / Redevelopment of Cityside infrastructure and ancillary buildings at Airside and Cityside” as estimated by MADC .......................................................................... 65 Consultation Paper No. 02/2024-25 Page 8 of 130List of Tables Table 71: Cost proposed to be considered by the Authority for the project “Development / Redevelopment of Cityside infrastructure and ancillary buildings at Airside and Cityside” in the First Control Period .............. 66 Table 72: Cost components of the project “Construction of Apron” as estimated by MADC ...................................... 67 Table 73: Inflation adjusted normative rate considered by the Authority for Apron/Runway/Taxiway ....................... 67 Table 74: Cost proposed to be considered by the Authority for the project “Construction of Apron” in the First Control Period and its comparison with normative cost ............................................................................... 68 Table 75: Cost proposed to be considered by the Authority for the project “Extension of existing runway and RESA” in the First Control Period .............................................................................................................. 69 Table 76: Cost components of the project “Construction of Isolation Bay and associated work on airside” as estimated by MADC ................................................................................................................................... 70 Table 77: Cost proposed to be considered by the Authority for the project “Construction of Isolation Bay and associated work on airside” in the First Control Period ................................................................................ 70 Table 78: Cost proposed to be considered by the Authority for the project “Construction of Seating Lounges – city side” in the First Control Period .................................................................................................................. 71 Table 79: Cost proposed to be considered by the Authority for the project “Construction of Seating Lounges – air side” in the First Control Period .................................................................................................................. 71 Table 80: Comparison of WIP CAPEX submitted by MADC and the Authority proposal for First Control Period ..... 72 Table 81: Cost proposed to be considered by the Authority for the project “Construction of Water Pond” in the First Control Period ............................................................................................................................................ 73 Table 82: Cost proposed to be considered by the Authority for the project “Air cargo facility and hangars” in the First Control Period .................................................................................................................................... 74 Table 83: Cost per Sq.m. for the proposed NITB as submitted by MADC in its revised submission ........................... 75 Table 84: Details of Inflation adjusted normative cost derived by the Authority ........................................................ 76 Table 85: Cost proposed to be considered by the Authority for the project “New integrated Terminal Building” in the First Control Period ............................................................................................................................... 76 Table 86: Comparison of Planned Capital Expenditure submitted by MADC and proposed by the Authority for the First Control Period .................................................................................................................................... 77 Table 87: Comparison of Total Capital Expenditure submitted by MADC and proposals made by the Authority ....... 77 Table 88: Aeronautical additions to RAB proposed by the Authority for the First Control Period for Shirdi International Airport ................................................................................................................................... 78 Table 89: Additions to CAPEX and RAB proposed by the Authority for the First Control Period .............................. 79 Table 90: Head wise breakup of depreciation for the First Control Period as per MADC submission ......................... 79 Table 91: MADC’s submission of Average RAB for the First Control Period............................................................ 79 Table 92: Useful life considered by MADC for proposed addition from FY24 to FY27 ............................................. 80 Table 93: Depreciation as proposed by the Authority for the First Control Period for Shirdi International Airport ..... 80 Table 94: RAB proposed by the Authority for the First Control Period for Shirdi International Airport ..................... 81 Table 95: MADC’s submission on Return on Land for Shirdi International Airport for the First Control Period ........ 82 Table 96: Usage of Land at Shirdi International Airport during the First Control Period ............................................ 82 Table 97: Return on land proposed by the Authority for the First Control Period ....................................................... 84 Table 98: Fair Rate of Return submitted by MADC for the First Control Period ........................................................ 85 Table 99: Inflation rates submitted by MADC for the First control period ................................................................. 87 Table 100: Inflation rates proposed by the Authority for the First control period ....................................................... 87 Table 101: Details of increase in terminal building area as projected by MADC ........................................................ 88 Table 102: O&M Expenses submitted by MADC for the First Control Period ........................................................... 88 Table 103: Growth rates assumed by MADC for Aeronautical O&M Expenses for the First Control Period .............. 89 Consultation Paper No. 02/2024-25 Page 9 of 130List of Tables Table 104: Revised Gross Block Ratio proposed by the Authority for the First Control Period .................................. 91 Table 105: Allocation Ratios proposed by the Authority for the First Control Period ................................................. 91 Table 106: Break up Administration & General (A&G) Expenses as submitted by MADC ........................................ 91 Table 107: Administration and general expenses proposed by the Authority for the First Control Period ................... 92 Table 108: Breakup of Airport operating expenses submitted by MADC for the First Control Period ........................ 93 Table 109: Re-classification of expenses from Airport Operating expenses to other heads as per the Authority ......... 93 Table 110: Airport operating expenses claimed by MADC and proposed by the Authority for the First Control Period ......................................................................................................................................................... 94 Table 111: License Fees claimed by MADC and proposed by the Authority for the First Control Period ................... 95 Table 112: Employee Cost submitted by MADC for the First Control Period ............................................................ 95 Table 113: Employee costs proposed by the Authority for the First Control Period.................................................... 96 Table 114: Power expenses claimed by MADC and proposed by the Authority for the First Control Period .............. 97 Table 115: Water expenses claimed by MADC for the first Control Period ............................................................... 97 Table 116: Revised Water expenses submitted by MADC on 5-Jan-2024 .................................................................. 98 Table 117: Water expenses claimed by MADC and proposed by the authority for the First Control Period ................ 98 Table 118: Water Withdrawal charges claimed by MADC for the First Control Period .............................................. 98 Table 119: Revised Water Withdrawal Expenses projected by MADC ...................................................................... 99 Table 120: Water withdrawal expenses projected by MADC and proposed by the authority for the First Control Period ......................................................................................................................................................... 99 Table 121: Repair and maintenance expense claimed by MADC for First Control Period ........................................ 100 Table 122: Repair and maintenance expense claimed by MADC as a percentage of opening RAB as proposed by the Authority .................................................................................................................................................. 100 Table 123: Repair and maintenance expenses claimed by MADC and proposed by the authority for the First Control Period ....................................................................................................................................................... 100 Table 124: Return on unamortized portion of Runway recarpeting expenses proposed by the Authority for Shirdi International Airport for the First Control Period ....................................................................................... 101 Table 125: Total Runway recarpeting Expenses for the First Control Period as proposed by the Authority for Shirdi International Airport ................................................................................................................................. 102 Table 126: Aeronautical Operating and Maintenance expenses proposed by the Authority for the First Control Period ....................................................................................................................................................... 102 Table 127: Streams of Non-Aeronautical Revenue projected by MADC for the First Control Period ....................... 104 Table 128: MADC’s Submission on Non-Aeronautical Revenue for Shirdi International Airport for the First Control Period ....................................................................................................................................................... 104 Table 129: Y-o-Y Growth Rate assumed by MADC for Non-Aeronautical Revenue for the First Control Period ..... 105 Table 130: Comparison of License fee for FY23 as provided by MADC and as proposed by the Authority ............. 106 Table 131: License fee from Non-Aeronautical Concessionaires from the existing terminal proposed by the Authority for the First Control Period ....................................................................................................... 106 Table 132: License fee from non-aeronautical concessionaires proposed by the Authority for FY27 ........................ 107 Table 133: License fee from Non-Aeronautical Concessionaires from the new terminal proposed by the Authority for the First Control Period ....................................................................................................................... 107 Table 134: License fee from Car Parking from the existing terminal proposed by the Authority for the First Control Period ....................................................................................................................................................... 107 Table 135: Revenue from Advertising in the existing terminal proposed by the Authority for the First Control Period108 Table 136: Advertising revenue in new terminal building proposed by the Authority for FY27 ............................... 109 Table 137: Revenue from advertising in the new terminal proposed by the Authority for the First Control Period ... 109 Consultation Paper No. 02/2024-25 Page 10 of 130List of Tables Table 138: Taxi Rentals from the existing terminal proposed by the Authority for the First Control Period ............. 109 Table 139: Miscellaneous from the existing terminal proposed by the Authority for the First Control Period ........... 110 Table 140: Non-Aeronautical Revenue for Shirdi International Airport proposed by the Authority for the First Control Period .......................................................................................................................................... 111 Table 141: Taxation submitted by MADC for Shirdi International Airport for the First Control Period .................... 113 Table 142: MADC’s submission regarding ARR and UDF for the First Control Period ........................................... 116 Table 143: ARR proposed by the Authority for the First Control Period .................................................................. 118 Consultation Paper No. 02/2024-25 Page 11 of 130List of Abbreviations List of Abbreviations Abbreviation Expansion A&G Administration & General AAI Airports Authority of India AERA / the Authority Airports Economic Regulatory Authority of India AFS Air Freight Station ANS Air Navigation Services ARR Aggregate Revenue Requirement ASQ Airport Service Quality ATC Air Traffic Control ATM Air Traffic Movement ATR Avions de Transport Regional AUCC Airport Users Consultative Committee BOQ Bill of Quantity CAPEX Capital Expenditure CAPM Capital Asset Pricing Model CGF Cargo Facility, Ground Handling and Supply of Fuel to the Aircraft CISF Central Industrial Security Force CNS Communication, Navigation and Surveillance COD Cost of Debt COE Cost of Equity COVID-19 Corona Virus Disease of 2019 CP Consultation Paper CTC Cost to Company CUSS Common User Self Service CUTE Common User Terminal Equipment DG Set Diesel Generator Set DGCA Directorate General of Civil Aviation DVOR Doppler Very High Frequency Omni Range EBIT Earnings Before Interest and Taxes EBITDA Earnings Before Interest, Taxes, Depreciation and Amortisation EHCR Employee Head Count Ratio ESR Elevated Surface Reservoir FAR Fixed Asset Register FCP First Control Period FIDS Flight Information Display System FRoR Fair Rate of Return GBR Gross Block Ratio GHA Ground Handling Agency GST Goods & Service Tax HDPE High Density Polyethylene HPCL Hindustan Petroleum Corporation Limited ICAO International Civil Aviation Organization IMD Indian Meteorological Department IOCL Indian Oil Corporation Limited ISP Independent Service Provider IT Information Technology MADC Maharashtra Airport Development Company Limited Consultation Paper No. 02/2024-25 Page 12 of 130List of Abbreviations Abbreviation Expansion MAT Minimum Alternate Tax MIHAN Multi-Modal International Hub Airport at Nagpur MoCA Ministry of Civil Aviation MoU Memorandum of Understanding MYTP Multi-Year Tariff Proposal NAR Non-Aeronautical Revenue NCAP National Civil Aviation Policy NID Nashik Irrigation Department NITB New Integrated Terminal Building O&M Operating and Maintenance expenses OPEX Operating Expenditure PAPI Precision Approach Pathway Indicator PBT Profit Before Tax PCN Pavement Classification Number PHP Peak Hour Passenger PSF Passenger Service Fee PV Present Value R&M Repair and Maintenance RAB Regulatory Asset Base RBI Reserve Bank of India RCC Reinforced Cement Concrete RESA Runway End Safety Area RFP Request for Proposal SBI State Bank of India TBLR Terminal Building Ratio TNLC Terminal Navigational Landing Charges UDF User Development Fee WDV Written Down Value WIP Work in Progress WPI Wholesale Price Index YPP Yield Per Passenger Units of measurement FY Financial Year MPPA Million Passengers per Annum MT Metric Tonnes PAX Passenger Sq.ft. Square feet Sq.m. Square meters Crs Crores Ha. Hectares Nos. Numbers Y-o-Y Year on year Consultation Paper No. 02/2024-25 Page 13 of 130BACKGROUND 1 BACKGROUND 1.1 Introduction 1.1.1 Shirdi International Airport is located at Kakadi village, about 14 km south-west of the town of Shirdi in Maharashtra. 1.1.2 The Government of Maharashtra (GoM) appointed Maharashtra Airport Development Company Limited (MADC) as the nodal agency for development of Shirdi International Airport. The operations in Shirdi International Airport commenced on 1st October 2017 leading to it becoming the first operational Greenfield airport under MADC. 1.1.3 MADC was constituted in the year 2002 by GoM as a special purpose vehicle to develop Multi-modal International Hub Airport at Nagpur (MIHAN) and Aviation Infrastructure in the State of Maharashtra and to provide regional air connectivity. 1.1.4 MADC had prepared and filed the Multi-Year Tariff proposal for the control period 1st April 2020 to 31st March 2025 to MoCA in March 2021. MoCA, on 1st November 2021 through gazette no. S.O. 4596 (E) notified Shirdi International Airport as Major Airport. Consequently, the tariff determination activity is being undertaken by Airports Economic Regulatory Authority of India (AERA/ Authority). 1.1.5 MADC in its initial submission considered the first control period to be from 1st April 2021 to 31st March 2026. However, the Authority, considering that the submission was received in February 2022 and that the tariff determination process is a time consuming and exhaustive exercise, directed MADC to re-submit the MYTP considering the First Control Period from 1st April 2022 to 31st March 2027. 1.1.6 MADC in its revised MYTP submission made in July 2023, has submitted the details of various building blocks for First control period from 1st April 2022 to 31st March 2027 together with shortfall computation for the period from 1stApril 2017 till 31st March 2022 being carried forward to be recouped in First control period. 1.2 Profile of Shirdi International Airport 1.2.1 In FY 2017-18, i.e. the year of commencement of airport operations, Shirdi International Airport handled 37,234 passengers. The airport had quantum growth and reached 0.23 million passengers in FY 2018-19 registering a 515% growth as compared to FY 2017-18 with around 3,000 aircraft movements annually. Before the impact of COVID-19 pandemic, a growth of 130% as compared to FY 2018-19 was recorded by the airport with passenger traffic reaching 0.57 million in FY 2019-20. This makes Shirdi the 4th busiest airport in Maharashtra after Mumbai, Pune, and Nagpur. 1.2.2 Technical and Terminal Building details of Shirdi International Airport submitted by MADC are provided in the table below: Table 1: Technical and Terminal Building details of Shirdi International Airport submitted by MADC Particulars Details Airport Area Existing airport is spread over 350.85 Ha. (866.97 acres) Terminal Building Area Terminal building covers an area of 2,750 Sq.m. Designated Passenger 0.68 MPPA Handling Capacity Consultation Paper No. 02/2024-25 Page 14 of 130BACKGROUND Particulars Details Check-in Counters 08 Nos. Boarding Gates 02 Nos. 2,500m x 45 m (Runway extended up to 3200 m x 45 m, however extended portion Runway of runway will be put to use after recarpeting of runway) 3 Taxiways (27891.41 Sq.m.) Taxiway & Apron Apron area - 23625 Sq.m. Able to accommodate 04 aircrafts DVOR (Doppler Very High Frequency Omni-Directional Radio Range) and PAPI Navaids (Precision Approach Path Indicator) available as navigational/ landing aids 1.3 Cargo Facility, Ground Handling and Supply of Fuel to the Aircraft (CGF Services) Cargo Handling Services 1.3.1 MADC exclusively handles belly cargo at Shirdi International Airport. There is no other Independent Service Provider (ISP) for handling Cargo services. Ground Handling Services 1.3.2 MADC has the right to grant license to any entity for providing Ground Handling Services at Shirdi International Airport on such terms and conditions as mentioned in the License Agreement between MADC and the potential service provider. The Authority notes that the ground handling operations are presently being performed by the airlines themselves for scheduled operations. MADC has engaged a Ground Handling Agent (GHA), M/s Krystal Services Pvt Ltd, for provision of Ground Handling services at Shirdi International Airport for non- scheduled operators with a revenue share of 25%. Supply of Fuel to the Aircraft 1.3.3 In accordance with the terms and conditions outlined in the License Agreements signed between MADC and the service providers, MADC has designated Indian Oil Corporation Ltd. (IOCL) and Hindustan Petroleum Corporation Ltd. (HPCL) to establish Aviation Fuel Farm at Shirdi International Airport. 1.3.4 MADC has allotted a land parcel of 1600 Sq.m. to IOCL and 1200 Sq.m. to HPCL to construct and operate the Aviation Fuel Facilities at the Airport for a period of 20 years. 1.3.5 Two Oil Marketing Companies (OMCs) namely M/s IOCL and M/s HPCL have set up their Aviation Fuel Facilities at the Shirdi Airport and are suppling Aviation Turbine Fuel (ATF) to aircrafts. These OMCs are paying applicable Land Rentals to the Airport Operator. Consultation Paper No. 02/2024-25 Page 15 of 130TARIFF DETERMINATION OF SHIRDI INTERNATIONAL AIRPORT 2 TARIFF DETERMINATION OF SHIRDI INTERNATIONAL AIRPORT 2.1 Tariff setting principles 2.1.1 AERA was established by the Government of India vide notification No. GSR 317(E) dated 12th May 2009. The functions of AERA, in respect of Major Airports, are specified in section 13(1) of The Airport Economic Regulatory Authority of India Act, 2008 (‘AERA Act’ or ‘The Act’) read with AERA (Amendment) Act 2019 and 2021, which are as below: a) To determine the tariff for aeronautical services taking into consideration. (i) The capital expenditure incurred and timely investment in improvement of airport facilities; (ii) The service provided, its quality and other relevant factors; (iii) The cost for improving efficiency; (iv) Economic and viable operation of major airports; (v) Revenue received from services other than aeronautical services; (vi) Any Concession offered by the Central Government in any agreement or memorandum understanding or otherwise; (vii) Any other factor which may be relevant for the purposes of the Act: Provided that different tariff structures may be determined for different airports having regard to all or any of the above considerations specified at sub-clauses (i) to (vii). b) To determine the amount of development fees in respect of major airports; c) To determine the amount of passenger service fee levied under rule 88 of the Aircrafts Rules, 1937 made under Aircraft Act, 1934; d) To monitor the set performance standards relating to quality, continuity and reliability of service as may be specified by the Central Government or any Authority by it in this behalf; e) To call for such information as may be necessary to determine the tariff under clause 13(1)(a). f) To perform such other functions relating to tariffs, as may be entrusted to it by the Central Government or as may be necessary to carry out the provisions of this Act. 2.1.2 As per the AERA Act, 2008 the following are the Aeronautical services: i. Aeronautical services provided by the Airport Operators. ii. Cargo Facility, Ground Handling and Supply of Fuel to the Aircraft; and iii. Air Navigation Services. Tariff determination for ANS is carried out by the Ministry of Civil Aviation (MoCA) across all airports to maintain uniformity. 2.1.3 The Methodology adopted by the Authority to determine Aggregate Revenue Requirement (ARR) is based on AERA Act, 2008 read with AERA (Amendment) Act 2019 and 2021, the AERA (Terms and Conditions for determination of Tariff for Airport Operators) Guidelines, 2011 and further Guidelines issued by AERA from time to time. 2.1.4 As per the Guidelines, the Authority has adopted the Hybrid-Till mechanism for tariff determination for the First Control Period wherein, 30% of the non-aeronautical revenues is to be used for cross- subsidizing the aeronautical charges. 2.1.5 The ARR for a given Control Period, under Hybrid Till is calculated as Consultation Paper No. 02/2024-25 Page 16 of 130TARIFF DETERMINATION OF SHIRDI INTERNATIONAL AIRPORT 5 𝐴𝑅𝑅 = ∑⬚𝐴𝑅𝑅 𝑡 𝑡=1 𝐴𝑅𝑅 = (𝐹𝑅𝑜𝑅 𝑥 𝑅𝐴𝐵 )+𝐷 +𝑂 +𝑇 −α 𝑥 𝑁𝐴𝑅 𝑡 𝑡 𝑡 𝑡 𝑡 Where, t is the tariff year in the control period, ranging from 1 to 5 𝐴𝑅𝑅 is the Aggregate Revenue Requirement for tariff year ‘t’ 𝑡 FroR is the Fair Rate of Return for the Control Period 𝑅𝐴𝐵 is the Aeronautical Regulatory Asset Base for tariff year ‘t’ 𝑡 𝐷 is the Depreciation corresponding to the Regulatory Asset Base for tariff year ‘t’ 𝑡 𝑂 is the Aeronautical Operating and Maintenance expenditure for the tariff year ‘t’ 𝑡 𝑇 is the Aeronautical taxation expense for the tariff year ‘t’ 𝑡 𝛼 is the cross-subsidy factor for revenue from services other than Aeronautical services under the Hybrid Till methodology followed by the Authority, 𝛼 = 30%. 𝑁𝐴𝑅 is the Non-Aeronautical Revenue in tariff year ‘t’. 𝑡 2.1.6 Based on ARR, Yield per passenger (Y) is calculated as per the formula given below: ∑5 𝑃𝑉(𝐴𝑅𝑅 ) 𝑌𝑖𝑒𝑙𝑑 𝑝𝑒𝑟 𝑝𝑎𝑠𝑠𝑒𝑛𝑔𝑒𝑟 (𝑌) = 𝑡=1 𝑡 ∑5 𝑉𝐸 𝑡=1 𝑡 Where, PV (ARR) is the Present Value of ARR. All cash flows are assumed to occur at the end of the year. t The Authority has considered discounting cash flows, one year from the start of the Control Period. VE is the passenger traffic in year ‘t’ t 2.2 Authority’s Orders applied in Tariff Proposals in this Consultation Paper 2.2.1 The Authority’s Orders applied in the tariff proposals in this Consultation Paper (CP) are: i. Order No. 13/2010-11 dated 12th January 2011 (Regulatory philosophy and approach in Economic Regulation of Airport Operators) and Direction No. 5 dated 28th February 2011 (Terms and conditions for determination of tariff for Airport Operators); ii. Order No. 05/2010-11 dated 2nd August 2010 (Regulatory philosophy and approach in Economic Regulation of the services provided for Cargo facility, Ground Handling and Supply of Fuel to aircraft), Order No. 12/2010-11 dated 10th January 2011 and Direction No. 4 dated 10th January 2011 (Terms and conditions for determination of tariff for services provided for Cargo facility, Ground Handling and Supply of Fuel to aircraft). iii. Order No. 07/2016-17 dated 13th June 2016 (Normative Approach to Building Blocks in Economic Regulation of Major Airports). iv. Order No. 14/2016-17 dated 23rd January 2017 in the matter of aligning certain aspects of AERA’s Regulatory Approach (Adoption of Regulatory Till) with the provisions of the National Civil Aviation Policy – 2016 (NCAP-2016) approved by the Government of India. Consultation Paper No. 02/2024-25 Page 17 of 130TARIFF DETERMINATION OF SHIRDI INTERNATIONAL AIRPORT v. Order No. 35/2017-18 dated 12th January 2018 and Amendment No. 01 to Order No. 35/2017-18 dated 9th April 2018 in the matter of determination of useful life of Airport assets. vi. Order No. 42/2018-19 dated 5th March 2019 in the matter of Determination of Fair Rate of Return (FRoR) to be provided on Cost of Land incurred by various Airport Operators in India. 2.3 Control Period 2.3.1 The Authority notes that MADC has submitted the MYTP for the initial period starting from 1st April 2017 to 31st March 2022 together with 5-year period from FY 2022-23 to FY 2026-27 (First Control Period). 2.3.2 The Authority notes that the Airport started its commercial operation on 1st October 2017 and was declared as a Major Airport on 1st November 2021. Further, the Authority notes that the first financial year after being notified as major airport contains only 5 months of operations. To give effect of a full term of 5 years, the Authority proposes to consider the Control Period as effective from FY 2022-23 to FY 2026-27 together with determining shortfall / excess recovery of revenues for the period from 1st November 2021 to 31st March 2022. 2.4 Past tariff determination history 2.4.1 The Authority, through Order No. 41/2022-23 dated 22nd March 2023 and addendum to the Order No 41/ 2022-23 dated 7th June 2023, allowed MADC to levy and collect tariff at Shirdi International Airport as per AIC No. 34/2020 dated 25th September 2020, on an interim basis w.e.f. 1st April 2023 to 30th September 2023. The Authority, vide above referred addendum dated 7th June 2023 further allowed MADC to increase Landing Charges and User Development Fees (UDF) at Shirdi Airport w.e.f 16.06.2023 to 30.09.2023, or, till the determination of regular tariffs, whichever is earlier. In addition, the Authority through the same addendum dated 7th June 2023 also decided to allow MADC to levy and collect Parking & Night Parking Charges, Charges for Extension of Watch Hours and Cargo Screening Charges as requested by MADC. 2.4.2 Thereafter, the Authority issued Order No. 19/2023-24 dated 20th September 2023, allowing MADC to levy the existing tariff, applicable as on 30th September 2023, on an interim basis, for a further period of 6 (six) months w.e.f. 1st October 2023 to 31st March 2024. 2.4.3 Subsequently, the Authority, vide Order No.40/ 2023-24 dated 15th March 2024 has further allowed MADC to levy and collect the existing tariff, applicable as on 31st March 2024, on an interim basis, for a further period of 6(six) months w.e.f. 1st April 2024 to 30th September 2024, or, till the determination of regular tariff for the relevant Control Period, whichever is earlier. 2.5 MYTP submission by MADC 2.5.1 As per proviso to clause 3.1 of the Airport Guidelines, the Airport Operator(s) are required to submit to the Authority for its consideration, a Multi-Year Tariff Proposal (MYTP) for the respective Control Periods within the due date as specified by the Authority. 2.5.2 Post notification of Shirdi International Airport as a major airport, MADC had submitted the initial MYTP the period commencing from 1st April 2021 to 31st March 2026 for Shirdi International Airport on 31st January 2022. As a response to the first set of queries raised by the Authority vide mail dated 7th Consultation Paper No. 02/2024-25 Page 18 of 130TARIFF DETERMINATION OF SHIRDI INTERNATIONAL AIRPORT April 2022, MADC had submitted a revised MYTP on 11th August 2022 with First Control Period from 1st April 2022 to 31st March 2027. In response to the second set of queries raised by the Authority vide mail dated 20th September 2022, MADC has submitted a revised MYTP on 21st November 2022. In response to the third set of queries raised by the Authority vide mail dated 25th January 2023, MADC had submitted the revised MYTP on 3rd April 2023. Based on the discussions held with the Authority on 11th May 2023, MADC has submitted the final MYTP model on 7th July 2023. The MYTP is available on the AERA’s website. Table 2: Sequence of events with regard to submission of MYTP by MADC Date Event 1st November 2021 Notification of Shirdi International Airport as a major airport 31st January 2022 Submission of MYTP for FCP from FY22 to FY26 7th April 2022 First Set of queries raised by the Authority 11th August 2022 Submission of MYTP for FCP from FY23 to FY27 20th September 2022 Second Set of queries raised by the Authority 21st November 2022 Submission of revised MYTP for FCP from FY23 to FY27 25th January 2023 Third Set of queries raised by the Authority 3rd April 2023 Submission of revised MYTP for FCP from FY23 to FY27 11th May 2023 Discussion regarding previous submissions with the Authority by MADC 7th July 2023 Submission of final MYTP model for FCP from FY23 to FY27 6th September 2023 Initial data request list (Set 1) shared with MADC 11th September 2023 Discussion with MADC on Set 1 queries 14th September 2023 Data Requirement Set 2 sent to MADC 19th September 2023 Data Requirement Set 3 sent to MADC 18th October 2023 Follow-up on queries to MADC 18th October 2023 Partial data shared by MADC pertaining to Initial data requirement list 20th October 2023 Further queries and request for clarification shared regarding reply received 23rd November 2023 Partial data shared by MADC 14th December 2023 Discussion with MADC on queries raised and further queries raised (Set 4) 21st December 2023 Site visit by the Independent Consultant Mail received requesting for extension of time till 5th January 2024 for 28th December 2023 submission of response to queries 3rd January 2024 Partial response shared by MADC 8th January 2024 Partial response shared by MADC 16th March 2024 Further queries on capex raised 22nd March 2024 Revised Capex submission by MADC 26th March 2024 Meeting with MADC for queries on documents submitted – capex related 28th March 2024 Further responses on capex related queries raised on 26th March 2024 8th April 2024 Actual Traffic data for FY 2023-24 received from MADC 2.5.3 The Authority notes that there were considerable delays in getting the required details / documents and clarifications from MADC, which has delayed the issuance of this Consultation Paper. The Authority advises MADC to ensure that in future there is no delay in submission of requisite information/ data to AERA. The Authority also notes that MADC has also submitted updated estimates on Capital Expenditure and certain other building blocks, during the course of review by the Authority. These have been considered by the Authority appropriately in Authority’s analysis as detailed in the relevant chapters. 2.5.4 The Authority has appointed an Independent Consultant, M/s PKF Sridhar & Santhanam LLP, to assess the MYTP submitted by MADC for Shirdi International Airport. Accordingly, M/s PKF Sridhar & Santhanam LLP has assisted the Authority in examining the submission of MADC by verifying the data Consultation Paper No. 02/2024-25 Page 19 of 130TARIFF DETERMINATION OF SHIRDI INTERNATIONAL AIRPORT from various supporting documents submitted by MADC such as audited financial statements, Fixed Asset Register (FAR), documentary evidence of the process of approval of Capital expenditure (CAPEX), Operation and Maintenance (O&M) expenses, examining the building blocks in tariff determination and ensuring that the treatment given to it is consistent with the Authority's methodology, approach, etc. 2.5.5 The Authority, through its Independent Consultant, has examined the MYTP submitted by MADC, verified the data and the projections for the First Control Period including CAPEX and obtained clarifications on the information provided by MADC from time to time, for finalizing this Consultation Paper. The Authority, through its independent consultant, has reviewed the audited financial statements for the period ended 31st March 2023 and considered the same appropriately in the computation of Aggregate Revenue Requirement in Chapter 13. The Authority notes that the actual / audited financial statements for FY 2023-24 is not available as yet. The Authority directs MADC to submit the Financials of FY 2023-24 during the Consultation stage which will be reviewed and considered appropriately by the Authority, at the time of finalization of the Tariff order. 2.5.6 The Independent Consultant has visited the Shirdi International Airport on 21st December 2023 for the site visit and sought clarifications on the information provided by MADC from time to time, by correlating the facts with the physical status of the Airport. 2.5.7 The Authority visited Shirdi International Airport on 16th February 2024 to carry out a review and assess the status of ongoing projects and review of CAPEX planned to be executed in the First Control Period. 2.5.8 All the figures presented in this Consultation Paper have been rounded off up to two decimals. 2.6 Revenues from Air Navigation Services (ANS) 2.6.1 AAI provides Air Navigation Services (ANS) at Shirdi International Airport. This Consultation Paper discusses the determination of Tariffs for Aeronautical Services at the airport, excluding ANS provided by AAI, as the tariff for ANS is presently being determined by the Ministry of Civil Aviation (MoCA) for all the airports, at the central level, to ensure uniformity in ANS charges across all the airports in the Country. 2.6.2 As present policy of AAI relating to provision of CNS/ATM Facilities & Services, at the non-AAI airports on the Cost Recovery Basis is under review, in consultation with AAI. At this stage, this Consultation Paper has not considered the CNS/ATM Costs payable by the MADC to AAI. However, AERA will review the present treatment of CNS/ATM Charges (payable by Airport Operator to AAI), once final view in the matter is taken. 2.7 Construct of this Consultation Paper 2.7.1 This Consultation Paper has been developed in the order of the events and as explained above. Chapter- wise details have been summarized as follows: i. A background on Shirdi International Airport is explained in Chapter 1. ii. Tariff determination of Shirdi International Airport has been detailed in this Chapter i.e. Chapter 2. iii. Chapter 3 presents the submission of MADC on the period prior to the First Control Period and the Authority’s proposals on the tariff for the period from 1st November 2021 to 31st March 2022. Consultation Paper No. 02/2024-25 Page 20 of 130TARIFF DETERMINATION OF SHIRDI INTERNATIONAL AIRPORT iv. Chapter 4 presents the submissions of MADC regarding Traffic Projections for the First Control Period and the Authority’s proposals on the same. v. Chapter 5 includes the submissions of MADC regarding Capital Expenditure (CAPEX), Depreciation and RAB for the First Control Period along with the Authority’s detailed examination, adjustments, rationalization and proposals on the Aeronautical capital expenditure, depreciation and RAB for the First Control Period. vi. Chapter 6-12 includes the submissions of MADC regarding various building blocks pertaining to the First Control Period including Return on Land, Fair Rate of Return, Inflation, Operating and Maintenance Expenses, Non-aeronautical Revenue, Taxation and Quality of Service along with the Authority's examination and proposals on each matter. vii. Chapter 13 presents the Aggregate Revenue Requirement as determined by the Authority based on the proposals for the First Control Period. viii. Chapter 14 summarizes the Authority’s proposals put forward for consultation. ix. In Chapter 15, the Authority invites views of all the stakeholders regarding proposals put forward for tariff determination for the First Control Period in the Consultation Paper. x. Chapter 16, contains Annexures • Annexure 1: Gross Value of Capital Additions as of 31st March 2022 by the Authority o Annexure 1A: Gross Value - Aeronautical o Annexure 1B: Gross Value - Common o Annexure 1C: Gross Value – Non – Aeronautical 2.8 Authority’s proposal regarding Control Period Based on the material before it and its examination, the Authority proposes the following with regard to Control Period for Shirdi International Airport: 2.8.1 To consider the First Control Period in respect of Shirdi International Airport effective from FY 2022-23 to FY 2026-27. Consultation Paper No. 02/2024-25 Page 21 of 130DETERMINATION OF TARIFF FOR THE PERIOD FROM 1ST NOVEMBER 2021 TO 31ST MARCH 2022 3 DETERMINATION OF TARIFF FOR THE PERIOD FROM 1ST NOVEMBER 2021 TO 31ST MARCH 2022 3.1 Background 3.1.1 Shirdi International Airport commenced its commercial operations on 1st October 2017. MADC has submitted its computation of shortfall for the period from FY 2017-18 to FY 2021-22 along with details of the First Control Period starting from FY 2022-23 to FY 2026-27 as part of its MYTP submission dated 7th July 2023. The computation submitted by MADC covers the following building blocks: i. Traffic ii. Capital Expenditure, Regulatory Asset Base and Depreciation iii. Return on Land iv. Fair Rate of Return (FRoR) v. Operating and Maintenance (O&M) Expenses vi. Non-Aeronautical Revenue vii. Taxation viii. Aeronautical Revenue 3.1.2 The Authority has analyzed MADC’s submission in detail. Analysis of the Authority, has been organized as follows: i. The Authority’s analysis of the period for which shortfall carry forward is to be considered. ii. Review and analysis of MADC’s submission regarding different regulatory building blocks. iii. Set out the Authority’s proposal regarding each regulatory building block for the period proposed by the Authority in (i) above. 3.1.3 The Authority has considered the following documents for determining the tariff for the period from 1st November 2021 to 31st March 2022: i. MoCA Gazette no. S.O. 4596 (E) dated 1st November 2021, declaring Shirdi International Airport as a Major airport. ii. Ledger details and financial statements submitted for FY 2021-22 iii. AERA Guidelines and Orders iv. The Authority’s decisions on the regulatory building blocks as per previously issued Tariff Orders of other airports. 3.2 MADC’s submission on shortfall for the period from FY 2017-18 to FY 2021-22 3.2.1 MADC has submitted its computation for the period from FY 2017-18 to FY 2021-22 as part of MYTP submission dated 7th July 2023. Details of the same are as follows: Table 3: MADC’s submission of shortfall for the period from FY18 to FY22 (₹ in crores) Particulars Ref. FY18 FY19 FY20 FY21 FY22 Total Average RAB A 2.64 67.75 131.58 130.83 136.26 FRoR B 14% 14% 14% 14% 14% Return on RAB C = A*B 0.37 9.49 18.42 18.32 19.08 65.68 Depreciation D 0.67 5.79 6.53 7.45 9.48 29.92 Amortization owing to land cost E 6.13 6.13 6.13 6.13 6.13 30.65 Consultation Paper No. 02/2024-25 Page 22 of 130DETERMINATION OF TARIFF FOR THE PERIOD FROM 1ST NOVEMBER 2021 TO 31ST MARCH 2022 Particulars Ref. FY18 FY19 FY20 FY21 FY22 Total O & M Expenses F 7.49 22.33 23.43 5.70 23.47 82.42 Taxation G - - - - - - Less: 30% of Non-Aeronautical H 0.00 0.17 0.38 0.41 0.46 1.42 Revenue I = C+D+E+F+G- Net ARR 14.66 43.57 54.13 37.19 57.70 207.25 H Actual Aeronautical Revenue J 0.21 1.93 5.86 1.50 2.72 12.22 Shortfall K = I-J 14.45 41.64 48.27 35.69 54.98 195.03 Present Value of Shortfall 27.80 70.33 71.52 46.37 62.68 278.70 3.3 Authority’s examination of period (prior to FCP) for which over/ under recovery is determined 3.3.1 The Authority notes that MoCA has declared Shirdi International Airport as major airport from 1st November 2021. During its initial submission dated 31st January 2022, MADC submitted the computation of shortfall for the period FY 2017-18 to FY 2020-21 along with the details of First Control period from 1st April 2021 until 31st March 2026. Post the submission by Shirdi International Airport, the Authority directed MADC to re-submit the MYTP with First Control Period beginning from 1st April 2022. Pursuant to this, MADC has submitted the revised MYTP with the computation for the First Control Period from 1st April 2022 to 31st March 2027 together with the shortfall for the period from FY 2017-18 to FY 2021-22. 3.3.2 The Authority notes that MADC, as part of its revised MYTP submission, has submitted the computation of shortfall for the period from FY 2017-18 to FY 2021-22. The Authority notes that MADC has considered the date of commencement of commercial operations (COD) as the beginning of the period from which the over-recovery / under-recovery is to be determined. 3.3.3 However, the Authority’s tariff determination process commences only from the date the Airport is notified as a major airport and accordingly, the Authority proposes to consider the period from 1st November 2021 (i.e. the date the notification as major airport) for the purpose of its evaluation. Accordingly, the period from 1st November 2021 to 31st March 2022 proposed to be considered by the Authority for computation of excess/shortfall to be carried forward for the First Control Period. 3.3.4 The Authority has, in the ensuing Chapters, detailed its principles and analysis with respect to different building blocks which have been used for computing the ARR and shortfall for the period from 1st November 2021 to 31st March 2022. 3.3.5 The Authority, in order to segregate the various building blocks for the period from 1st November 2021 to 31st March 2022, from the audited financial statements of FY 2021-22, sought from MADC the financial information for the period from 1st November 2021 to 31st March 2022. MADC in its reply dated 18th October 2023 submitted as follows: “MADC has no internal process for preparation of the financial statements on interim/monthly basis. Thus, it will not be possible for us to bifurcate the financials of the FY 2021-22 into April - October and November - March.” 3.3.6 In view of absence of financial information for the period 1st November 2021 to 31st March 2022, the Authority proposes to adopt the following methodology for segregating revenues, cost and RAB in order to compute the under-recovery / over-recovery for the period from 1st November 2021 to 31st March 2022: Consultation Paper No. 02/2024-25 Page 23 of 130DETERMINATION OF TARIFF FOR THE PERIOD FROM 1ST NOVEMBER 2021 TO 31ST MARCH 2022 Table 4: Basis of apportionment of various building blocks between the period from 1st April 2021 to 31st October 2021 and the period from 1st November 2021 to 31st March 2022 Building Block Basis of segregation Actual Traffic (based on the data from AAI website) for the period from 1st November 2021 Traffic to 31st March 2022 Opening Fixed Assets Balance as per audited financials as of 1st April 2021, adjusted for RAB actual additions from 1st April 2021 to 31st October 2021 Actual Depreciation for period 1st November to 31st March 2022 based on the RAB as Depreciation computed above Operating and Expenses for FY 2021-22 pro-rated based on the number of months in the period from 1st Maintenance November 2021 to 31st March 2022 Expenses Pro-rated based on the number of months in the period from 1st November 2021 to 31st Return on Land March 2022 Non-Aeronautical Pro-rated based on the number of months in the period from 1st November 2021 to 31st Revenue March 2022 since the nature of revenues is such that these accrue over a period of time • Based on the actual ATM / passenger traffic during the period from 1st November 2021 to 31st March 2022 for the nature of revenues that are based on the ATM / passenger Aeronautical traffic i.e: Landing fees, Parking fees, UDF etc. Revenue • Pro-rated based on the number of months in the period from 1st November 2021 to 31st March 2022 for the nature of revenues that accrue over a period of time i.e : Space rental from Airlines, Revenue from Ground handling etc. 3.3.7 The Authority’s examination of each of the building blocks has been detailed below. 3.4 Traffic MADC’s Submission 3.4.1 MADC has submitted the following Passenger and ATM Traffic for Shirdi International Airport for the period from FY 2017-18 to FY 2021-22: Table 5: MADC’s submission on Passenger Traffic and ATM for the period from FY18 to FY22 Particulars FY18 FY19 FY20 FY21 FY22 Domestic Passengers 37,531 2,29,248 5,67,585 85,978 1,77,223 International Passengers - - - - - Total Passengers 37,531 2,29,248 5,67,585 85,978 1,77,223 Domestic ATM 802 3,342 6,384 1,520 1,860 International ATM - - - - - Total ATM 802 3,342 6,384 1,520 1,860 Authority’s Examination 3.4.2 On review of the traffic details (Passenger and ATM) submitted by MADC for the period beginning FY 2017-18 to FY 2021-22, the Authority notes that traffic details submitted by MADC do not match with actual traffic as per AAI’s website as detailed below: Consultation Paper No. 02/2024-25 Page 24 of 130DETERMINATION OF TARIFF FOR THE PERIOD FROM 1ST NOVEMBER 2021 TO 31ST MARCH 2022 Table 6: Difference in actual traffic between MADC’s Submission and AAI website for the period from FY18 to FY22 Traffic as per MADC Traffic as per AAI Website (B) Difference (C=A-B) submission (A) Year Passenge Passenger ATM Cargo Passenger ATM Cargo r ATM Cargo FY18 37,531 802 - 37,234 745 - 297 57 - FY19 2,29,248 3,342 - 2,29,040 3,064 - 208 278 - FY20 5,67,585 6,384 - 5,68,968 6,226 - (1,383) 158 - FY21 85,978 1,520 - 85,673 1,452 - 305 68 - FY22 1,77,223 1,860 38 1,76,787 1,716 38 436 144 - 3.4.3 On enquiry of the difference as above, MADC responded as follows: “1. Infant is counted by AAI in the arrival data whereas we do not count it in our data. 2. Infant and Transit data for indigo Airlines is included in the AAI Data, whereas we do not include infant in the Passenger data.” 3.4.4 The Authority notes that the explanation provided by MADC does not clarify the difference as detailed above, as the numbers are higher in MADC submission as compared to AAI data. The Authority proposes to consider traffic as per AAI data. 3.4.5 The Authority, has reviewed the actual traffic for Shirdi International Airport available from the AAI website for the period from 1st November 2021 to 31st March 2022 (Pre-Control Period), as indicated in para 3.3.3 which is presented below: Table 7: Domestic Passenger Traffic and Domestic ATM proposed by the Authority for the period from 1st November 2021 to 31st March 2022 Total Nov’21 to Particulars Nov’21 Dec’21 Jan’22 Feb’22 Mar’22 Mar’22 Passenger Traffic as per the Authority 33,488 39,982 15,794 21,742 49,757 1,60,763 ATM as per the Authority 310 356 224 212 412 1,514 3.4.6 The Authority accordingly proposes to consider the actual passenger traffic and ATM for the period from 1st November 2021 to 31st March 2022 based on the data from AAI website as per Table 7. 3.5 Capital Expenditure (CAPEX), Depreciation and Regulatory Asset Base (RAB) MADC’s Submission 3.5.1 MADC has submitted the following Average RAB for Shirdi International Airport for the period from FY 2017-18 to FY 2021-22: Table 8: MADC’s submission of Average RAB for the period from FY18 to FY22 (₹ in crores) Particulars Ref. FY18 FY19 FY20 FY21 FY22 Total Opening RAB A - 5.29 130.22 132.95 128.72 Commissioned Assets in B 5.90 - - - - 5.90 FY17* Commissioned Assets in C 0.41 137.94 10.11 3.80 26.37 178.63 respective FYs Total Commissioned Assets D = B+C 6.31 137.94 10.11 3.80 26.37 184.53 Consultation Paper No. 02/2024-25 Page 25 of 130DETERMINATION OF TARIFF FOR THE PERIOD FROM 1ST NOVEMBER 2021 TO 31ST MARCH 2022 Particulars Ref. FY18 FY19 FY20 FY21 FY22 Total (Table 9) Aeronautical portion E 95% 95% 95% 95% 95% Aeronautical portion of F = D*E 5.99 131.02 9.61 3.60 25.06 175.28 Commissioned Assets Add: Asset created out of G 50.00 - - - - 50.00 the grant received** Total of Aeronautical portion of Commissioned H = F+G 55.99 131.02 9.61 3.60 25.06 225.28 Assets Grant I 50.00 - - - - 50.00 Depreciation (Table 10) J 0.70 6.10 6.87 7.84 9.98 31.49 K = A+H- Closing RAB 5.29 130.22 132.95 128.72 143.80 I-J L = RAB for Calculating ARR 2.64 67.75 131.58 130.83 136.26 (A+K)/2 *The assets acquired in FY17 (prior to commencement of commercial operations) were added to the additions in FY18 as MADC has considered the Period from FY 2017-18 onwards. **The assets created out of the grant of ₹ 50 crores from Shri Saibaba Sansthan Trust is added as part of the commissioned assets and then adjusted as part of grant, thus having ‘Nil’ impact on RAB. 3.5.2 The head wise additions considered by MADC for the computation of RAB is as follows: Table 9: Breakup of Capital Expenditure for the period from FY17 to FY22 as per MADC’s submission (₹ in crores) Head FY17 FY18 FY19 FY20 FY21 FY22 Total Software - - 0.01 0.01 - - 0.02 Computers – End User Devices 0.03 0.03 0.04 0.03 0.04 0.02 0.19 Computers – Services & Network - - - - - 0.01 0.01 Furniture and Fixtures other than 0.17 0.17 1.18 0.09 0.03 - 1.64 trolleys Furniture & Fixtures – Trolleys - - - - 0.01 - 0.01 Building - - 115.80 - - - 115.80 Plant & Machinery 5.53 0.05 0.94 9.90 0.07 16.09 32.58 Electrical installations - - 15.46 - 3.47 10.25 29.18 Vehicle 0.11 0.09 - - 0.02 - 0.22 Office equipment 0.06 0.07 4.51 0.08 0.16 - 4.88 Total 5.90 0.41 137.94 10.11 3.80 26.37 184.53 Aeronautical portion 95% 95% 95% 95% 95% 95% 95% Aeronautical portion of Capex 5.61 0.38 131.02 9.61 3.60 25.06 175.28 3.5.3 The Asset category wise depreciation considered by MADC for the computation of RAB is as follows: Table 10: Asset category wise breakup of depreciation for the period from FY17 to FY22 as per MADC’s submission (₹ in crores) Head FY17 FY18 FY19 FY20 FY21 FY22 Total Software - - 0.00 0.00 0.01 0.01 0.02 Computers - End User Devices - 0.02 0.03 0.03 0.03 0.03 0.14 Computers - Services & Network - - - - - 0.00 0.00 Furniture and Fixtures other than - 0.03 0.13 0.21 0.22 0.22 0.81 trolleys Furniture & Fixtures - Trolleys - - - 0.00 0.00 0.00 0.00 Building - - 3.81 3.86 3.86 3.86 15.39 Consultation Paper No. 02/2024-25 Page 26 of 130DETERMINATION OF TARIFF FOR THE PERIOD FROM 1ST NOVEMBER 2021 TO 31ST MARCH 2022 Head FY17 FY18 FY19 FY20 FY21 FY22 Total Plant & Machinery - 0.65 0.08 0.69 1.42 2.56 5.40 Electrical installations - - 1.51 1.49 1.73 2.83 7.56 Office equipment - 0.02 0.84 0.94 0.95 0.96 3.71 Vehicle - 0.02 0.02 0.02 0.03 0.03 0.12 Total - 0.74 6.42 7.24 8.25 10.50 33.15 Aeronautical portion 95% 95% 95% 95% 95% 95% 95% Aeronautical Depreciation - 0.70 6.10 6.87 7.84 9.98 31.49 Authority’s Examination Additions to Fixed Assets 3.5.4 The Authority notes that Shirdi International Airport commenced its commercial operations on 1st October 2017 and has incurred total capital expenditure of ₹ 184.53 crores till FY 2021-22, the breakup of which is given in Table 9. 3.5.5 The Authority notes that the financial year-wise additions as per FAR given by MADC does not match the corresponding additions in the respective years as per financial statements. However, the total of additions to fixed assets of the years up to 31st March 2022 as per FAR matches with the audited financial statements. No clarifications were received from MADC for the same. The Authority proposes to consider the additions as per FAR as final for the purpose of its examination. The Authority also notes that there are no significant deletions as per audited financial statements for all years up to FY 2021-22. 3.5.6 The Authority relies on the information available in the audited financial reports & FAR for its analysis. The Authority expects that the Airport Operator would ensure the accuracy of the information captured in its books of accounts & FAR and that there is no overbilling or duplication of expenses that results in undue enrichment. Further, it is the sole responsibility of the Airport Operator to maintain proper books of accounts & Fixed Asset Register (FAR) diligently and present accurate information in its submissions. 3.5.7 The Authority further notes that MADC has considered the aeronautical portion as 95% of all actual additions to Fixed Assets in each of the financial years from FY 2017-18 to FY 2021-22. 3.5.8 For the purposes of classifying the assets into aeronautical assets, non-aeronautical assets and common assets, the Authority sought the classification from MADC. The Authority analyzed the classification received from MADC in line with the nature of the assets as per FAR and classified the assets into aeronautical assets, non-aeronautical assets and common assets. Detailed asset wise classification is provided in Annexure 1 of Chapter 16. A comparative analysis of the classification provided by MADC and the classification propose by the Authority is as follows: Table 11: Comparison of classification of assets as on 31st March 2022 as per MADC and the Authority (₹ in crores) Total (A) As per Type Particulars FY17 FY18 FY19 FY20 FY21 FY22 As per MADC (B) Authority Aeronautical Gross Value 5.69 0.27 126.58 10.02 3.49 9.32 155.36 183.79 Assets Aero RAB 5.69 0.27 126.58 10.02 3.49 9.32 155.36 174.59 Gross Value 0.20 0.13 11.27 0.10 0.30 17.06 29.08 0.67 Common Aero RAB 0.19 0.13 10.71 0.10 0.29 16.21 27.63 0.63 Non-Aero Gross Value 0.01 - 0.06 - - - 0.07 0.07 Consultation Paper No. 02/2024-25 Page 27 of 130DETERMINATION OF TARIFF FOR THE PERIOD FROM 1ST NOVEMBER 2021 TO 31ST MARCH 2022 Total (A) As per Type Particulars FY17 FY18 FY19 FY20 FY21 FY22 As per MADC (B) Authority Aero RAB - - - - - - - 0.06 Total Gross 5.90 0.41 137.93 10.11 3.79 26.38 184.53 184.53 Total Aero 5.88 0.41 137.31 10.11 3.78 25.53 182.99 175.28 RAB 3.5.9 The Authority further proposes to classify the common assets based on Employee Head Count Ratio (EHCR) and Terminal Building Ratio (TBLR). The ratios considered for arriving at the aeronautical portion of RAB are as follows: Table 12: Ratio for segregating common assets into aeronautical and non-aeronautical considered by the Authority Non-Aeronautical Nature Aeronautical portion portion Aeronautical Assets 100% 0% Common Assets – Based on EHCR (Para 3.8.5) 95% 5% Common Assets – Based on TBLR (Para 3.8.9) 95% 5% Non-Aeronautical Assets 0% 100% 3.5.10 Based on the above allocation ratios, the Authority proposes the following aeronautical additions to capex for the period beginning from FY 2017-18 to FY 2021-22: Table 13: Aeronautical CAPEX proposed by the Authority for the period from FY18 to FY22 (₹ in crores) 01/04/2021 to 01/11/2021 to Particulars FY18 FY19 FY20 FY21 Total 31/10/2021 31/03/2022 Gross value of additions 6.31 137.94 10.11 3.80 26.37 - 184.53 Aeronautical additions 6.28 137.29 10.11 3.78 25.53 - 182.99 3.5.11 The Authority notes from the discussions with MADC that Shirdi International Airport has received grant from Shri Saibaba Sansthan Trust amounting to ₹ 50 crores in FY 2011-12 (₹ 45 Crores) and FY 2017-18 (₹ 5 Crores). The Authority sought the statement of utilization of the said grant of ₹ 50 crores and the accounting treatment adopted by MADC for the grant of ₹ 50 crores. MADC has confirmed that assets that are constructed / developed / acquired (as per Table 14) out of the said grant are accounted net of grant and hence have not been included as part of the additions in Fixed Asset in the financial statements. The Authority through its independent consultant has reviewed the FAR and ensured that these assets do not form part of the FAR submitted by MADC. The following utilization statement has been provided by MADC: Table 14: Statement of Utilization of Grant received from Shri Saibaba Sansthan Trust as submitted by MADC (₹ in crores) Project Name Amount Shifting / rerouting of EHV Transmission Lines around the proposed Airport at Shirdi 22.35 Strengthening and widening of access roads from bypass road to Kakdi village 7.13 Area grading, construction of runway, taxiway, apron, GSE, Isolation Bay, compound wall, storm 16.02 water drainage, Security tower, etc. Diversion of MDR-9 along the Compound Wall 4.50 Total 50.00 Consultation Paper No. 02/2024-25 Page 28 of 130DETERMINATION OF TARIFF FOR THE PERIOD FROM 1ST NOVEMBER 2021 TO 31ST MARCH 2022 3.5.12 The Authority notes that MADC has considered the assets in Table 14 as additions and then reduced the grant of ₹ 50 crores from computation of RAB of FY 2017-18 as it is capital receipt in the nature of contribution from stakeholders thereby having ‘NIL’ effect in the computation of average RAB. Authority’s examination of Depreciation for the period from 1st November 2021 to 31st March 2022 3.5.13 The Authority notes that MADC has considered depreciation as per the financial statements as the base for computation of aeronautical depreciation which is not in line with the useful life as per Order No.35/2017-18 dated 12th January, 2018 on “In the matter of Determination of Useful life of Airport Assets”. 3.5.14 The Authority also noted an error in the formula used for computation whereby 95% (aeronautical %) has been applied twice to the book depreciation to arrive at depreciation as per MADCs submission for the period prior to the FCP. 3.5.15 The Authority, through its independent consultant has re-calculated the Aeronautical depreciation, taking into account depreciation as per financial statements until 1st April 2018 and thereafter depreciation as per Order No.35/2017-18 dated 12th January, 2018, “In the matter of Determination of Useful life of Airport Assets”. 3.5.16 While recomputing the depreciation, it was noted that the depreciation as per FAR shared and that reflected in the financial statement were not matching on a year-to-year basis. This was on account of inconsistencies between the dates of capitalization in books versus FAR. However, the WDV as at 31st March 2022 was matching between the FAR and financials. The reason for difference was requested from MADC however there was no response on the same. In the absence of information, the Authority proposes to consider the FAR as the base for computing depreciation. 3.5.17 The Aeronautical depreciation recalculated is as follows: Table 15: Aeronautical depreciation recalculated by the Authority (₹ in crores) FY22 - Upto 31st FY22 - After 31st Particulars FY18 FY19 FY20 FY21 Total October 2021 October 2021 Furniture and Fixture – 0.09 0.11 0.19 0.20 0.12 0.07 0.78 Other than trolley Office Equipment 0.02 0.58 0.62 0.64 0.38 0.27 2.51 Computer - End User 0.02 0.03 0.03 0.03 0.02 0.01 0.14 Devices Plant and Machinery 0.73 0.39 0.58 1.07 1.22 0.87 4.87 Vehicle 0.02 0.02 0.02 0.02 0.01 0.01 0.12 Operational Building - 3.53 3.57 3.57 2.08 1.49 14.25 Terminal Building - 0.24 0.24 0.24 0.14 0.10 0.96 Utility Building - 0.04 0.04 0.04 0.03 0.01 0.15 Electrical Installation - 1.53 1.53 1.79 1.68 1.20 7.73 Computer - Software - 0.00 0.00 0.00 0.00 0.00 0.01 Furniture and Fixture - - - 0.00 0.00 0.00 0.00 0.00 trolley Computers - Service and - - - - 0.00 0.00 0.00 Network Total 0.90 6.47 6.82 7.59 5.70 4.03 31.51 Consultation Paper No. 02/2024-25 Page 29 of 130DETERMINATION OF TARIFF FOR THE PERIOD FROM 1ST NOVEMBER 2021 TO 31ST MARCH 2022 3.5.18 Depreciation for the period 1st November 2021 to 31st March 2022 is computed considering the actual additions for the period and pro-rating the depreciation on existing assets for the specific period. The RAB as per the Authority’s recalculation is as follows: Table 16: Regulatory Asset Base as proposed by the Authority for the period FY18 to FY22 (₹ in crores) FY22 - Upto FY22 - After Particulars Ref FY18 FY19 FY20 FY21 31st October 31st October Total 2021 2021 Opening RAB A - 5.38 136.20 139.49 135.68 155.51 (+) Additions B 6.28 137.29 10.11 3.78 25.53 - 182.99 (Table 13) (-) Depreciation C 0.90 6.47 6.82 7.59 5.70 4.03 31.51 (Table 15) Closing RAB D=A+B-C 5.38 136.20 139.49 135.68 155.51 151.48 Average RAB D=(A+D)/2 2.69 70.79 137.85 137.59 145.60 153.50 3.6 Return on Land MADC’s Submission 3.6.1 MADC has submitted the following estimated Return on Land for Shirdi International Airport for the period FY 2017-18 to FY 2021-22: Table 17: MADC’s submission on Return on Land for the period FY18 to FY22 (₹ in crores) Particulars FY18 FY19 FY20 FY21 FY22 Total Return on Land - Aero 6.13 6.13 6.13 6.13 6.13 30.65 3.6.2 The basis of computation adopted by MADC for the above return on land is as follows: Table 18: MADC’s submission on the basis of computation of Return on Land for FY18 to FY22 Particulars Ref. Unit Value Cost of Land considered by MADC A ₹ in crores 68.41 SBI Rate B % 6.65 Rate considered for Equated Annual Instalment C = B+2% % 8.65 Equated Annual instalments (for 30 years) D* ₹ in crores 6.45 Aeronautical Portion E % 95% Aeronautical portion of amortization owing to land cost F = D*E ₹ in crores 6.13 * (A*C*((1+C)^30))/(((1+C)^30)-1) Authority’s Examination 3.6.3 The Authority notes that MADC has acquired land of 350.85 Hectares (866.97 acres) for the development of Shirdi International Airport at a cost of ₹ 68.41 crores (₹ 64.80 crores in FY 2017-18 and ₹ 3.61 crores in FY 2021-22). 3.6.4 The Authority notes that MADC had considered the entire value of land including the additional cost incurred in FY 2021-22 and calculated return on land from FY 2017-18 for the full amount. The Authority also notes that return on land is being claimed by MADC for the full area of airport i.e. 350.85 Hectares – even though some of the areas of the land parcel are not utilized currently (after considering the developments proposed in the First Control Period). Consultation Paper No. 02/2024-25 Page 30 of 130DETERMINATION OF TARIFF FOR THE PERIOD FROM 1ST NOVEMBER 2021 TO 31ST MARCH 2022 3.6.5 Para 4.1.2 of the land return order No. 42/2018-19 dated 5th March 2019, states that “The return will be given only on the cost of land used for aeronautical activities”. The Authority, through its independent consultants during their site visit to the Shirdi International Airport noted that there are some areas of the airport premises that are yet to be put to use/ planned for construction in FCP. 3.6.6 The Authority requested for details of area of land currently used by the Airport Operator, however, only partial details were received. The Authority through its independent consultant, has re-computed the area of land currently in use – from the master plan of the airport shared by MADC. Table 19: Details of land area in use as of November, 2021 (in Sq.m.) Particulars FY22 Total land area 35,08,500.00 Details of undeveloped area as of Nov 2021 Plot 1 10,925.00 Plot 2 12,375.00 Plot 3 7,935.00 Plot 4 7,740.00 Plot 5 7,509.00 Plot 6 7,830.00 Proposed Sewage Treatment Plant 3,967.50 Taxi Parking Future Expansion Phase II 5,462.50 New Terminal Building (-) Existing Terminal Building 19,750.00 Terminal Building Expansion Phase III 10,229.31 Extended Runway, RESA and Blast pad 70,200.00 Extended Apron 58,394.00 Apron Expansion Phase II 14,580.00 Apron Expansion Phase III 30,450.80 Proposed Cargo Terminal 33,089.76 Isolation Bay - Work in Progress 1,79,138.07 Armoury Block, Admin Block, Utility Block, Hangar, etc., 25,840.00 Total of undeveloped area as of Nov 2021 5,05,415.94 % of undeveloped land area 14% % of developed land area 86% 3.6.7 Order No.42/2018-19 dated 5th March, 2019, “In the matter of Determination of Fair Rate of Return (FRoR) to be provided on Cost of Land incurred by various Airport Operators in India” mentions in para 4.1.4 that, “in case land is purchased by the airport operating company either from private parties or from government, the compensation shall be in the form of equated annual instalments computed at actual cost of debt or SBI base rate + 2% whichever is lower over a period of thirty years.” The rate of return should be cost of debt or SBI rate plus 2% whichever is lower. 3.6.8 In the case of Shirdi International Airport, there is no debt prior to March 2022. The Authority notes that if MADC had taken debt, it would have been able to obtain the same at a rate similar to SBI rate in force. In view of absence of debt being taken for funding land for Shirdi International Airport, the Authority proposes to consider SBI rate plus 2% to be the rate for return on land i.e. (6.65% plus 2%) as submitted by MADC. 3.6.9 The Authority proposes to consider Return on Land, for the Pre-Control Period from 1st November 2021 upto 31st March 2022. Consultation Paper No. 02/2024-25 Page 31 of 130DETERMINATION OF TARIFF FOR THE PERIOD FROM 1ST NOVEMBER 2021 TO 31ST MARCH 2022 3.6.10 Return on land as computed by the Authority for the period 1st November 2021 to 31st March 2022 is given in the following table: Table 20: Return on land proposed by the Authority for the period 1st November 2021 to 31st March 2022 Particulars Ref. Unit Value Cost of Land to be considered A ₹ in crores 68.41 SBI Rate B % 6.65% Rate considered for Equated Annual Instalment = SBI rate +2% C = B+2% % 8.65% Area of land under use D % 86.00% Aeronautical Portion of Land E % 95.00% Equated Annual instalments (for 30 years) F* ₹ in crores 5.27 Prorated for 5 months (Nov 21 to Mar 22) G = F*5/12 ₹ in crores 2.20 *(A*C*((1+C) ^30))/(((1+C) ^30)-1)*D*E 3.7 Fair Rate of Return (FRoR) MADC’s Submission 3.7.1 MADC has submitted Fair Rate of Return (FRoR) for Shirdi International Airport for the period from 1st April 2017 to 31st March 2022 at 14% as per the computations below: Table 21: FRoR submitted by MADC for the period FY18 to FY22 (₹ in crores) Particulars FY18 FY19 FY20 FY21 FY22 Debt - - - - - Reserve & Surplus (8.40) (35.83) (60.61) (71.99) (102.95) Equity 0.16 112.09 98.07 90.49 86.83 Total Equity (8.24) 76.25 37.46 18.50 (16.12) Cost of debt - - - - - Cost of equity 14.00% 14.00% 14.00% 14.00% 14.00% Fair Rate of Return 14.00% 14.00% 14.00% 14.00% 14.00% Authority’s Examination 3.7.2 The Authority notes that MADC has submitted a Fair Rate of Return of 14% for the period from 1st November 2021 to 31st March 2022. 3.7.3 AERA Guidelines prescribe determination of Fair Rate of Return comprising of Cost of Equity and Cost of Debt based on Capital Asset Pricing model as given below: 5.1.3 Cost of Equity The Authority shall estimate cost of equity, for a Control period, by using the Capital Asset Pricing Model (CAPM) for each Airport Operator, subject to the consideration of such factors as the Authority may deem fit. 3.7.4 The Authority notes that there are no borrowings in the financial statements for the said period. It is further noted that Shirdi International Airport receives funding for its capital expenditure projects from mainly from the Government of Maharashtra and small portion of funds from others sources. 3.7.5 The Authority further notes the following with respect to evaluation of FRoR for Shirdi International Airport: Consultation Paper No. 02/2024-25 Page 32 of 130DETERMINATION OF TARIFF FOR THE PERIOD FROM 1ST NOVEMBER 2021 TO 31ST MARCH 2022 i. The traffic volume at Shirdi International Airport is much lower as compared to other Major Airports. Traffic for the recent year - FY 2023-24 is only 7.24 lakh passengers and during the First Control Period, the traffic is expected to reach a maximum of only up to 1.79 million (FY 2026- 27). Passengers by the end of the control period 2026-27, still significantly below the threshold of 3.50 million passengers, which is the minimum passenger volume for considering an Airport as a Major Airport (based on actual annual passenger throughput). It is important for the Airports having very low traffic base to ensure that the operations at the airport are viable by considering charges which are reasonable and optimum so as to attract more traffic. ii. Financing of Shirdi International Airport is largely through the funding / Grants by the Government of Maharashtra, which is considered as Shareholders’ funds. In order to ensure balanced approach in funding of Airport Projects, the Authority always encourages optimum leverage of debt being considered by Airports. The Authority has, in various earlier tariff determinations, underscored the importance of having efficient funding plan for Airport Capital Expenditure requirements, which will also help in optimizing the Aeronautical charges. Financing the entire project through internal accruals/Govt. funds does not result in optimization of funding sources and in turn, leads to additional charges being levied on the users of the Airport, as the resultant Aggregate Revenue Requirement computed in this scenario is higher. 3.7.6 The Authority, in the recent Tariff Orders for similar Govt. owned airports, has generally considered FRoR @ 14%, where no debt is availed by the Airport Operators. Shirdi Airport is owned & operated by the Govt. Undertaking (MADC) and its CAPEX is primarily funded by the Govt. of Maharashtra. However, considering the factors as explained above, particularly the low traffic base, the Authority, proposes to consider 9% as a Fair Rate of Return for the pre-control period. The Authority invites specific comments from the stakeholders in this regard, on evaluation of which, a final decision will be taken by the Authority. 3.8 Operating and Maintenance (O & M) Expenses MADC’s Submission 3.8.1 MADC has submitted Aeronautical Operating and Maintenance expense for Shirdi International Airport for the period from 1st April 2017 to 31st March 2022 as below: Table 22: Operating and Maintenance (O&M) expenses submitted by MADC for the period FY18 to FY22 (₹ in crores) Particulars Ref FY18 FY19 FY20 FY21 FY22 Total Administration and General Exp A 0.43 0.80 0.33 0.95 0.64 3.15 Airport Operating Exp B 3.18 15.30 16.70 (3.47) 7.02 38.73 License Fees C 0.03 - 0.07 - 0.02 0.12 Employee expenses (Shirdi D 0.47 1.47 2.18 2.74 3.21 10.07 International Airport) Employee expenses E 0.37 1.16 1.39 1.37 1.40 5.69 (Headquarters) Power expenses F 0.24 1.00 1.73 1.39 1.41 5.77 Other water expenses G 0.15 0.35 0.30 0.21 0.15 1.16 Water charges paid to NID H 2.23 2.28 - - - 4.51 Repair and Maintenance (R&M) I 0.78 1.15 1.96 2.81 10.86 17.56 Total O&M Expense J=SUM(A:I) 7.88 23.51 24.66 6.00 24.71 86.76 Consultation Paper No. 02/2024-25 Page 33 of 130DETERMINATION OF TARIFF FOR THE PERIOD FROM 1ST NOVEMBER 2021 TO 31ST MARCH 2022 Particulars Ref FY18 FY19 FY20 FY21 FY22 Total Aero % K 95% 95% 95% 95% 95% Total – Aero O&M expense L=J*K 7.49 22.33 23.43 5.70 23.47 82.42 Authority’s Examination 3.8.2 The Authority has conducted a detailed analysis of Aeronautical O&M expenses submitted by MADC in the following order: I. Allocation Ratios II. Examination of reasonableness and necessity of O&M expenses III. Allocation into Aeronautical and Non-Aeronautical expenses. I. Allocation Ratios 3.8.3 The Authority notes that MADC has allocated all expenses into Aeronautical and Non-Aeronautical in the ratio 95%:5%. However, the Authority, in line with the methodology followed in other airports notes that expenses should be allocated based on relevant ratios as given below. In this regard, the Authority has analyzed and computed the following ratios for appropriate segregation of expenses into Aeronautical and Non-Aeronautical for the period from 1st November 2021 to 31st March 2022. Employee Head Count Ratio (EHCR) 3.8.4 The Authority observed that MADC has not provided the detailed department-wise split of the employee headcount with segregation into aeronautical, non-aeronautical and common employees / departments. The Authority also noted that MADC, in response to a query raised by the Authority, has provided that the actual head count of employees, department-wise, working at Shirdi International Airport for FY 2021-22 as 112. However, no segregation was provided by MADC on whether the employees perform Aeronautical / Non-Aeronautical or Common functions. 3.8.5 On review of the department-wise list of employees, the Authority notes that there is no dedicated employee who is working on Non-Aeronautical services. Considering the same, the Authority proposes to consider the Aero: Non Aero allocation of Employees to be 95%: 5% as submitted by MADC. The Authority will review the same at the time of review of MYTP during the next control period. Terminal Building Ratio (TBLR) 3.8.6 The Authority observed that the data regarding aeronautical areas and non-aeronautical areas were not made available by MADC for the period from 1st November 2021 to 31st March 2022 in the MYTP submission. 3.8.7 The Authority requested MADC to provide a detailed breakup of actual aeronautical and non- aeronautical areas in the Terminal Building. MADC submitted the same via an email dated January 3, 2024. From the detailed break-up, the Authority notes that out of the total terminal area of 2,750 sq.m., 36 Sq.m. were allocated for non-aeronautical services, while the remaining 2,714 Sq.m. were being designated for aeronautical activities. The non-aeronautical area works out to be 1.3%. 3.8.8 The Authority, through its independent consultant, during the site visit noted that the existing passenger terminal building is very congested and there is no scope for further expansion of aeronautical / non- aeronautical activities in the existing building. However, after the commissioning of the New Terminal Building (Refer para 5.3.68 for a detailed analysis on the construction of New Terminal Building), Consultation Paper No. 02/2024-25 Page 34 of 130DETERMINATION OF TARIFF FOR THE PERIOD FROM 1ST NOVEMBER 2021 TO 31ST MARCH 2022 MADC should endeavor to increase the area in the terminal building for non-aeronautical activities for increasing the share of non-aero revenues, to ensure that cross-subsidization of aeronautical tariff benefit the users of the airport. 3.8.9 However, considering the current condition of the Terminal Building and lack of space, the Authority proposes to consider the ratio of 95%:5% as the Terminal Building Ratio (TBLR) for the period from 1st November 2021 to 31st March 2022. The Authority will review the Terminal area allocation in the future control periods. Gross Block Ratio (GBR) 3.8.10 The Authority proposes to consider the Gross Block Ratio (GBR) determined based on the allocation of Aeronautical Assets, Non-Aeronautical Assets and common assets into Aeronautical and Non- Aeronautical using EHCR and TBLR. The GBR so determined is as given below: Table 23: Gross Block Ratio proposed by the Authority for the period from 1st November 2021 to 31st March 2022 (₹ in crores) Particulars Ref Table ref FY22 Aeronautical Gross Block A Table 13 182.99 Non-Aeronautical Gross Block B 1.54 Total Gross Block C=A+B Table 13 184.53 Gross Block Ratio A/C 99.17% Summary of Allocation Ratios proposed by the Authority for the period from 1st November 2021 to 31st March 2022 3.8.11 The Allocation ratios proposed by the Authority for Shirdi International Airport for the period from 1st November 2021 to 31st March 2022 are as follows: Table 24: Allocation Ratios proposed by the Authority for the period from 1st November 2021 to 31st March 2022 Particulars Aeronautical Non-Aeronautical Employee Head Count Ratio (EHCR) 95.00% 5.00% Terminal Building Ratio (TBLR) 95.00% 5.00% Gross Block Ratio (GBR) 99.17% 0.83% II. Review of O&M expenses and its allocation into Aeronautical and Non-Aeronautical expenses for the period from 1st November 2021 to 31st March 2022 3.8.12 The Authority has compared the total O&M expenses as per MADC submission with the audited financial statements and noted certain differences in FY 2020-21 and FY 2021-22. Upon enquiry, it was informed that these differences pertain to CISF expenses which has been excluded by MADC for preparation of MYTP submission. 3.8.13 The Authority proposes to evaluate the under/ over recovery for the period from 1st November 2021 (Date of notification as Major Airport) till 31st March 2022 to be added to the ARR of the First Control Period as indicated in para 3.3.3. To this effect, the Authority, after analysis of all heads of expenses of FY 2021-22 proposes to divide the expenses in time proportion i.e. 5 months from 1st November 2021 to 31st March 2022 as per the basis detailed in Table 4. Consultation Paper No. 02/2024-25 Page 35 of 130DETERMINATION OF TARIFF FOR THE PERIOD FROM 1ST NOVEMBER 2021 TO 31ST MARCH 2022 3.8.14 The Authority’s examination of different heads of O&M expenses for FY 2021-22 is detailed below: A. Administration and General (A&G) Expenses 3.8.15 The Authority obtained the break-up of Administration and General Expenses and analyzed the nature of such expenses. The breakup and nature of Administration and General Expenses for FY 2021-22 is given below: Table 25: Break up and nature of Administration and General (A&G) Expenses for FY 22 as submitted by MADC (₹ in crores) Particulars FY 22 Nature of expenses Admin - Advertisement 0.10 Advertisement of Various Tender and Recruitments Admin - Consultancy Charges 0.04 Consultancy charges of Appointed Consultant Admin – Fuel 0.12 Procurement of Petrol & Diesel for DG Set & Airport Vehicle Professional fees paid to Advocate for various matters Admin - Legal Fees 0.21 Court Fees and other charges included Admin – Misc 0.10 Misc. expenses Admin - Office Expenses 0.06 Office expenses Admin - Provisions 0.02 Provision for Doubtful Debt-Expense Admin - Travelling Expenses 0.00 Staff Travelling related to office work Total A&G Expenses 0.64 A&G Expenses – Aero (95%) 0.61 3.8.16 The Authority notes that ₹ 0.02 Crores was included in Administration & General Expenses in FY 2021- 22 on account of provision for doubtful bad debts. Provision for doubtful debts is an accounting estimate made by entities to account for the possibility that some of their accounts receivable may not be collected. The Authority proposes not to consider Provision for bad and doubtful debts and to consider the expenses excluding the provision on doubtful debts from the computation of expenses for FY 2021- 22. 3.8.17 The Authority notes that ₹ 0.21 Crores was included in Administration & General Expenses in FY 2021- 22 on account of legal fees which includes fees paid to advocate for various matters in court and other legal charges. The Authority proposes to exclude the legal expenses incurred by the Airport Operator as a part of operating expenses in line with the position considered in other similar airports. 3.8.18 The Authority notes that while MADC has allocated all expenses between Aeronautical and Non- Aeronautical services using 95% :5% ratio, the Authority proposes to consider the actual expenses submitted by MADC pertaining to Administration and General Expenses in FY 2021-22 using the following ratios as per the below details: Table 26: Aeronautical Administration and General (A&G) Expenses for FY22 as per MADC submission and as proposed by the Authority (₹ in crores) Particulars Basis FY 22 As per MADC Submission Total Aeronautical A&G Expenses 0.61 As per the Authority Admin - Advertisement Gross Block Ratio 0.09 Admin - Consultancy Charges Gross Block Ratio 0.04 Admin – Fuel Gross Block Ratio 0.12 Admin - Misc Gross Block Ratio 0.10 Admin - Office Expenses Gross Block Ratio 0.06 Consultation Paper No. 02/2024-25 Page 36 of 130DETERMINATION OF TARIFF FOR THE PERIOD FROM 1ST NOVEMBER 2021 TO 31ST MARCH 2022 Particulars Basis FY 22 Admin - Travelling Expenses EHCR 0.00 Total Aeronautical A&G Expenses 0.41 Note: Difference between figures as per the MADC and as per AERA is mainly due to exclusion of legal fees & provision for bad & doubtful debts. B. Airport Operating Expenses 3.8.19 The Authority obtained the break-up of Airport Operating Expenses and analyzed the nature of such expenses. The breakup and nature of Airport Operating Expenses for FY 2021-22 is given below: Table 27: Break up and nature of Airport Operating Expenses for FY22 as submitted by MADC (₹ in crores) Particulars FY 22 Nature of expenses Other Employee related cost e.g: housekeeping, grass cutting staff Others - Employee Related 0.30 etc. Opex – Ambulance 0.68 Basic Life supporting Ambulance service at Shirdi Airport CNS / ATM Service Charges - related to Manpower and Equipment Opex - CNS and ATM Services 3.80 charges - Services provided by AAI Manpower from the India Meteorological Department (IMD) is Opex - IMD Charges 0.70 deployed for current weather forecasting– Services provided by AAI Opex – Misc 0.50 Misc. expenses Outsourcing - Housekeeping 0.39 Housekeeping Charges Outsourcing - Vehicle Expenses 0.15 Hiring of vehicle for AAI, CNS Staff pick up and drop service Opex - PAPI Maintenance 0.49 Flight calibration of PAPI DVOR Total Airport Operating 7.02 Expenses Total Airport Operating 6.67 Expenses – Aero (95%) 3.8.20 The Authority notes that Airport Operating Expenses contains a ledger called “Others – Employee Related”. On further enquiry with MADC, it was informed that these pertain to costs of outsourced labour. Hence the Authority proposes to classify the same together with “Employee Cost” for FY 2021- 22. 3.8.21 The Authority also notes that Airport Operating Expenses include expenses related to CNS / ATM services. The Authority analyzed the CNS/ ATM expenses from FY 2017-18 till FY 2021-22. Over the period, CNS/ATM services account for approximately 57% of the Airport Operating Expenses. The Authority notes that these CNS/ATM charges are of the nature of charges levied by AAI on MADC for the services rendered by AAI – over and above the TNLC collected by it as per the agreement between AAI and MADC. 3.8.22 The Authority, at this stage, as per the discussion in para 2.6.2, proposes not to consider “CNS and ATM Services” expenses and “Outsourcing – Vehicle Expenses” (which are of the nature of hiring vehicle for AAI, CNS staff pick up and drop service) totaling to ₹ 3.95 Crores for the FY 2021-22 claimed by AO under the Airport Operating Expenses for FY 21-22. 3.8.23 The Authority proposes to reclassify “Opex - PAPI Maintenance” to Repairs and Maintenance for the period from 1st November 2021 to 31st March 2022 as this is considered to be the appropriate head. 3.8.24 The Authority proposes to consider the other expenses under this head as submitted by MADC in FY 2021-22 and apply the following allocation ratios as below: Consultation Paper No. 02/2024-25 Page 37 of 130DETERMINATION OF TARIFF FOR THE PERIOD FROM 1ST NOVEMBER 2021 TO 31ST MARCH 2022 Table 28: Airport Operating Expenses for FY22 as per MADC and as proposed by the Authority (₹ in crores) Particulars Basis Ref FY 22 As per MADC Submission Aeronautical Airport Operating Expenses 6.67 As per the Authority Opex - Ambulance Aeronautical Table 27 0.68 Opex – IMD Charges Aeronautical Table 27 0.70 Opex – Misc. Gross Block Ratio Table 27 0.49 Outsourcing - Housekeeping Gross Block Ratio Table 27 0.39 Total Airport Operating Expenses 2.26 Note: CNS/ATM expenses not considered & expenses related to PAPI Lights shifted to R&M Expenses C. License Fee 3.8.25 The Authority notes that the License Fee relates to the Aerodrome License which is to be renewed every two years as per Rule 87 of Aircraft Rule 1937. The Authority notes that the total cost of ₹ 0.065 Crores incurred in FY 2021-22 has been apportioned over FY 2021-22 and FY 2022-23 considering the duration of the validity of the license. The Authority proposes to consider ₹ 0.03 Crores for FY 2021-22 and consider the same as 100% Aeronautical in nature. D. Employee Expenses (Shirdi International Airport) & E. Employee Expenses (Headquarters) 3.8.26 The Authority notes that the cost of employees located at Shirdi International Airport amounts to ₹ 10.07 crores for the 5-year period FY 2017-18 to FY 2021-22, out of which the cost of ₹ 3.21 Crores pertains to FY 2021-22. 3.8.27 The Authority notes that “other employee expenses” incurred by MADC during FY 2021-22 amounts to ₹ 0.30 crore which was classified under “Airport Operating Expense”. Based on the nature of the expense, the Authority proposes to reclassify the same under “Employee Cost”. 3.8.28 The Authority notes that Headquarter employees (of MADC) cost has been allocated to Shirdi International Airport amounting to ₹ 5.69 crores for the 5-year period FY 2017-18 to FY 2021-22 and for FY 2021-22 the allocation amounts to ₹ 1.40 Crores. On enquiry on the basis of allocation of Head quarter employees to Shirdi International Airport, MADC had submitted a working, where the total cost of the Engineering Department, Planning Department, Administration Department and Accounts Department were allocated to Shirdi International Airport considering the percentages of 40%, 25%, 20% and 20% respectively. 3.8.29 On further enquiry on the basis for allocation of costs between other airports/ units of MADC and Shirdi International Airport the following explanation was submitted by MADC: “MADC has prepared separate financials only for the purpose of the Shirdi Airport MYTP filing. While preparing the financial statements these estimates were considered by the management which was accepted by the auditors as well. These are considered based on the following factors. Consultation Paper No. 02/2024-25 Page 38 of 130DETERMINATION OF TARIFF FOR THE PERIOD FROM 1ST NOVEMBER 2021 TO 31ST MARCH 2022 1. Engineering department is predominantly working for the Shirdi Airport and MIHAN project. Thus, the 40% of the expenditure is considered for the Shird Airport and rest for MIHAN and other airports. 2. Planning Department was predominantly working for MIHAN Project and then Shirdi Airport. Thus, the allocation for Shirdi Airport is considered at 25%. 3. Administration and Accounts, were considered based on the scale of the operations and 1/5th of the HO cost is allocated for Shirdi Airport.” Considering the above explanation, the Authority proposes to accept MADC submission of Corporate Cost allocation for FY 2021-22. 3.8.30 The Authority also proposes to apportion the employee cost into Aeronautical and Non-Aeronautical based on the EHCR as per table below. Table 29: Aeronautical Employee Expenses for FY22 as per MADC submission and as proposed by the Authority (₹ in crores) Particulars Ref Basis FY 22 As per MADC Submission Total Aeronautical Employee Expenses A 4.38 As per the Authority Employee Expenses (Shirdi) B EHCR 3.05 Employee Expenses (HQ) C EHCR 1.33 Total Employee Expenses D=B+C 4.38 Add: Regrouping from Airport Operating Expenses – other employee expenses E EHCR 0.30 Total Employee Expenses F=D+E 4.68 Difference# G=F-A 0.30 #Difference due to re-grouping of other employee expenses from airport operating expenses F. Power Expenses 3.8.31 The Authority observed that the actual power expense incurred for FY 2021-22 is ₹ 1.41 Crores and noted that MADC had considered the expense without adjusting for any recoveries from the concessionaires. Based on a query on the same sent on 4th September 2023, MADC had submitted the recovery only from certain concessionaires amounting to ₹ 0.02 Crores for FY 2021-22. However, on analysis of the data in ‘Non-Aeronautical Revenue - Miscellaneous Income’, the Authority notes that the total power recovery for FY 2021-22 was ₹ 0.12 Crores. The Authority therefore proposes to reduce ₹ 0.12 crores as recovery from the actual power expenses incurred by MADC and the power cost post- adjustment of recovery from concessionaires of ₹ 1.29 Crores (actual power expense less recoveries from concessionaire) is proposed to be considered as 100% Aeronautical expense by the Authority. G. Other water expenses 3.8.32 The Authority examined that the actual water expense incurred for FY 2021-22 is ₹ 0.15 Crores and the same seems to be reasonable. The Authority also proposes to apportion the other water expenses into Aeronautical and Non-Aeronautical based on the Gross Block Ratio as per Table 24. H. Water Charges to NID 3.8.33 The Authority notes that MADC has made payments to Nashik Irrigation Department (NID) in FY 2017- 18 and FY 2018-19 only. Since the water charges in FY 2021-22 in NIL this has no impact on the amount to be considered for the period 1st November 2021 to 31st March 2022. Consultation Paper No. 02/2024-25 Page 39 of 130DETERMINATION OF TARIFF FOR THE PERIOD FROM 1ST NOVEMBER 2021 TO 31ST MARCH 2022 I. Repair and Maintenance (R&M) 3.8.34 The Authority notes that R&M expenses had increased by 287% in FY 2021-22 as compared FY 2020- 21. This is mainly due to the incurrence of civil-related R&M expenses of ₹ 10.18 Crores (94% of the total R&M expenses incurred) and the balance of ₹ 0.67 Crores pertains to R&M of vehicles, terminal, airside and others. 3.8.35 The Authority notes that R&M expenses submitted by MADC for FY 2021-22, were higher than the cap of 6% of the Opening RAB (of that year) generally considered by the Authority, for capping of R&M Expenses to ceiling of 6% of opening RAB of concerned tariff year. Accordingly, the Authority, proposes to cap R&M Expenses at 6% of opening RAB (Net Block) as per Table 30. 3.8.36 The Authority, on the aspect of capping of R&M Expenses of the airport at 6% of Opening RAB (Net Block) of the related tariff year, notes the submission of some of the airport operators, wherein they have submitted that capping of R&M Expenses to 6% of Opening RAB (Net Block) needs review. As per the stakeholders, considering that the RAB (Net Block) of the airports, particularly smaller airports, with no major CAPEX additions, gradually decrease due to depreciation; whereas, due to normal wear & tear and aging of Assets, R&M Expenses tend to increase over a period of time. Hence, capping of R&M Expenses at 6% of Opening RAB (Net Block) may be reviewed by the Authority appropriately, as capping of R&M Expenses as per present mechanism impacts adversely the airports (smaller airports) with low Regulatory Asset Base. The Authority, taking note of above submission of stakeholders, proposes to revisit the issue relating to capping of R&M Expenses at the ceiling of 6% of Opening RAB (Net Block). The Authority seeks the specific views of the stakeholders on the capping of R&M Expenses at 6% of opening RAB (Net Block). The Authority will take a final view in the matter considering the views/ inputs from the stakeholders. 3.8.37 The Authority proposes to reclassify the expenses pertaining to PAPI Maintenance which was claimed by MADC in “Airport Operating Expenses” amounting to ₹ 0.49 Crores in FY 2021-22 under “Repair and Maintenance”. 3.8.38 The Authority also proposes to apportion the R&M Expenses into Aeronautical and Non-Aeronautical based on the Gross Block Ratio as per Table 24. Table 30: Repair and Maintenance Expenses for FY 22 as proposed by the Authority (₹ in crores) Particulars Ref. FY 22 As per MADC Submission Aeronautical R&M Expenses 10.32 As per the Authority R&M - Vehicle 0.23 R&M - Terminal 0.02 R&M - Airside 0.01 R&M - Civil 10.10 R&M - Others 0.42 Total R&M Expenses A 10.77 Add: regrouping from Airport Operating Expenses - PAPI Maintenance B 0.49 Total R&M Expenses C=A+B 11.26 Opening RAB (Table 16) D 135.68 Consultation Paper No. 02/2024-25 Page 40 of 130DETERMINATION OF TARIFF FOR THE PERIOD FROM 1ST NOVEMBER 2021 TO 31ST MARCH 2022 Particulars Ref. FY 22 6% of the Opening RAB E=D*6% 8.14 Allowable Expenses F=Lower of 8.14 C or E Total R&M Expense proposed by the Authority 8.14 3.8.39 The following adjustments were made to the total operating expenditure of ₹ 24.71 crores submitted by MADC for FY 2021-22: Table 31: Adjustments to Total O&M expenses proposed by the Authority for FY22 (₹ in crores) Particulars Ref FY 22 Total O&M expenses submitted by MADC (Table 22) A 24.71 Less: Exclusion of CNS / ATM B 3.80 Less: Power recovery expenses C 0.12 Less: Provisions on doubtful debts D 0.02 Less: Admin – Legal Fees E 0.21 Less: Outsourcing – Vehicle Expenses (CNS) F 0.15 Less: Rationalization of R&M Expenses to 6% of opening RAB G 3.11 Total O&M expenses as proposed by the Authority H =A-B-C-D-E-F-G 17.30 3.8.40 After re-classification of expenses into other categories, the Authority notes that the aeronautical O&M Expenses for FY 2021-22 amounts to ₹ 16.97 crores. Based on the methodology as per Table 4, the Authority proposes to consider ₹ 7.07 crores as Aeronautical O&M expenses for the period 1st November 2021 to 31st March 2022 as presented below: Table 32: Aeronautical Operating & Maintenance (O&M) expenses proposed by the Authority for the period from 1st November 2021 to 31st March 2022 (₹ in crores) Ref. Table/ 1st Apr 21 to 1st Nov 21 to Total Particulars Ref Para no. 31st Oct 2021 31st Mar 22 FY22 Administration and General A Table 26 0.24 0.17 0.41 Exp Airport Operating Exp B Table 28 1.32 0.94 2.26 License Fees C 3.8.25 0.02 0.01 0.03 Employee expenses D Table 29 2.73 1.95 4.68 Power (net of recovery) E 3.8.31 0.75 0.54 1.29 Other Water expenses F 3.8.32 & 3.8.33 0.09 0.06 0.15 Repair and Maintenance G Table 30 4.75 3.39 8.14 Total Aero O&M expenses 9.90 7.07 16.97 3.9 Non-Aeronautical Revenue (NAR) MADC’s Submission 3.9.1 MADC has submitted Non-Aeronautical Revenue for Shirdi International Airport for the period from FY 2017-18 to FY 2021-22 as part of its MYTP submission, which is as given below: Table 33: MADC’s submission on Non-Aeronautical Revenue for the period from FY18 to FY22 (₹ in crores) Particulars FY18 FY19 FY20 FY21 FY22 Total License Fees - Airlines - 0.29 0.47 0.67 0.57 2.00 Consultation Paper No. 02/2024-25 Page 41 of 130DETERMINATION OF TARIFF FOR THE PERIOD FROM 1ST NOVEMBER 2021 TO 31ST MARCH 2022 Particulars FY18 FY19 FY20 FY21 FY22 Total License Fees - Concessionaire - 0.06 0.24 0.40 0.52 1.22 Miscellaneous (Inc. Other Royalties) - 0.08 0.31 0.28 0.39 1.06 Taxi rentals - - 0.11 0.02 0.02 0.15 Car parking - license fee - 0.00 0.02 0.00 0.00 0.02 Car parking - via new tender - - - - 0.04 0.04 Advertisement - 0.14 0.10 - - 0.24 Total - 0.57 1.26 1.37 1.54 4.73 Authority’s Examination 3.9.2 The Authority proposes to consider the non-aeronautical revenue pertaining to the period from 1st November 2021 to 31st March 2022, as indicated in para 3.3.3, for the purpose of determination of ARR for the said period. License Fees - Airlines and License Fees Concessionaires 3.9.3 The Authority notes that license fee from airlines ₹ 0.24 Crores (for 5 months ended 31st March 2022) are in the nature of lease rentals for the space used by the airlines and GHA in the terminal building and MADC has considered the same as part of Non-Aeronautical Revenue for the period from 1st November 2021 to 31st March 2022. The Authority proposes to consider license fee from airlines as Aeronautical Revenue similar to that considered in other airports. 3.9.4 The Authority obtained a concessionaire wise break up for the license fee received from concessionaires and notes that these relate to the lease rentals received from non-aeronautical concessionaires. Accordingly, the Authority proposes to consider the same as Non-Aeronautical Revenues. Other Non-Aeronautical Revenue 3.9.5 The Authority notes that Miscellaneous Income relates to Interest from Fixed Deposits and recovery of electricity charges from concessionaire to the tune of ₹ 0.12 crores for FY 2021-22. The Authority proposes to exclude this amount of recovery of electricity charges from NAR and reduce the same from electricity expenses as part of Aeronautical O&M expenses for the year. 3.9.6 Based on the above analysis, Non-Aeronautical Revenues for FY 2021-22 computed by the Authority is as detailed below: Table 34: Non-Aeronautical Revenues proposed by the Authority for FY22 (₹ in crores) Particulars Ref. FY22 License Fees - Concessionaire para 3.9.4 0.52 Miscellaneous (Inc. Other Royalties) para 3.9.5 0.27 Taxi rentals 0.02 Car parking - license fee 0.00 Car parking - via new tender 0.04 Total for FY22 0.85 3.9.7 The reconciliation of Non-Aeronautical Revenue for FY 2021-22 between MADC submission and the Authority’s proposal is as follows: Consultation Paper No. 02/2024-25 Page 42 of 130DETERMINATION OF TARIFF FOR THE PERIOD FROM 1ST NOVEMBER 2021 TO 31ST MARCH 2022 Table 35: Reconciliation of Non-Aeronautical Revenue for FY22 between MADC submission and the Authority’s proposal (₹ in crores) Particulars Ref. Amount Non-Aero Revenue for FY 22 as per MADC (Table 33) A 1.54 Less: Electricity recovery reduced from Operating Expenses B 0.12 Less: License fee – Airlines considered as Aeronautical C 0.57 revenue Non-Aero Revenue computed by the Authority for FY 22 D = A-B-C 0.85 3.9.8 Based on the methodology in Table 4, the Authority proposes to consider ₹ 0.35 crores as non- aeronautical revenue for the period from 1st November 2021 to 31st March 2022 as computed in the below table: Table 36: Non-Aeronautical Revenue proposed by the Authority for the period from 1st November 2021 to 31st March 2022 (₹ in crores) Particulars Ref. Amount Total Non-Aeronautical Revenue for FY22 as per the Authority (Table 34) A 0.85 Non-Aeronautical Revenue for the period 1st November 2021 to 31st March B = A*5/12 0.35 2022 3.10 Aeronautical Revenue MADC’s Submission 3.10.1 MADC has submitted Aeronautical Revenue for Shirdi International Airport for the period from FY 2017-18 to FY 2021-22 as follows: Table 37: Aeronautical Revenue submitted by MADC for the period FY18 to FY22 (₹ in crores) Particulars FY18 FY19 FY20 FY21 FY22 Total Landing fee 0.03 0.66 2.49 0.43 0.91 4.52 Parking fee 0.00 0.01 0.00 0.00 0.01 0.03 PSF - facility 0.15 1.06 2.78 0.01 - 3.99 Fuel throughput - 0.07 0.18 - - 0.25 Royalty on license fee - Ground Handling 0.03 0.06 0.07 0.03 0.04 0.23 Cargo screening revenue (X-ray) - - - - 0.01 0.01 License fee Refueller - 0.08 0.34 0.62 0.66 1.70 UDF - - - 0.42 1.09 1.51 Total 0.21 1.93 5.86 1.50 2.72 12.23 Authority’s Examination 3.10.2 The Authority, as indicated in para 3.3.3, proposes to consider aeronautical revenue pertaining to period from 1st November 2021 to 31st March 2022 for the computation of ARR. 3.10.3 The Authority analyzed the nature of various heads under Aeronautical Revenue for FY 2021-22 as per MADC submission and proposes to consider the same as Aeronautical in nature. 3.10.4 As indicated in para 3.9.3, the Authority proposes to reclassify the license fee from airlines as “Aeronautical Revenue”, amounting to ₹ 0.57 crores for FY 2021-22. Consultation Paper No. 02/2024-25 Page 43 of 130DETERMINATION OF TARIFF FOR THE PERIOD FROM 1ST NOVEMBER 2021 TO 31ST MARCH 2022 3.10.5 The reconciliation of Aeronautical Revenue for FY 2021-22 between MADC submission and the Authority’s proposal is as follows: Table 38: Reconciliation of Aeronautical Revenue for FY22 between MADC submission and the Authority’s proposal (₹ in crores) Particulars Ref. Amount Aero Revenue for FY 22 as per MADC (Table 37) A 2.72 Add: License fee – Airlines considered as Aeronautical revenue B 0.57 Aero Revenue computed by the Authority for FY 22 C = A+B 3.29 3.10.6 Based on the methodology as per Table 4, the basis of segregation of revenues of FY 2021-22 to into the periods 1st April 2021 to 31st October 2021 and 1st November 2021 to 31st March 2022 is as below. Table 39: Basis of split for Aeronautical Revenue for FY22 between the periods 1st April 2021 to 31st October 2021 and 1st November 2021 to 31st March 2022 Total Traffic for the Total traffic for the Particulars Total Traffic Basis period 01/04/2021 to period 01/11/2021 to (in No’s) for FY22 31/10/2021 31/03/2022 Actual - No. of Landing fee 202 1,514 1,716 ATM’s Actual - No. of Parking fee 202 1,514 1,716 ATM’s Royalty on Actual - No. of license fee - 202 1,514 1,716 ATM’s Ground Handling Cargo screening Actual - No. of 16,024 1,60,763 1,76,787 revenue (X-ray) Passenger’s License fee Actual - No. of 202 1,514 1,716 Refueller ATM’s Actual - No. of UDF 16,024 1,60,763 1,76,787 Passenger’s License Fee - No. of months 7 5 12 Airlines 3.10.7 Based on the methodology in Table 4 and Table 39, the Authority proposes to consider ₹ 2.68 crores as Aeronautical revenue for the period from 1st November 2021 to 31st March 2022 as computed in the below table: Table 40: Aeronautical Revenue proposed by the Authority for the period from 1st November 2021 to 31st March 2022 (₹ in crores) 1st April to 31st 1st Nov 21 to 31st Particulars Total FY22 October 2021 Mar 22 Landing fee 0.12 0.80 0.92 Parking fee 0.00 0.01 0.01 Royalty on license fee - Ground 0.00 0.03 0.03 Handling Cargo screening revenue (X-ray) 0.00 0.01 0.01 License fee Refueller 0.07 0.59 0.66 UDF 0.10 0.99 1.09 License Fees - Airlines 0.33 0.24 0.57 Total 0.62 2.67 3.29 Consultation Paper No. 02/2024-25 Page 44 of 130DETERMINATION OF TARIFF FOR THE PERIOD FROM 1ST NOVEMBER 2021 TO 31ST MARCH 2022 3.11 Taxation MADC’s Submission 3.11.1 MADC has submitted the following taxation values for Shirdi International Airport for period from FY 2017-18 to FY 2021-22 based on the building blocks submitted: Table 41: MADC’s submission on Taxation for the period from FY18 to FY22 (₹ in Crores) Particulars Ref. FY18 FY19 FY20 FY21 FY22 Total Aeronautical Revenue A 0.21 1.93 5.86 1.50 2.72 12.22 Non-Aeronautical Revenue B - 0.57 1.26 1.37 1.54 4.74 Total Revenue C=A+B 0.21 2.50 7.12 2.87 4.26 16.96 Total O&M Expenses D 7.88 23.52 24.66 6.00 24.71 86.77 EBITDA E=C-D -7.67 -21.02 -17.54 -3.13 -20.45 -69.81 Depreciation (ARR) F 0.74 6.42 7.24 8.25 10.50 33.15 - EBIT G=E-F -8.41 -27.44 -24.78 -11.38 -30.95 103.00 Interest Cost on Debt H - - - - - - Interest Cost on Working Capital I - - - - - - - PBT J=G-H-I -8.41 -27.44 -24.78 -11.38 -30.95 103.00 Add: Depreciation (ARR) F 0.74 6.42 7.24 8.25 10.50 33.15 Less: Depreciation for Taxation K 0.44 6.99 7.17 7.03 8.63 30.26 PBT for Taxation L=J+F-K -8.11 -28.01 -24.71 -10.16 -29.08 -100.1 Loss Carried Forward (Opening) M - -8.11 -36.12 -60.83 -70.99 - Current Loss N -8.11 -28.01 -24.71 -10.16 -29.08 -100.1 Set Off O - - - - - - Loss Carried Forward (Closing) P=M+N+O -8.11 -36.12 -60.83 -70.99 -100.1 - Net Taxable Income Q - - - - - - Tax Rate Applicable R 34.94% 34.94% 34.94% 34.94% 34.94% - Tax (As per normal provisions) S=Q*R - - - - - - MAT Rate T 17.47% 17.47% 17.47% 17.47% 17.47% - MAT U=Q*T - - - - - - Higher of S Tax Payable - - - - - - or U Authority’s Examination 3.11.2 The Authority, as indicated in para 3.3.3, proposes to consider taxation pertaining to income and expense for the period from 1st November 2021 to 31st March 2022 for the computation of ARR. The Authority proposes to consider the carried forward aeronautical loss till 31st October 2021 from the date of commercial operations for the purpose of determining the aeronautical tax for the period from 1st November 2021 to 31st March 2022. 3.11.3 The Authority also notes that MADC has considered Shirdi Airport as a whole (including Non- Aeronautical Revenue, cost etc.) for the purpose of determining the aeronautical taxation. The Authority proposes to consider only the Aeronautical P&L for the purpose of arriving at the aeronautical taxation for the period from 1st November 2021 to 31st March 2022 and to determine the carried forward aeronautical loss till 31st October 2021. Consultation Paper No. 02/2024-25 Page 45 of 130DETERMINATION OF TARIFF FOR THE PERIOD FROM 1ST NOVEMBER 2021 TO 31ST MARCH 2022 Aeronautical O&M Expenses: 3.11.4 The Authority has examined the Aeronautical O&M expenses submitted by MADC for the period FY 2017-18 to FY 2021-22 for the purposes of calculation of carry forward tax loss as at 31st October 2021 and has analysed, rationalized and regrouped such expenses on the basis of EHCR and GBR or considering as 100% aeronautical in nature, as appropriate. The Authority has considered such expenses until 31st October 2021, which are discussed in the following paragraphs: Employee Expenses 3.11.5 MADC has submitted employee expenses of ₹ 15.76 crores pertaining to Employee expenses (Shirdi) - ₹ 10.07 crores and Employee expenses (Mumbai) - ₹ 5.69 crores. The Authority proposes to consider ₹ 8.40 crores for Employee expenses (Shirdi) and ₹ 4.94 crores for Employee expenses (Mumbai) after allocating such expenses on the basis of EHCR, for the purposes of computation of aeronautical tax. Administration and General expenses 3.11.6 The Authority notes that MADC has submitted an Administration and General expense of ₹ 3.15 crores for the period FY 2017-18 to FY 2021-22. The Authority proposes to consider ₹ 2.29 crores for the purposes of computation of tax and the cause for the variance are non-allowance of legal expenses & provision for doubtful debts and allocation on the basis of GBR. Repairs and Maintenance (R&M) 3.11.7 MADC has submitted Repairs and Maintenance expenses amounting to ₹ 17.56 crores. The Authority proposes to consider ₹ 11.42 crores after allocating such expenses on the basis of GBR, re-classification of PAPI maintenance expenses from “Airport Operating expenses” and limiting the total R&M expenses to 6% of Opening RAB, for the purposes of computation of aeronautical tax. Water Expenses 3.11.8 The Authority notes that an amount of ₹ 5.67 crores on account of Water expenses and Water charges paid to NID. The Authority proposes to consider an amount of ₹ 5.59 crores towards the same, after allocating on the basis of GBR, for the purposes of computation of tax. Power Costs 3.11.9 The Authority notes that MADC has submitted Power costs to the tune of ₹ 5.77 crores for the period FY 2017-18 to FY 2021-22. Further, MADC has submitted such expenses without reduction of power recoveries as explained in para 3.8.31. Hence the Authority proposes to consider ₹ 4.78 crores for the purposes of computation of tax. Airport Operating Expenses 3.11.10 MADC has submitted Airport Operating expenses to a tune of ₹ 38.73 crores. The Authority proposes to consider an amount of ₹ 12.69 crores for the purposes of computation of aeronautical tax. The major reasons for the variance in figures, as per the AO & as per the Authority, are non-consideration of CNS & ATM expenses, re-classification of “PAPI Maintenance expenses’ to “Repairs & Maintenance” and “Others – Employees” to “Employee expenses”, and application of GBR for allocating the expenses, as appropriate. Consultation Paper No. 02/2024-25 Page 46 of 130DETERMINATION OF TARIFF FOR THE PERIOD FROM 1ST NOVEMBER 2021 TO 31ST MARCH 2022 On the basis of above paragraphs, the aeronautical O&M expenses proposed to be considered by the Authority for the purposes of computation of aeronautical tax for the pre-control period is as presented in the table below: Table 42: Breakup of Aeronautical O&M Expenses (₹ in crores) FY22 - Upto 31st Particulars FY18 FY19 FY20 FY21 Total Oct 2021 Employee expenses 0.80 2.50 3.39 3.91 2.73 13.34 Administration and General Exp 0.35 0.80 0.33 0.57 0.24 2.29 Repair and Maintenance 0.78 1.14 1.95 2.80 4.75 11.42 Power (net of recovery) 0.24 0.96 1.62 1.21 0.75 4.78 Water expenses 2.38 2.62 0.29 0.21 0.09 5.59 Airport Operating Exp 1.30 5.83 3.96 0.28 1.32 12.69 License Fees 0.03 - 0.07 - 0.02 0.11 Total 5.87 13.85 11.61 8.98 9.89 50.20 3.11.11 The Authority notes that MADC has computed depreciation on WDV method based on the actual no. of days the asset is put to use in that FY by considering the useful life as per the table below: Table 43: Useful life considered by MADC for existing assets for computing IT Depreciation Asset Category Useful Life Building 30 Plant & Machinery 15 Electrical Installations & Equipment 10 Vehicles 8 Computers - Servers and Network 6 Computers – Others 3 Furniture & Fixture – Trolleys 3 Furniture & Fixture without Trolleys 7 Office Equipment 5 3.11.12 The Authority has recomputed the depreciation as per Income Tax Act, 1961 from the FAR provided by MADC by using the following depreciation rates: Table 44: Depreciation rates used by the Authority for re-computation for Income Tax depreciation Particulars Rate of Depreciation Till FY17 Rate of Depreciation After FY17 Building 10% 10% Computers 60% 40% Electrical Installations & Equipment 10% 10% Furniture & Fixture 10% 10% Office Equipment’s 15% 15% Plant & Machinery 15% 15% Software 60% 40% Vehicle 15% 15% 3.11.13 The Authority has recomputed the depreciation as per Income Tax Act, 1961 using the depreciation rates and useful life of assets indicated therein as detailed in Table 44. Consultation Paper No. 02/2024-25 Page 47 of 130DETERMINATION OF TARIFF FOR THE PERIOD FROM 1ST NOVEMBER 2021 TO 31ST MARCH 2022 Table 45: Income tax depreciation recomputed by the Authority (₹ in crores) FY18 FY19 FY20 FY21 FY22 (1st April 2021 to Particulars 31st October 2021) Building - 11.44 10.40 9.36 4.91 Computers 0.02 0.02 0.02 0.03 0.02 Electrical Installations & Equipment - 1.53 1.38 1.58 1.43 Furniture & Fixture 0.03 0.10 0.14 0.13 0.07 Office Equipment 0.01 0.68 0.59 0.53 0.27 Plant & Machinery 0.77 0.79 1.42 1.95 2.31 Software - 0.00 0.00 0.01 0.00 Vehicle 0.02 0.02 0.02 0.02 0.01 Total 0.84 14.59 13.97 13.60 9.02 3.11.14 The Authority also notes that MADC has considered the tax rate of 34.94% based on the following components: i. Corporate tax of 30% ii. Surcharge of 12% iii. Health and Education Cess of 4% 3.11.15 However, on enquiry, it was noted that the effective tax rate currently in force for Shirdi International Airport (from FY19) is 27.82%, breakup of the same is as under: i. Corporate tax of 25% ii. Surcharge of 7% iii. Health and Education Cess of 4% 3.11.16 Based on the above facts, the Authority proposes to consider the following aeronautical loss carried forward as on 31st October 2021 from the date of commencement of commercial operations: Table 46: Aeronautical losses carried forward proposed by the Authority as on 31st October 2021 (₹ in crores) FY22 (1st April Particulars Ref. FY18 FY19 FY20 FY21 2021 to 31st Total October 2021) Aeronautical Revenue A 0.21 1.93 5.86 1.50 0.63 10.13 Aeronautical O&M B 5.87 13.85 11.61 8.98 9.89 50.20 Expenses Interest Cost C - - - - - - Depreciation as per D 0.84 14.59 13.97 13.60 9.02 52.02 Income Tax Aero Profit / (Loss) E = A-B- -6.50 -26.51 -19.72 -21.08 -18.28 -92.09 before Tax C-D Loss Carried Forward F - -6.50 -33.01 -52.74 -73.81 Total profit / (loss) G = E+F -6.50 -33.01 -52.74 -73.81 -92.09 after set off Taxable Profit H - - - - - Tax Rate Applicable I 34.94% 27.82% 27.82% 27.82% 27.82% Tax as per Normal J = H*I - - - - - Provisions Depreciation (Table 15) K 0.90 6.47 6.82 7.59 5.70 27.48 Book Profit / (Loss) for L = A-B- -6.56 -18.39 -12.57 -15.07 -14.96 -67.55 Consultation Paper No. 02/2024-25 Page 48 of 130DETERMINATION OF TARIFF FOR THE PERIOD FROM 1ST NOVEMBER 2021 TO 31ST MARCH 2022 FY22 (1st April Particulars Ref. FY18 FY19 FY20 FY21 2021 to 31st Total October 2021) MAT K MAT Rate M 17.47% 17.47% 17.47% 17.47% 17.47% MAT N = L*M - - - - - - Higher of Tax Payable - - - - - - J or N 3.11.17 Based on the above facts, the Authority proposes to consider the following aeronautical tax for the period from 1st November 2021 to 31st March 2022: Table 47: Aeronautical Tax proposed by the Authority for the period from 1st November 2021 to 31st March 2022 (₹ in crores) FY22 (1st November 2021 to Particulars Table Ref. Ref. 31st March 2022) Aeronautical Revenue Table 40 A 2.67 Aeronautical O&M Expenses Table 32 B 7.07 Interest Cost C - Depreciation as per Income Tax Table 45 D 6.44 Aero Profit before Tax E = A-B-C-D -10.84 Loss Carried Forward Table 46 F -92.10 Total profit / (loss) after setting off G = E+F -102.94 Taxable Profit H - Tax Rate Applicable I 27.82% Tax as per Normal Provisions J = H*I - Depreciation as per Fin. Statement Table 15 K 4.03 Book Profit / (Loss) for MAT L = A-B-K -8.43 MAT Rate M 17.47% MAT N = L*M - Tax Payable Higher of J or N - 3.12 Aggregate Revenue Requirement (ARR) for the period from 1st November 2021 to 31st March 2022 MADC’s Submission 3.12.1 MADC has submitted the ARR for Shirdi International Airport for the period from FY 2017-18 to FY 2021-22 as indicated in Table 3 and has requested for a shortfall of ₹ 278.70 crores to be included in the computation of ARR for the first control period. Authority’s Examination 3.12.2 The Authority notes that MADC has computed the shortfall for the period FY 2017-18 to FY 2021-22. However, as indicated in para 3.3.3, the Authority proposes to consider the shortfall only for the period from 1st November 2021 to 31st March 2022. 3.12.3 The Authority also notes that MADC has inadvertently considered aeronautical portion of depreciation by considering 95% twice, effectively making it as 90.25% of the total depreciation for the period from FY 2017-18 to FY 2021-22. Hence the same does not match the aeronautical portion of depreciation as per Table 10. Consultation Paper No. 02/2024-25 Page 49 of 130DETERMINATION OF TARIFF FOR THE PERIOD FROM 1ST NOVEMBER 2021 TO 31ST MARCH 2022 3.12.4 Based on its analysis of the various building blocks, the Authority has computed the ARR and Shortfall (Under recovery) for the period from 1st November 2021 to 31st March 2022 as presented in the table below: Table 48: ARR and Shortfall proposed by the Authority for FY 21-22 (for the period from 1st November 2021 to 31st March 2022) (₹ in crores) Table FY22 (1st November 2021 Particulars Ref. Ref. to 31st March 2022) Average RAB Table 16 A 153.50 Rate of Return on Average RAB 9% Return on RAB# B= A* 9% *5/12 5.76 (+) Depreciation Table 15 C 4.03 (+) Return on Land Table 20 D 2.20 (+) Operating Expenses Table 32 E 7.07 (+) Taxation Table 47 F - ARR G = B+C+D+E+F 19.06 NAR Table 36 H 0.35 (-) 30% of NAR I = H*30% 0.11 Net ARR J = G-I 18.95 Aeronautical Revenue Table 40 K 2.67 Under recovery as on 31st March 2022 L = J-K 16.28 PV factor @ 9% M 1.09 PV of Under recovery as on 31st March 2022 N = L*M 17.74 (# Return on RAB computed proportionately for 5 months i.e. 1st Nov 2021 to 31st Mar 2022) 3.13 Authority’s proposal regarding Aeronautical Tariff for the period from 1st November 2021 to 31st March 2022 Based on the material before it and its analysis, the Authority proposes the following with regard to Tariff for the period from 1st November 2021 to 31st March 2022 for Shirdi International Airport: 3.13.1 To consider the shortfall for the period from 1st November 2021 to 31st March 2022 to be carried forward to the First Control Period. 3.13.2 To consider Traffic as per Table 7. 3.13.3 To consider RAB and depreciation as per Table 16. 3.13.4 To consider FRoR as per para 3.7.6. 3.13.5 To consider Return on land as per Table 20. 3.13.6 To consider Aeronautical O&M Expenses as per Table 32. 3.13.7 To consider Non-Aeronautical Revenue as per Table 36. 3.13.8 To consider the Aeronautical Tax as per Table 47. 3.13.9 To consider the Aeronautical Revenue as per Table 40. 3.13.10 To consider under recovery of ₹ 17.74 crores as per Table 48 and adjust the same in the ARR for the First Control Period. Consultation Paper No. 02/2024-25 Page 50 of 130TRAFFIC FOR THE FIRST CONTROL PERIOD 4 TRAFFIC FOR THE FIRST CONTROL PERIOD 4.1 MADC’s submission regarding Traffic for the First Control Period 4.1.1 Passenger Traffic, ATM, Belly Cargo and Air Cargo volume and the corresponding growth rates (%) submitted by MADC for the First Control Period are as follows: Table 49: MADC’s submission of Passenger Traffic, ATM, Belly Cargo and Air Cargo and corresponding growth rates Passenger (in Nos) ATM (in Nos) Belly Cargo (in MT) Air Cargo (in MT) Year Dom Int’l Total Dom Int’l Total Dom Int’l Total Dom Int’l Total Traffic FY23 7,34,029 - 7,34,029 5,971 - 5,971 122 - 122 - - - FY24 8,44,133 - 8,44,133 7,977 - 7,977 163 - 163 - - - FY25 10,12,960 - 10,12,960 9,280 - 9,280 190 - 190 - - - FY26 12,66,200 - 12,66,200 11,600 - 11,600 237 - 237 6,250 - 6,250 FY27 17,09,370 85,469 17,94,839 15,659 783 16,442 320 - 320 7,697 - 7,697 Total 55,66,692 85,469 56,52,161 50,487 783 51,270 1,032 - 1,032 13,947 - 13,947 Growth (%) FY23* 314% - 314% 221% - 221% 221% - 221% - - - FY24 15% - 15% 34% - 34% 34% - 34% - - - FY25 20% - 20% 16% - 16% 17% - 17% - - - FY26 25% - 25% 25% - 25% 25% - 25% - - - FY27 35% - 42% 35% - 42% 35% - 35% 23% - 23% *Growth rates are computed based on actual traffic for FY23 as compared to that of FY22 4.1.2 The Authority was informed that the traffic forecast considered by MADC for Shirdi International Airport is based on the internal estimates of pre-COVID growth and targets for FY 2026-27. 4.1.3 MADC has submitted that international travel is expected to begin by FY 2026-27 post commissioning of new terminal building as proposed by MADC in FY 2025-26. MADC has also submitted that the air cargo facility is expected to begin by FY 2024-25 in line with the capitalization of the new Air Cargo Facility in FY 2024-25 with an estimated cargo volume of 6,250 MT in FY 2025-26. 4.2 Authority’s examination regarding Traffic for the First Control Period 4.2.1 The Authority has reviewed the historic traffic details at Shirdi International Airport. The historical passenger traffic* and ATM at the Airport is as follows: Table 50: Past trend in growth of Traffic at Shirdi International Airport (based on AAI Data) Domestic Y-o-Y Growth % FY Passenger ATM Belly Cargo Passenger ATM Belly Cargo (in Nos.) (in Nos.) (in Tons) (in Nos.) (in Nos.) (in Tons) FY18 37,234 745 - - - - FY19 2,29,040 3,064 - 515% 311% - FY20 5,68,968 6,226 - 148% 103% - FY21 85,673 1,452 - (85%) (77%) - FY22 1,76,787 1,716 38 106% 18% - FY23 7,33,038 5,635 643 315% 228% 1,592% *Source: Traffic News from AAI website Consultation Paper No. 02/2024-25 Page 51 of 130TRAFFIC FOR THE FIRST CONTROL PERIOD Passenger Traffic estimate for First Control Period 4.2.2 On review of the traffic details (Passenger, ATM and Cargo) submitted by MADC for FY 2022-23, the Authority notes that traffic details submitted by MADC do not match with actual traffic as per AAI’s website as detailed below: Table 51: Difference in actual traffic between MADC’s Submission and AAI website for the period for FY23 Traffic as per MADC Traffic as per AAI Website (B) Difference (C=A-B) Year submission (A) Passenger ATM Cargo Passenger ATM Cargo Passenger ATM Cargo FY23 7,34,029 5,971 122 7,33,038 5,635 643 991 336 (521) FY24 7,26,440 6,268 245 7,24,980 6,017 243 1,460 251 2 4.2.3 On enquiry of the difference for FY 2022-23 as above, MADC responded as follows: i. Infant is counted by AAI in the arrival data whereas we do not count it in our data. ii. Infant and Transit data for indigo Airlines is included in the AAI Data, whereas we do not include infant in the Passenger data.” 4.2.4 The Authority notes that the explanation provided by MADC does not clarify the difference as detailed above, as the numbers are higher in MADC submission as compared to AAI data for passenger traffic. Therefore, the Authority proposes to consider traffic (Passenger, ATM and Cargo) as per AAI data for FY 2022-23 and FY 2023-24. 4.2.5 The Authority compared the actual traffic from AAI website for FY 2023-24 with the pre-COVID traffic (FY 2019-20). The comparison is given below: Table 52: Passenger Traffic for the period FY 2019-20 and FY 2023-24 Particulars FY20 FY24 Recovery % FY20 Passenger Traffic (in Nos.) 5,68,968 7,24,980 127% 4.2.6 Based on Table 52, the Authority notes that the passenger traffic has surpassed the pre-COVID levels. 4.2.7 The Authority sought the rationale from MADC behind the growth rates adopted for passenger traffic in its MYTP submission as indicated in Table 49 above. MADC has responded as follows: “The traffic forecast considered by the MADC for Shirdi Airport, based on the internal estimates of pre- covid growth and targets for FY 2026-27. The projected growth distributed over the period of 4 years, keeping in mind that the initial years will not facilitate the higher growth due to the capacity constraints of the existing terminal. Further, with proposed construction of new terminal and world class passenger experience, the growth for FY 2025-26 and FY 2026-27 is projected to be on higher side.” 4.2.8 The Authority notes that Shirdi International Airport commenced its operation in FY 2017-18. The growth rates in FY 2018-19 and FY 2019-20 reflect the fulfilment of available demands. The period from FY 2020-21 to FY 2021-22 was impacted by COVID-19. Hence, the Authority notes that due to various factors i.e. Shirdi International Airport being a new airport and COVID-19 impacting the traffic during the significant portion of 4th and 5th year of its operation, the past growth trends may not reflect clear trends to estimate the future projections. 4.2.9 Based on the comparison of actual traffic for FY 2023-24, the Authority notes that there is a significant difference (~14%) between the traffic projections given by MADC (i.e. 8,44,133) and the actual numbers Consultation Paper No. 02/2024-25 Page 52 of 130TRAFFIC FOR THE FIRST CONTROL PERIOD for the year (i.e. 7,24,980) from AAI website. However, considering the possible demands that exists in Shirdi International Airport, the Authority proposes to consider the traffic numbers projected by MADC for FY 2024-25, FY 2025-26 and FY 2026-27. 4.2.10 With respect to International Passenger Traffic, the Authority notes that MADC has projected that international operations will commence in FY 2026-27 with the opening of NITB in FY 2025-26, and the volume of international passenger traffic has been projected at 5% of domestic passenger traffic. Though the Authority has shifted the commencement of commercial operation of the NITB from FY 2025-26 to 1st October 2026 i.e. FY 2026-27 the Authority proposes to consider 5% of domestic passenger traffic as the estimate for international passenger traffic for FY 2026-27 as submitted by MADC. The Authority proposes to true up the same based on actuals at the time of tariff determination for the Second Control Period. Considering the above, the details of passenger traffic proposed by the Authority for the First Control Period is as follows: Table 53: Passenger Traffic proposed by the Authority for First Control Period Particulars FY23 FY24 FY25 FY26 FY27 Total Domestic Passenger Traffic (in Nos.) Domestic Passenger Traffic submitted 7,34,029 8,44,133 10,12,960 12,66,200 17,09,370 55,66,692 by MADC Domestic Passenger Traffic proposed 7,33,038* 7,24,980* 10,12,960 12,66,200 17,09,370 54,46,548 by the Authority Y-o-Y Growth of Domestic PAX 314% 15% 20% 25% 35% - submitted by MADC Y-o-Y Growth of Domestic PAX 315% -1% 40% 25% 35% - proposed by the Authority International Passenger Traffic (in Nos.) International Passenger Traffic - - - - 85,469 85,469 submitted by MADC International Passenger Traffic - - - - 85,469 85,469 proposed by the Authority Y-o-Y Growth of International PAX - - - - - - submitted by MADC Y-o-Y Growth of International PAX - - - - - - proposed by the Authority *Based on actual data from Traffic News - AAI website ATM estimate for First Control Period 4.2.11 The Authority proposes to consider the actual data for FY 2022-23 and FY 2023-24 from AAI website as detailed in para 4.2.4. The Authority compared the actual ATM for FY 2023-24 from AAI website with the pre-COVID traffic (FY 2019-20). The comparison is given below: Table 54: ATM for the period FY 2019-20 and FY 2023-24 Particulars FY20 FY24 Recovery % FY20 ATM (in Nos.) 6,226 6,017 97% 4.2.12 Based on Table 54, the Authority notes that the ATM traffic will surpass the pre-COVID levels by FY 2024-25. 4.2.13 Based on the actual ATM for FY 2023-24, the Authority notes that there is a significant difference (~25%) in the ATM projections given by MADC (i.e. 7,977) for FY 2023-24 vis-à-vis actuals (i.e. 6,017). However, considering the possible demands that exists in Shirdi International Airport, the Consultation Paper No. 02/2024-25 Page 53 of 130TRAFFIC FOR THE FIRST CONTROL PERIOD Authority proposes to consider the ATM numbers projected by MADC for FY 2024-25 , FY 2025-26 and FY 2026-27. 4.2.14 The Authority also notes that MADC has projected that international operations will commence in FY 2026-27, and the volume of international ATM has been projected at 5% of domestic ATM similar to the assumption for passenger traffic. Being the first year of international operations, the Authority proposes to consider 5% of domestic ATM for international ATM and true up the same based on actuals at the time of tariff determination for the Second Control Period. 4.2.15 Based on the above, the Authority proposes the ATM traffic to be considered by the Authority for Shirdi International Airport as given below: Table 55: ATM proposed by the Authority for First Control Period Particulars FY23 FY24 FY25 FY26 FY27 Total Domestic ATM (in Nos.) Domestic ATM submitted by MADC 5,971 7,977 9,280 11,600 15,659 50,487 Domestic ATM proposed by the 5,635* 6,017* 9,280 11,600 15,659 48,192 Authority Y-o-Y Growth of Domestic ATM 221% 34% 16% 25% 35% - submitted by MADC Y-o-Y Growth of Domestic ATM 228% 7% 54% 25% 35% - proposed by the Authority International ATM (in Nos.) International ATM submitted by - - - - 783 783 MADC International ATM proposed by the - - - - 783 783 Authority Y-o-Y Growth of International ATM - - - - - - submitted by MADC Y-o-Y Growth of International ATM - - - - - - proposed by the Authority *Based on actual data from Traffic News - AAI website 4.2.16 The above ATM nos. include ATMs that are exempt for the purposes of computation of Landing charges (i.e. aircraft with a maximum certified capacity of less than 80 seats, being operated by domestic scheduled operators at airport). Accordingly, the Authority proposes to reduce such exempted ATM nos. for landing charges computation by deriving the Scheduled ATM and Non-Scheduled ATM proportion , based on past trend of ATMs as shown in the table below: Table 56: Historical Scheduled and Non-Scheduled ATMs Scheduled Non-scheduled Month Total ATM ATM ATM Nov-21 320 302 18 Dec-21 368 348 20 Jan-22 242 218 24 Feb-22 242 216 26 Mar-22 430 400 30 Apr-22 529 464 65 May-22 565 522 43 Jun-22 526 492 34 Jul-22 482 468 14 Aug-22 488 456 32 Sep-22 480 438 42 Consultation Paper No. 02/2024-25 Page 54 of 130TRAFFIC FOR THE FIRST CONTROL PERIOD Scheduled Non-scheduled Month Total ATM ATM ATM Oct-22 504 470 34 Nov-22 482 442 40 Dec-22 507 472 35 Jan-23 497 472 25 Feb-23 426 400 26 Mar-23 482 464 18 Total 7570 7044 526 % to Total 100% 93% 7% 4.2.17 On the total ATMs proposed for the First Control Period, the Authority using the percentages calculated in table above, has arrived at the Scheduled and Non-Scheduled ATM. Table 57: Apportionment of ATMs proposed by the Authority on the basis of Historical trend Particulars FY 23 FY 24 FY 25 FY 26 FY 27 Total ATM proposed by the Authority (Table 55) 5,635 6,017 9,280 11,600 15,660 48,192 Scheduled (93%) (A) 5,241 5,596 8,630 10,788 14,564 44,819 Non-Scheduled (7%) (B) 394 421 650 812 1,096 3,373 Total (A+B) 5,635 6,017 9,280 11,600 15,660 48,192 4.2.18 MADC has considered the aircraft mix for FY 2023-24 to be 70:30 for NBA:ATR. The Authority proposes to consider the same. From FY 2024-25 onwards, the Authority has considered the actual NBA:ATR mix as submitted by MADC. From the ATR numbers arrived at for FY 2023-24 and the actual numbers given by MADC, the non-scheduled portion of ATM calculated in table 57 above has been reduced from total ATR numbers, as it is understood from MADC that all non-scheduled landings in Shirdi International Airport are ATRs, to arrive at the scheduled ATRs. Table 58: Scheduled ATRs exempted for the purposes of computation of Landing Charges Particulars FY 23 FY 24 FY 25 FY 26 FY 27 Total Total ATRs (A) 2,254 1,805 3,418 4,272 5,767 17,516 Less: Non-Scheduled ATRs (B) (Table 57) -394 -421 -650 -812 -1,095 -3,372 Exempted ATRs considered for landing charges (A-B) 1,860 1,384 2,768 3,460 4,672 14,144 4.2.19 On exclusion of Scheduled ATR, the total ATM nos. proposed to be considered by the Authority for computation of Landing Charges is as presented in the table below: Table 59: ATMs considered for computation of Landing Charges Particulars FY 23 FY 24 FY 25 FY 26 FY 27 Total Non – Scheduled ATR (Table 57) 394 421 650 812 1,095 3,372 NBA 3,381 4,212 5,862 7,328 9,892 30,675 Total 3,775 4,633 6,512 8,140 10,987 34,047 Belly Cargo estimate for First Control Period 4.2.20 The Authority proposes to consider the actual belly cargo volume for FY 2022-23 and FY 2023-24 from AAI website as detailed in para 4.2.4. Consultation Paper No. 02/2024-25 Page 55 of 130TRAFFIC FOR THE FIRST CONTROL PERIOD 4.2.21 The Authority notes that MADC has projected the domestic Belly Cargo volume based on the effective growth rate of ATM as per Table 49. The Authority proposes to use the belly cargo volume as submitted by MADC for the projection of domestic Belly Cargo for the FY 2024-25, FY 2025-26 and FY 2026-27. 4.2.22 The Authority notes that there is a significant drop in the Belly Cargo volumes in FY 2023-24 as compared to FY 2022-23. On enquiry, the Authority notes that this is because of non-alignment of flight schedule with cargo SOP and decline in cargo bookings with Spice Jet in FY 2023-24. 4.2.23 The Authority also notes that MADC has projected that international operations will commence in FY 2026-27, however, it has not projected any increase in Belly Cargo volume because of such international flights. The Authority notes that the Cargo Terminal proposed as part of the Capital Expenditure for the First Control Period would take care of the international cargo operations and hence no international belly cargo volumes have been projected by MADC. The Authority proposes no belly cargo international volumes for the First Control Period. Accordingly, the belly cargo volume (domestic) proposed to be considered by the Authority for Shirdi International Airport for the First Control Period is as follows: Table 60: Belly Cargo Volume proposed by the Authority for First Control Period Particulars FY23 FY24 FY25 FY26 FY27 Total Domestic Belly Cargo (in MT) Domestic Belly Cargo submitted by 122 163 190 237 320 1,032 MADC Domestic Belly Cargo proposed by the 643* 243* 190 237 320 1,633 Authority Y-o-Y Growth of Domestic Belly 221% 34% 16% 25% 35% - Cargo submitted by MADC Y-o-Y Growth of Domestic Belly 1592% -62% -22% 25% 35% - Cargo proposed by the Authority *Based on actual data from Traffic News - AAI website Authority’s Examination of Air Cargo estimate for First Control Period 4.2.24 The Authority notes that MADC has projected the volume of Air Cargo based on the demand considered as part of the feasibility study undertaken by it on the assumption that the air cargo facility will be commissioned for operation in FY 2024-25. While the project commissioning was proposed in FY 2024- 25, the domestic Air Cargo volume has been projected by MADC in its submission from FY 2025-26. The Authority, having assessed the present status of the project, physical progress and the work order issued proposes to shift the capitalization of the Cargo Facility to FY 2025-26 (refer para 5.3.57). The Authority proposes to retain the domestic air cargo volume projections submitted by MADC for FY 2025-26 as projected by MADC and true up based on actuals at the time of tariff determination for the Second Control Period. The Authority also notes that International Air Cargo volumes were not projected by MADC in their submission. Hence, the Authority proposes not to project any international air cargo volumes for the First Control period, and to true up the same based on actuals at the time of tariff determination for the Second Control Period. 4.2.25 Based on the above analysis, the Authority proposes to consider the domestic and international air cargo volume for the First Control Period as follows: Consultation Paper No. 02/2024-25 Page 56 of 130TRAFFIC FOR THE FIRST CONTROL PERIOD Table 61: Air Cargo Volume proposed by the Authority for the First Control Period Particulars FY23 FY24 FY25 FY26 FY27 Total Domestic Air Cargo (in MT) Domestic Air Cargo submitted by MADC - - - 6,250 7,698 13,948 Domestic Air Cargo proposed by the - - - 6,250 7,698 13,948 Authority Y-o-Y Growth of Domestic Air Cargo - - - - 23% - submitted by MADC Y-o-Y Growth of Domestic Air Cargo - - - - 23% - proposed by the Authority 4.2.26 Based on the above analysis, the Authority’s proposal for traffic for the First Control Period is as follows: Table 62: Traffic proposed by the Authority for the First Control Period for Shirdi International Airport Particulars FY23 FY24 FY25 FY26 FY27 Total Domestic Passenger Traffic (in Nos.) Domestic Passenger Traffic 7,34,029 8,44,133 10,12,960 12,66,200 17,09,370 55,66,692 submitted by MADC Domestic Passenger Traffic proposed by the Authority 7,33,038* 7,24,980* 10,12,960 12,66,200 17,09,370 54,46,548 (Table 53) Y-o-Y Growth of Domestic Passenger proposed by the 315% -1% 40% 25% 35% - Authority International Passenger Traffic (in Nos.) International Passenger Traffic - - - 85,469 85,469 submitted by MADC - International Passenger Traffic proposed by the Authority - - - 85,469 85,469 - (Table 53) Y-o-Y Growth of International Passenger proposed by the - - - - - - Authority Total Passenger Traffic (in Nos.) Total Passenger Traffic 7,34,029 8,44,133 10,12,960 12,66,200 17,94,839 56,52,161 submitted by MADC Total Passenger Traffic 7,33,038* 7,24,980* 10,12,960 12,66,200 17,94,839 55,32,017 proposed by the Authority Y-o-Y Growth of Total Passenger proposed by the -1% 40% 25% 42% Authority Domestic ATM (in Nos.) Domestic ATM submitted by 5,971 7,977 9,280 11,600 15,659 50,487 MADC Domestic ATM proposed by 5,635* 6,017* 9,280 11,600 15,659 48,192 the Authority (Table 55) Y-o-Y Growth of Domestic ATM proposed by the 228% 7% 54% 25% 35% - Authority Domestic exempted ATM (in Nos.) (Table 58) 1,860 1,384 2,768 3,460 4,672 14,144 Domestic Billable ATM (in 3,775 4,633 6,512 8,140 10,987 34,047 Consultation Paper No. 02/2024-25 Page 57 of 130TRAFFIC FOR THE FIRST CONTROL PERIOD Particulars FY23 FY24 FY25 FY26 FY27 Total Nos.) (Table 59) International ATM (in Nos.) International ATM submitted - - - - 783 783 by MADC International ATM proposed - - - - 783 783 by the Authority (Table 55) Y-o-Y Growth of International ATM proposed by the - - - - - - Authority Total ATM Traffic (in Nos.) Total ATM Traffic submitted 5,971 7,977 9,280 11,600 16,442 51,270 by MADC Total ATM Traffic proposed 5,635* 6,017* 9,280 11,600 16,442 48,975 by the Authority Y-o-Y Growth of Total ATM 7% 54% 25% 42% proposed by the Authority Domestic Belly Cargo (in MT) Domestic Belly Cargo 122 163 190 237 320 1,032 submitted by MADC Domestic Belly Cargo proposed by the Authority 643* 243* 190 237 320 1,633 (Table 60) Y-o-Y Growth of Domestic Belly Cargo proposed by the 1592% -62% -22% 25% 35% - Authority Domestic Air Cargo (in MT) Domestic Air Cargo submitted - - - 6,250 7,698 13,948 by MADC Domestic Air Cargo proposed - - - 6,250 7,698 13,948 by the Authority (Table 61) Y-o-Y Growth of Domestic Air Cargo proposed by the - - - - 23% - Authority *Based on actual data from Traffic News - AAI website 4.3 Authority’s proposal regarding Traffic for the First Control Period Based on the available facts and analysis, the Authority proposes the following with regard to the traffic forecast for the First Control Period: 4.3.1 To consider the Passenger Traffic, ATM, Belly Cargo volume and Air Cargo volume for the First Control Period for Shirdi International Airport as per Table 62. 4.3.2 To true up the traffic volume (Passengers, ATM, Belly Cargo and Air Cargo) pertaining to the First Control Period, based on actual traffic, while determining the Tariff for Second Control Period. Consultation Paper No. 02/2024-25 Page 58 of 130CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FIRST CONTROL PERIOD 5 CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FIRST CONTROL PERIOD 5.1 Background 5.1.1 RAB is an essential element in the process of tariff determination. The return to be provided on the RAB constitutes a considerable portion of the Aggregate Revenue Requirement for an Airport operator. To safeguard the interests of the airport users, it must be ensured that the capital additions are efficient, their needs justified, and the return on investment is provided solely on the assets related to the core operations (i.e., Aeronautical services) of the airport. 5.1.2 The Authority notes that the development of the airport includes construction and procurement of various assets such as: i. Runways, Taxiways, Aprons, Air Traffic control tower, Cargo facilities, Parking, Warehousing facilities, Airline offices, administrative offices and associated facilities ii. Construction of Terminal Building and provision of allied equipment /facilities iii. Construction of approach roads etc. 5.1.3 The Authority observes that MADC has planned to develop Shirdi International Airport to increase the annual passenger throughput capacity (domestic and international) and annual cargo handling capacity, along with ancillary facilities as per the demand projections. 5.1.4 The Independent Consultant appointed by the Authority has performed an in-depth analysis of the submissions made by MADC regarding Aeronautical Capital Additions, Depreciation and RAB. In this respect, the Independent Consultant has performed the following functions: i. Sought and verified Drawings & Plans, BOQs, cost estimates and break-up, detailed justification and explanation, Demand vs. Requirement statement, Work Orders, etc., as applicable and to the extent provided by MADC. ii. Sought written explanation on the status of the projects and perused the tenders floated and work orders approved for the projects, as applicable. 5.1.5 Based on the review of documents as stated above, the Authority has rationalized the CAPEX projects, submitted by MADC by shifting the capitalization of some of the projects within the First Control Period based on the essentiality and necessity for Airport operations. 5.1.6 In the background of the facts stated above, the Authority has examined the capital expenditure proposed by MADC, considering the historical traffic trends and future traffic estimates such that only essential, reasonable and efficient CAPEX is considered as part of RAB for the First Control Period and maintain a balanced approach between the sustainable operations of MADC and the interest of the airport users. Further, the Authority takes cognizance of the fact that, if any excessive CAPEX is allowed in this Control Period, it would be against the regulatory framework, as tariff would have no link to the services / facilities created at the Airport and the resultant high aeronautical charges would be unfair to the ultimate users. 5.1.7 Towards this objective, the Authority has examined in detail the Aeronautical Capital Expenditure, Depreciation and RAB submitted by MADC and has presented its views in the following order: (i) Capital expenditure for the First Control Period Consultation Paper No. 02/2024-25 Page 59 of 130CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FIRST CONTROL PERIOD (ii) Depreciation for the First Control Period (iii) Regulatory Asset Base for the First Control Period 5.1.8 While analyzing the MYTP regarding capitalization of Aeronautical Expenditure for the First Control Period, the Authority has considered the actual traffic, growth in traffic and actual Peak Hour Passenger (PHP) as submitted by MADC. In this background, the Authority has sought and examined MADC’s submission based on the following details / criteria: i. Nature of the expenditure ii. Necessity / requirement of the expenditure iii. Business plan and Master plan for all projects iv. Number of PAX on hourly basis, both at present and projected, for the First Control Period v. Terminal Capacity both at present and projected for the First Control Period vi. Other short-term and long-term plans of MADC vii. Sustainability of the airport operations viii. Passenger facilitations ix. Passenger safety and security of passengers and airport operations 5.1.9 Based on the above, the Authority has rationalized the capital expenditure for all the projects and accordingly proposes capital additions for the First Control Period. However, if any project whose cost is not considered as part of CAPEX proposed by the Authority but actually incurred in the First Control Period because it is mandated by regulatory requirements or are incurred for improving operational efficiency, the Authority will true up the costs on actual incurrence basis, subject to evaluation of reasonableness at the time of determination of tariff for the Second Control Period. 5.2 MADC’s submission regarding Capital Expenditure (CAPEX) for the First Control Period 5.2.1 MADC has submitted Total Capital Expenditure of ₹ 846.02 crores (out of which Aeronautical Capital Expenditure amounts to ₹ 803.71 crores) in the MYTP dated 7th July 2023, for the First Control Period as given below: Table 63: MADC’s submission on Capital Expenditure (CAPEX) for the First Control Period for Shirdi International Airport (₹ in crores) Particulars Ref. FY23 FY24 FY25 FY26 FY27 Total WIP CAPEX Development / Redevelopment of cityside infrastructure and ancillary buildings at A - 66.00 - - - 66.00 Airside and cityside of Shirdi International Airport Construction of Apron B - 35.90 - - - 35.90 Extension of existing runway and RESA C - 44.00 - - - 44.00 Construction of Isolation Bay and D - 10.00 - - - 10.00 associated works on airside Seating Lounge E - 1.70 - - - 1.70 Subtotal: WIP CAPEX 157.60 157.60 Planned CAPEX Construction of Water Pond F - - 17.80 - - 17.80 Air cargo facility and hangars G - - 55.00 - - 55.00 Runway Recarpeting H - 25.00 - - - 25.00 Construction of New Integrated Terminal I - - - 590.62 - 590.62 Consultation Paper No. 02/2024-25 Page 60 of 130CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FIRST CONTROL PERIOD Particulars Ref. FY23 FY24 FY25 FY26 FY27 Total Building Subtotal: Planned CAPEX 25.00 72.80 590.62 - 688.42 Total - 182.60 72.80 590.62 - 846.02 Aeronautical portion (%) 95% 95% 95% 95% 95% 95% Aeronautical portion of Capex - 173.47 69.16 561.09 - 803.71 5.2.2 The Asset category wise breakup of the CAPEX submitted by MADC for the First Control Period is as follows: Table 64: Asset Category wise breakup of the CAPEX submitted by MADC for the First Control Period (₹ in crores) Particulars FY23 FY24 FY25 FY26 FY27 Total Civil - 163.02 67.29 354.37 - 584.68 Electrical - 14.45 5.51 177.18 - 197.14 Equipment - 2.79 - 21.44 - 24.23 Furniture & Fixture - 0.84 - 13.91 - 14.75 Furniture & Fixture - Trolleys - 0.01 - 0.09 - 0.10 IT - Software - 0.19 - 2.94 - 3.13 IT - End User Devices - 1.23 - 19.58 - 20.81 IT - Services and Networks - 0.07 - 1.11 - 1.18 Total - 182.60 72.80 590.62 - 846.02 Aeronautical portion 95% 95% 95% 95% 95% 95% Aeronautical portion of Capex - 173.47 69.16 561.09 - 803.71 5.2.3 MADC has provided justification for the aforementioned CAPEX projects as follows: Table 65: Justification for CAPEX Projects for the First Control Period as submitted by MADC Particulars Ref. Justification WIP CAPEX In this work construction of ATC tower, fire station, causality Development / centres, CISF block, armoury lock etc. is proposed. These Redevelopment of cityside components are very essential for proper functioning of airport as infrastructure and ancillary well as to provide emergency services to aircrafts / passengers using A buildings at Airside and the airport. Presently, all these facilities are available but of cityside of Shirdi temporary nature but citing huge response by passengers to this International Airport. airport there is need to have full-fledged facilities working at this airport. Presently, at Shirdi International Airport parking is available for 4 ATR aircrafts. Considering increased demand there is a need to Construction of Apron B increase this parking. Hence, with a view to provide parking for 10 ATR aircrafts expansion / construction of apron is taken up. Shirdi International Airport is currently handling 28 daily aircraft movement. Since devotees of holy Saibaba are spread across the Extension of existing C world it is expected that international flight may start from this runway and RESA airport soon. To cater for vide body aircrafts, extension of existing runway from 2,500 m to 3,200 m is proposed. Construction of Isolation Isolation bay is essential requirement for isolating aircrafts from Bay and associated works on D runway during the times of emergencies. Shirdi being operational airside. airport in a sensitive holy area this requirement is vital one. MADC has planned construction of temporary seating lounges in Seating Lounge E both cityside and airside. The project is expected to be capitalised in FY24 Consultation Paper No. 02/2024-25 Page 61 of 130CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FIRST CONTROL PERIOD Particulars Ref. Justification Planned CAPEX Water is a basic need and to operate a full-fledged airport uninterrupted supply of water is very essential. Presently, Shirdi International Airport is getting water supply through nearby wells as well as through tanker facilities. To have continuous uninterrupted and clean water supply there is a need to have proper water supply scheme for the airport. To supply treated water at various operational Construction of Water Pond F building/location in the airport water distribution system is a must. To have continuous, uninterrupted, and clean water supply there is need to have proper water supply scheme for the airport. Shirdi International Airport is catering to nearly 6 lakh passengers and to cater for wastewater generated due to such passenger movement at public place like airport, sewage disposal system is also proposed. Shirdi International Airport is surrounded by area rich in agricultural produce. Since March 2021 Shirdi International Airport got Air cargo facility and G permission to start belly cargo operation and till Oct 2023, the total hangars belly cargo transported is to the tune of 453 MT. Citing such a huge demand separate air cargo facility is planned. As per the DGCA report on surveillance inspection conducted in May,2023 it was mentioned in the report that “Runway surface condition found deteriorated in the entire stretch of runway. Sand Recarpeting the runway and H patch test also failed at many places. Operator to submit short term taxiway and long term mitigation plan”. In light of the DGCA observation, MADC thereafter submitted the work proposal to AAI for runway re- carpeting and taxiway work. Present area of Terminal Building is about 2,750 sq.m. It can handle 150 arriving and 150 departing passengers. However, presently there are 28 daily movements of aircraft from Shirdi International Airport and there is no sufficient space available for passengers at the airport. New Integrated Terminal I Further, considering increased passenger traffic demand in next 10 Building years to facilitate the increased passengers it is proposed to construct new integrated terminal building with 1200 peak hour passenger capacity. This building will also cater international operations from this airport which are likely to start from FY26. 5.2.4 For WIP CAPEX, MADC has provided the status of the projects as follows: Table 66: Status of WIP CAPEX for the First Control Period as submitted by MADC Particulars Ref. Status as of December 2023 Development / Redevelopment of cityside infrastructure and ancillary buildings at 50% of the project completed with ₹ 34 Crores incurred A Airside and cityside of Shirdi International till December 2023 Airport. Work completed and commissioning approval received. Construction of Apron B Final bill in process Extension of existing runway and RESA C Scope of work for these projects have increased and Construction of Isolation Bay and D tenders for the same is yet to be floated associated works on airside. MADC had originally planned for the extension of the existing terminal building. But the same was cancelled Seating Lounge E and has planned construction of temporary seating lounges in both cityside and airside. The project is expected to be capitalised in FY24. Consultation Paper No. 02/2024-25 Page 62 of 130CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FIRST CONTROL PERIOD 5.2.5 MADC has classified the assets into Aeronautical and Non-Aeronautical by considering the ratio 95%:5%. Based on this allocation ratio, MADC has considered the following Aeronautical additions to RAB for the First Control Period: Table 67: MADC’s proposal of Aeronautical additions to RAB for the First Control Period for Shirdi International Airport (₹ in Crores) Particulars FY23 FY24 FY25 FY26 FY27 Total Civil - 154.87 63.93 336.65 - 555.45 Electrical - 13.73 5.23 168.33 - 187.28 Equipment - 2.65 - 20.37 - 23.02 Furniture & Fixture - 0.80 - 13.21 - 14.01 Furniture & Fixture - Trolleys - 0.01 - 0.09 - 0.09 IT – Software - 0.18 - 2.79 - 2.97 IT - End User Devices - 1.17 - 18.60 - 19.77 IT - Services and Networks - 0.07 - 1.05 - 1.11 Total - 173.47 69.16 561.09 - 803.71 5.2.6 The Authority through its independent consultant had raised queries on capex costs submitted by MADC for the First Control Period. MADC has responded to the queries with a letter addressed to the Authority dated 22nd March 2024 stating “The response to the remarks of M/s PKF Sridhar & Santhanam LLP have been compiled in Annexure I. Further we have floated RFPs/RFQs and Letter of Award has been given for all the projected capex works to be executed in the balance periods of the MYTP. Accordingly, the Letter of Awards are also being shared with you along with the revised estimated capex cost after considering these awards”. The letter also states that “We request you to consider the revised project costs as part of tariff fixation”. 5.2.7 While MADC has submitted the revised costs for all capex projects, the consequent depreciation, revised capitalization dates, aeronautical RAB portion etc. have not been submitted by MADC. Comparison of the revised capex costs vis-à-vis the original capex costs is given below: Table 68: Comparison of the revised capex costs vis-à-vis the original capex costs as submitted by MADC for Shirdi International Airport for the First Control Period (₹ in crores) As per MADC As per MADC Excess/ (short) original Submission revised Submission compared to Particulars Ref dated 07th July dated 22nd March original 2023 2024 submission 1 2 3=2-1 WIP CAPEX Capex Incurred for FY23 - - - Development / Redevelopment of A cityside infrastructure and ancillary 66.00 66.00 - buildings at Airside and cityside of Shirdi International Airport Construction of Apron B 35.90 35.90 - Extension of existing runway and C 44.00 44.00 - RESA Construction of Isolation Bay and D 10.00 9.50 -0.50 associated works on airside Seating Lounge E 1.70 8.87 7.17 Subtotal: WIP CAPEX 157.60 164.27 6.67 Consultation Paper No. 02/2024-25 Page 63 of 130CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FIRST CONTROL PERIOD As per MADC As per MADC Excess/ (short) original Submission revised Submission compared to Particulars Ref dated 07th July dated 22nd March original 2023 2024 submission Planned CAPEX - Construction of Water Pond F 17.80 18.02 0.22 Air cargo facility and hangars G 55.00 51.59 -3.41 Runway Recarpeting H 25.00 61.68 36.68 Construction of New Integrated I 590.62 722.50 131.88 Terminal Building Subtotal: Planned CAPEX 688.42 853.79 165.41 GRAND TOTAL 846.02 1,018.06 172.08 5.3 Authority’s examination regarding Revised Capital Expenditure (CAPEX) for the First Control Period 5.3.1 For the purpose of its analysis of CAPEX for the First Control Period, the Authority proposes to consider the revised submission made by MADC dated 22nd March 2024. The Authority, has examined the capex in the following manner: a) WIP Capex b) Planned Capex 5.3.2 The Authority observes that MADC has submitted total aeronautical capital addition of ₹ 1018.06 crores of which ₹ 164.27 Crores relates to WIP which is expected to be capitalized in FY 2023-24 and ₹ 853.83 Crores relates to new projects proposed to be initiated and completed in the First Control Period as part of MYTP submission. 5.3.3 As per relevant guidelines of Direction 5, AUCC meetings are to be held by Airport Operator with the stakeholders, whenever there are any additions to Fixed assets of such value as mentioned therein. Upon enquiry MADC has communicated that it has not held any AUCC meetings in the past. The Authority, therefore, directs MADC to conduct AUCC meeting for the Capital additions proposed for the First Control Period, as per AERA Guidelines, 2011 for Airport Operators (Appendix 1: Consultation Protocol) and submit the Minutes of AUCC Meeting/ relevant documents to the Authority before end of stakeholders’ consultation process. 5.3.4 The Authority notes that as per MADC’s submission dated 7th July 2023, the existing terminal building has a design capacity of 0.68 MPPA while the annual traffic has exceeded this designed capacity in FY 2022-23. The annual traffic in FY 2022-23 was 0.73 MPPA. The capital expenditure projected by MADC is evaluated in this background. 5.3.5 The Authority also notes that MADC has not considered any additions to CAPEX in FY 2022-23. However, on examination of the Fixed Asset Register and audited financial statements for FY 2022-23, the Authority notes that there have been actual additions to Fixed Assets to the tune of ₹ 0.50 crores – highest being ₹ 0.09 Crores for Airfield Ground Lighting and various other items including door frame metal detector and parking shade etc. (out of which, aeronautical additions as submitted by MADC amounts to ₹ 0.46 crores). The Authority sought the reason from MADC for not considering the additions in FY 2022-23 in its submission. MADC responded that the same has been inadvertently missed to be included in its submission. The Authority proposes to consider the assets in FY 2022-23 for the purpose of determination of RAB for the First Control Period. Consultation Paper No. 02/2024-25 Page 64 of 130CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FIRST CONTROL PERIOD 5.3.6 As indicated in para 3.5.8, MADC had submitted the FAR with classification (Aero / Non-Aero / Common) upon request from the Authority for all the actual additions including the additions in FY 2022-23. A comparison of the classification provided by MADC and the classification proposed by the Authority for the additions in FY 2022-23 is as follows: Table 69: Comparison of classification of assets considered in FY23 as per the Authority (₹ in Crores) Nature FY 23 Gross value of Aeronautical Assets 0.24 Gross value of Common Assets 0.19 Gross value of Non-Aeronautical Assets 0.07 Total 0.50 5.3.7 The Authority analyzed various projects submitted by MADC that were in progress as at the end of FY 2022-23 and the projects that were proposed to be initiated and completed in the First Control Period. The independent consultant has carried out discussions with MADC, sought further details / clarifications on various projects. Based on the analysis, the Authority’s assessment on the need, size, timing and cost of capitalization and classification and its proposal is detailed project wise as below: WIP CAPEX A. Development / Redevelopment of cityside infrastructure and ancillary buildings at Airside and cityside - ₹ 66.00 crores 5.3.8 The Authority notes the justification provided by MADC for this project as indicated in Table 65. The Authority notes that these facilities are already available in the airport but are temporary in nature and considering the growth in traffic proposed by the Authority (in Table 62) and for proper and seamless functioning of the airport, the Authority notes the need for the project. 5.3.9 The Authority also notes the status of this project as provided by MADC in Table 66. The Authority, through its Independent Consultant, examined the physical status of the progress of the project as of December 2023 and notes that while considerable progress has been made in the project in terms of cost incurred, the project is not expected to be completed by FY 2023-24. Hence the Authority proposes to consider the capitalization of the said project in FY 2024-25. 5.3.10 The Authority further sought the details of tender floated and work order issued with respect to this project, for the analysis of cost estimation. Based on the documents received from MADC, the Authority notes that following cost components of the project was estimated by MADC: Table 70: Cost components of the project “Development / Redevelopment of Cityside infrastructure and ancillary buildings at Airside and Cityside” as estimated by MADC (₹ in crores) Particulars Estimated Cost Earth Works 1.10 Concrete Work 15.14 Brick Work 1.07 Finishing 1.34 Flooring 1.55 Miscellaneous Work 2.65 Doors & Windows 0.71 Site Development 22.99 Lifts & Elevators 0.75 Consultation Paper No. 02/2024-25 Page 65 of 130CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FIRST CONTROL PERIOD Particulars Estimated Cost Internal & External Electrical Works 13.17 HVAC Works 2.11 Fire Fighting Works 0.61 Plumbing and Drainage Works 2.80 Total cost estimated by MADC 66.00 5.3.11 The Authority also notes that the tender was awarded at a reduction of 4.23%, amounting to ₹ 63.21 crores and the cost incurred as of December 2023 amounts to ₹ 34.00 crores. 5.3.12 Since the project is ongoing, the Authority proposes to consider the awarded cost of ₹ 63.21 crores for its further analysis. The Authority, through its Independent Consultant, analyzed the cost estimated by MADC for this project in line with the scope of work and bill of quantities as attached in the tender floated. Based on this analysis, the Authority notes that the cost estimate submitted by MADC is reasonable. 5.3.13 The Authority notes that the project comprises of construction of ATC tower, fire station, casualty centers, CISF block, armory block, etc., Based on the nature of components of this project, the Authority proposes to classify the assets of the project under “Aeronautical Assets” for the purpose of determination of aeronautical portion of capex additions proposes in the First Control Period. 5.3.14 Based on the above analysis on need, size, cost and classification of the project, the Authority proposes to consider the capitalization of the aeronautical portion of the awarded cost of the project, in FY 2024- 25, as follows: Table 71: Cost proposed to be considered by the Authority for the project “Development / Redevelopment of Cityside infrastructure and ancillary buildings at Airside and Cityside” in the First Control Period Particulars Ref. Unit Amount Total cost proposed to be considered by the Authority A ₹ in Crores 63.21 Year of Capitalization as proposed by the Authority - - FY25 Classification of Project - - Aeronautical Aeronautical portion (Table 105) B % 100% Aeronautical portion of cost proposed by the Authority C = A*B ₹ in Crores 63.21 B. Construction of Apron - ₹ 35.90 crores 5.3.15 The Authority notes the justification provided by MADC for this project as indicated in Table 65. Considering the growth in traffic proposed by the Authority in Table 62 and for proper and seamless functioning of the airport, the Authority notes the need for the project. 5.3.16 The Authority also notes the status of the project as provided by MADC in Table 66. The Authority, through its Independent Consultant, examined the physical status of the progress of the project as of December 2023 and notes that the project is almost completed as of December 2023 and based on the fact that commissioning approval for the apron is received in FY 2023-24, the Authority proposes to consider capitalization of the project in FY 2023-24. 5.3.17 The Authority further sought the details of tender floated and work order issued with respect to this project, for the analysis of cost estimation. The Authority, based on the documents received, notes the following component wise cost estimate made by MADC: Consultation Paper No. 02/2024-25 Page 66 of 130CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FIRST CONTROL PERIOD Table 72: Cost components of the project “Construction of Apron” as estimated by MADC (₹ in Crores) Particulars Estimated Cost Taxiway, Taxi link and Apron 26.90 Peripheral Road 5.55 Profile Correction Works 0.10 Drain and Culvert 1.60 High Mast Foundation and Other Works 1.27 Aerobridge Foundation 0.48 Total cost estimated by MADC 35.90 5.3.18 The Authority notes that the tender was awarded at a reduction of 19.19%, amounting to ₹ 29.01 crores. The Authority therefore proposes to consider the awarded cost of ₹ 29.01 crores for its further analysis. 5.3.19 Based on the nature of components of this project, the Authority proposes to classify the assets of the project under "Aeronautical Assets" for the purpose of determination of aeronautical portion of capex additions proposed in the First Control Period. 5.3.20 The Authority proposes to compare the cost per sq.m. of construction of Apron with cost per sq.m. as per Order on Normative cost vide Order No. 07/2016-17 on 13th June 2016, “In the matter of Normative Approach to Building blocks in Economic Regulation of Major Airports – Capital costs Regarding”. In the Order on Normative cost vide Order No. 07/2016-17 on 13th June 2016 the normative cost for apron/runway/taxiway was given as ₹ 4,700 per sq.m. The Authority notes that the cost mentioned in the order is inclusive of taxes applicable at that time, which is 12%. Subsequently, GST has been introduced wherein the GST rate is 18% and computed the inflation adjusted normative cost by considering an additional 6% thereby resulting in total GST of 18% as given below: Table 73: Inflation adjusted normative rate considered by the Authority for Apron/Runway/Taxiway Inflation adjusted Inflation adjusted Financial Year WPI Index Inflation % * normative cost @18% Cost GST # FY16 109.7 - 4,700** 4,952 FY17 111.6 - 4,781 5,038 FY18 114.9 - 4,923 5,187 FY19 119.8 - 5,133 5,408 FY20 121.8 - 5,218 5,498 FY21 123.4 - 5,287 5,570 FY22 - 7.14% 5,664 5,968 FY23 - 9.42% 6,198 6,530 FY24 - -0.70% 6,155 6,484 FY25 - 3.10% 6,345 6,685 FY26 - 3.70% 6,580 6,933 FY27 - 3.70% 6,824 7,189 *Inflation rates considered as per Chapter 8 of this Consultation Paper **Inflation adjusted base amount (inclusive of 12% GST) (A) = ₹ 4,700 per sq.m. Inflation adjusted base amount (exclusive of 12% GST) (B=A*100/112) = ₹ 4,196 per sq.m. Add GST @ 18% c) (C=B*18%) = ₹ 755 per sq.m. Normative cost including GST (D = B+C) = ₹ 4,952 per sq.m. Consultation Paper No. 02/2024-25 Page 67 of 130CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FIRST CONTROL PERIOD 5.3.21 The Authority notes that the actual cost per Sq.m. for Apron is lower than the inflation adjusted normative cost generally being considered by the Authority and hence the Authority proposes to consider the actual cost incurred by MADC for its further analysis as detailed in Table 74. 5.3.22 The Authority proposes to consider the following cost in FY 2023-24 towards the project “Construction of Apron”: Table 74: Cost proposed to be considered by the Authority for the project “Construction of Apron” in the First Control Period and its comparison with normative cost Particulars Ref. Unit Amount Actual Cost for construction of Apron submitted by MADC A ₹ in Crores 29.01 Area developed into Apron (Based on the details in tender B Sq.m. 65,573 floated) Cost per Sq.m. C = (A*10^7)/B ₹ 4,424 Year of Capitalization as proposed by the Authority - - FY24 Normative Cost per Sq.m. for FY24 (Table 73) D ₹ 6,484 E = ((Lower of C Total Cost proposed to be considered by the Authority ₹ in Crores 29.01 and D)*B)/10^7 Classification of Project - - Aeronautical Aeronautical portion (Table 105) F % 100% Aeronautical portion of cost proposed to be considered G = E*F ₹ in Crores 29.01 by the Authority C. Extension of existing runway and RESA - ₹ 44.00 crores 5.3.23 The Authority notes the justification provided by MADC for this project as indicated in Table 65. Considering the growth in traffic proposed by the Authority in Table 62 and the fact that a new integrated terminal building (NITB) is proposed to be commissioned in the First Control Period, the Authority notes the need for the extension of runway from the 2,500M to 3,200M and RESA. 5.3.24 The Authority also notes the status of the project as provided by MADC in Table 66. The Authority, through its Independent Consultant, examined the physical status of the progress of the project as of December 2023. The Authority notes that work related to extension of runway and RESA has been completed as on December, 2023 and the same will be put to use only after re-carpeting the entire area together with the existing runway recarpeting. Hence, the Authority proposes the capitalization of extension of existing runway and RESA in FY 2025-26 along with the runway re-carpeting as detailed in para 5.3.60. 5.3.25 The Authority, based on the work order awarded for the project in the year 2017, notes that the cost estimated by MADC for the extension of runway and RESA along with construction of apron area, isolation bay and associated works on airside amounts to ₹ 42.12 crores. The project has been awarded at a reduction of 16.69%, which works out to ₹ 35.09 crores. Based on the awarded cost, the Authority proposes to consider ₹ 35.09 crores as the basis for its analysis. 5.3.26 The Authority notes that the revised cost of ₹ 35.09 crores for RESA and Runway extension is lower than the inflation adjusted cost of pavement as noted in Table 75 and hence the Authority proposes to consider the cost of ₹ 35.09 crores towards Runway extension and RESA. Consultation Paper No. 02/2024-25 Page 68 of 130CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FIRST CONTROL PERIOD Table 75: Cost proposed to be considered by the Authority for the project “Extension of existing runway and RESA” in the First Control Period Particulars Ref. Unit Amount Actual Cost for extension of existing runway and A ₹ in Crores 35.09 RESA submitted by MADC Runway Extended Area B Sq.m. 31,500 Area of RESA C Sq.m. 36,000 Area of Blast Pad D Sq.m. 2,700 Isolation Bay and taxiway E Sq.m. 15,206 Area extended into runway and RESA F = B+C+D+E Sq.m. 85,406 Cost per Sq.m. G = (A*10^7)/F ₹ 4,109 Year of Capitalization proposed by Authority - - FY26 Normative Cost per Sq.m. for FY26 (Table 73) H ₹ 6,933 I = ((Lower of G Total Cost proposed to be considered by Authority ₹ in Crores 35.09 and H)*F)/10^7 Classification of Project - - Aeronautical Aeronautical portion (Table 105) J % 100% Aeronautical portion of cost proposed by the K = I*J ₹ in Crores 35.09 Authority 5.3.27 Based on the nature of components of this project, the Authority proposes to classify the assets of the project under "Aeronautical Assets" for the purpose of determination of aeronautical portion of capex additions proposed in the First Control Period. D. Construction of Isolation Bay and associated works on airside - ₹ 9.50 crores 5.3.28 The Authority notes the justification provided by MADC for the said project as indicated in Table 65. Considering the need to have readily available security related infrastructure in place, the Authority is of the view that construction of an isolation bay is required from security viewpoint during times of emergency. 5.3.29 The Authority also notes the status of the project as provided by MADC in Table 66. The Authority, through its Independent Consultant, examined the physical status of the progress of the project as of December 2023. Based on discussion with MADC, the Authority notes that construction of isolation bay was part of the project “Extension of runway and RESA, construction of isolation bay and associated works” (discussed in main para C) and there has been cost overrun in the project as indicated in para 5.3.25. 5.3.30 MADC has mentioned in its revised submission that “Work was terminated due to non-performance of contractor. Balance work to be done at his risk & cost. Hence the balance work estimation is prepared based on earlier tender rates. No new tender floated for execution of remaining works.” MADC also anticipates that since part work is completed, the remaining work will be executed by the contractor within 6-8 months of commencement of construction work. MADC estimates the date of commencement to be June 2024. Based on the timeline indicated by MADC, the Authority assumes that the construction of isolation bay will be completed only by end of FY 2024-25 and hence proposes to consider such costs from FY 2025-26. 5.3.31 The Authority notes that MADC has estimated the cost of carrying out the remaining portion of work associated with isolation bay, which is as follows: Consultation Paper No. 02/2024-25 Page 69 of 130CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FIRST CONTROL PERIOD Table 76: Cost components of the project “Construction of Isolation Bay and associated work on airside” as estimated by MADC (₹ in crores) Particulars Estimated Cost Civil Work 7.32 Electrical Work 0.26 Total cost excluding contingencies etc 7.58 Add: Soft Cost 0.56 Total cost excl. GST incl. Soft Cost 8.14 Add: GST 1.36 Total cost estimated by MADC 9.50 5.3.32 It is noted that in its original submission, MADC had factored GST @ 12%, however in its revised submission dated 22nd March 2024, MADC has revised the GST to 18% on total cost excluding contingencies etc. The Authority proposes to consider the revised submission of MADC. 5.3.33 The Authority has reviewed the breakup of this project as given in 5.3.34 Table 76 and the overall cost proposed by MADC seems reasonable. 5.3.35 Based on the nature of components of this project, the Authority proposes to classify the assets of the project under “Aeronautical Assets” for the purpose of determination of aeronautical portion of capex additions proposed in the First Control Period. 5.3.36 Based on the above analysis on need, size, cost and classification of the project, the Authority proposes to consider the aeronautical portion of the estimated cost of the project, for capitalization in FY 2025-26, as follows: Table 77: Cost proposed to be considered by the Authority for the project “Construction of Isolation Bay and associated work on airside” in the First Control Period Particulars Ref. Unit Amount 5.3.37 Total cost proposed to be considered by the Authority ( A ₹ in Crores 9.50 Table 76) Year of Capitalization as proposed by the Authority - - FY26 Classification of Project - - Aeronautical Aeronautical portion (Table 105) B % 100% Aeronautical portion of cost proposed by the Authority C = A*B ₹ in Crores 9.50 E. Seating Lounge - ₹ 8.87 crores 5.3.38 The Authority notes the justification provided by MADC for this project as indicated in Table 65. The Authority also notes that MADC had plans earlier of extending the existing terminal in order to cater to the peak hour passenger traffic. However, subsequently MADC decided to cancel the extension plan and proposed to construct additional seating lounges instead, until the NITB is operational. 5.3.39 With the growth in passenger traffic proposed by the Authority for the First Control Period, the Authority is of the view that the construction of seating lounges to accommodate the passengers is necessary for the seamless operations, until the NITB is operational. Considering the growth in traffic Consultation Paper No. 02/2024-25 Page 70 of 130CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FIRST CONTROL PERIOD proposed by the Authority in Table 62 and for proper and seamless functioning of the airport, the Authority notes that the need for the project is justified. 5.3.40 MADC through its revised submission dated 22nd March 2024, has projected 2 separate costs for seating lounge: • City Side – ₹ 60.00 lakhs which has already been capitalized in FY 2023-24. • Airside – ₹ 7.32 Crores – which has been tendered in Feb 2024. 5.3.41 The Authority, through its Independent Consultant, examined the physical status of the progress of the city side seating structure as of December 2023 and notes that the project was already operational as of December 2023. Hence the Authority proposes to capitalize the same in FY 2023-24. 5.3.42 For the airside seating, based on the fact that work order has been issued on 26th February 2024 which stipulates that work shall be completed within a period of 3 months, the Authority proposes to consider the capitalization of the airside project in FY 2024-25 5.3.43 Based on the nature of the project, the Authority proposes to classify the assets of the project under “Common Assets” to be split in TBLR for the purpose of determination of aeronautical portion of capex additions proposed in the First Control Period. 5.3.44 Based on the above analysis on need, size, cost and classification of the project, the Authority proposes to consider the capitalization the aeronautical portion of the estimated cost of the project, in FY 2023-24 and FY 2024-25, which is as follows: Table 78: Cost proposed to be considered by the Authority for the project “Construction of Seating Lounges – city side” in the First Control Period Particulars Ref. Unit Amount Total cost proposed to be considered by the Authority A ₹ In Crores 0.60 Cost incl 12% GST A*1.12 ₹ in Crores 0.67 Year of Capitalization as proposed by the Authority - - FY24 Common (Based Classification of Project - - on TBLR) Aeronautical portion (Table 105) B % 95% Aeronautical portion of cost proposed by the Authority C = A*B ₹ in Crores 0.63 Table 79: Cost proposed to be considered by the Authority for the project “Construction of Seating Lounges – air side” in the First Control Period Particulars Ref. Unit Amount Total cost proposed to be considered by the Authority A ₹ in Crores 7.32 Cost incl 12% GST A*1.12 ₹ in Crores 8.20 Year of Capitalization as proposed by the Authority - - FY25 Common (Based Classification of Project - - on TBLR) Aeronautical portion (Table 105) B % 95% Aeronautical portion of cost proposed by the Authority C = A*B ₹ in Crores 7.79 5.3.45 After considering the facts as stated above, a summary of the Authority’s proposals with respect to WIP CAPEX is given below: Consultation Paper No. 02/2024-25 Page 71 of 130CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FIRST CONTROL PERIOD Table 80: Comparison of WIP CAPEX submitted by MADC and the Authority proposal for First Control Period (₹ in crores) MADC's revised The Authority's proposal submission* Particulars Total Year of Total Aeronautical Year of Capex capitalization Capex portion capitalization WIP CAPEX Capex Incurred for FY23 - - 0.50 0.42 FY23 Development /Redevelopment of cityside infrastructure and ancillary buildings at Airside and 66.00 FY24 63.21 63.21 FY25 cityside of Shirdi International Airport Construction of Apron 35.90 FY24 29.01 29.01 FY24 Extension of existing runway and 44.00 FY24 35.09 35.09 FY26 RESA Construction of Isolation Bay and 9.50 FY25 9.50 9.50 FY26 associated works on airside Seating Lounge 8.87 FY24 8.87 8.42 FY24/ FY25 Total WIP Capex 164.27 - 146.18 145.65 - *The Authority has compared the revised capex submission by MADC for the purpose of its analysis in Table 87. PLANNED CAPEX F. Construction of Water Pond - ₹ 18.02 crores 5.3.46 The Authority notes the justification provided by MADC for this project as indicated in Table 65. Considering the growth in traffic proposed by the Authority in Table 62 and the need to provide potable water, and the need for the project. The Authority, through its Independent Consultant, examined the physical location of the project in December 2023 and based on the discussion with MADC, the Authority notes that there is a huge demand for water in the area in which the Shirdi International Airport is located since it is an area with scarcity of water. 5.3.47 Based on discussion during site visit and analysis of the master plan for construction of NITB, the Authority notes that the existing pond is about to be decommissioned and the area in which the existing water pond is located is proposed to be utilized partially for the construction of NITB and partially for the construction of new water pond. The Authority also notes that, at present, Shirdi International Airport is getting water supply from nearby wells and through water tankers. 5.3.48 Considering the scarcity of water in the locality and growth in the passenger traffic projected by the Authority for the First Control Period, the Authority is of the view that the construction of a water pond is indispensable to store large quantities of water. 5.3.49 As per discussions held with MADC on 26th March, 2024, MADC has submitted a revised cost of ₹ 18.02 crores for ‘Construction of Water Pond’ project. MADC estimates that the tender will be floated post June 2024 and once tendered, the project will take 15 months from commencement to completion. Based on the information provided by MADC, the Authority anticipates that the project will be completed by December 2025. Consultation Paper No. 02/2024-25 Page 72 of 130CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FIRST CONTROL PERIOD 5.3.50 MADC has provided a detailed BOQ of cost of the project components. The Authority has analysed the same and proposes to consider the revised cost of ₹ 18.02 Crores. 5.3.51 Based on the nature of the project, the Authority proposes to classify the assets of the project under “Common Assets” to be split in TBLR for the purpose of determination of aeronautical portion of capex additions proposed in the First Control Period. 5.3.52 Based on the above analysis on need, size, cost and classification of the project, the Authority proposes to consider the capitalisation of the aeronautical portion of the estimated cost of the project in FY 2025- 26, as follows: Table 81: Cost proposed to be considered by the Authority for the project “Construction of Water Pond” in the First Control Period Particulars Ref. Unit Amount ₹ in Total cost proposed to be considered by the Authority A 18.02 crores Year of Capitalization as proposed by the Authority - - FY26 Classification of Project - - Common (Based on TBLR) Aeronautical portion (Table 105) B % 95% ₹ in Aeronautical portion of cost proposed by the Authority C = A*B 17.12 Crores G. Air Cargo facility and hangars - ₹ 51.59 crores 5.3.53 The Authority notes the justification provided by MADC for this project as indicated in Table 65. The Authority observed that MADC has undertaken a feasibility study for establishing air cargo facility. Considering the growth in belly cargo operations, the Authority notes the need for the project. 5.3.54 The Authority also notes that MADC has been sanctioned the financial assistance to the extent of ₹ 55.00 crores as interest free loan to be repaid after a period of 50 years, under the PM Gati Shakti Scheme, for the proposed cargo operations in Shirdi International Airport. These funds have been received by MADC on 3rd May 2023. 5.3.55 The Authority notes that MADC in its initial submission has projected a cost of ₹ 55.00 crores to establish the air cargo facility in its MYTP submission. 5.3.56 As per discussions held with MADC on 26th March, 2024, MADC has submitted a revised cost of ₹ 51.59 crores (incl. GST) for ‘Air Cargo facility and Hangars’ project based on the work order issued dated 14.03.2024 for ₹ 51.59 crores, which is proposed to be considered by the Authority. Based on the nature of this project, the Authority proposes to classify the assets of the project under “Aeronautical Assets” for the purpose of determination of aeronautical portion of capex additions proposed in the First Control Period. 5.3.57 The work order mentions that the work needs to be completed within 18 months from the date of issue of work order (Mar 2024) which works out to September 2025. Hence, the Authority proposes to consider the capitalization of the project in FY 2025-26 as against MADC’s initial submission to capitalize the same in FY 2024-25. 5.3.58 Based on the above analysis on need, size, cost and classification of the project, the Authority proposes to consider capitalization of the aeronautical portion of the estimated cost of the project, in FY 2025-26, as follows: Consultation Paper No. 02/2024-25 Page 73 of 130CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FIRST CONTROL PERIOD Table 82: Cost proposed to be considered by the Authority for the project “Air cargo facility and hangars” in the First Control Period Particulars Ref. Unit Amount Total cost proposed to be considered by the Authority A ₹ in Crores 46.06 (excluding GST @ 12% based on current market rates FY24) Total cost proposed to be considered by the Authority B = A*1.12 ₹ in Crores 51.59 (including GST @ 12% based on current market rates FY24) Year of Capitalization as proposed by the Authority - - FY26 Classification of Project - - Aeronautical Aeronautical portion (Table 105) C % 100% Aeronautical portion of cost proposed by the Authority D = B*C ₹ in Crores 51.59 H. Runway Recarpeting - ₹ 61.68 crores 5.3.59 Based on the discussion with MADC and based on the DGCA observations regarding quality of runway and RESA, the Authority notes that the runway surface condition has deteriorated in the entire stretch of the runway and that the sand patch test has also failed in many places. This is mainly due to operational wear and tear and oxidization of the runway surface, as stated in the DGCA report. The Authority notes that MADC has proposed corrective action of recarpeting the runway as a response to the observation stated in DGCA report. MADC, in its response to a query dated 22nd March 2024 has submitted the MOU with AAI for recarpeting. The Authority notes that the project is required to be executed based on regulatory requirement. 5.3.60 The Authority notes that the date of the MOU is 7th December 2023 and the MOU stipulates that the work will be completed within 12 month of issue of work order. Work order has not been made available to the Authority and hence, the Authority anticipates that the completion of recarpeting will be completed in FY 2025-26. 5.3.61 As per discussions held with MADC on 26th March, 2024, MADC has submitted a revised cost of ₹ 61.68 crores. for ‘Recarpeting of Runway’ project which includes base cost of ₹ 48.88 Crores, plus 7% departmental charges and GST of 18%. 5.3.62 The Authority further notes that, as a result of this runway recarpeting, the PCN shall be restored to the existing level and is not proposed to increase beyond the existing level. On this basis, the Authority proposes not to capitalize the cost associated with recarpeting the runway and proposes to consider the same as part of Aeronautical Operating and Maintenance Expenditure (Refer para 9.2.73 for detailing the Authority’s analysis for the same). I. New Integrated Terminal Building (NITB) - ₹ 722.50 crores 5.3.63 The Authority notes that the amount of ₹ 722.50 Crores (cost as per original MYTP submission ₹ 590.62 crores) relates to the construction of the New Integrated Terminal Building (NITB) spanning an area of 53,349 Sq.m. 5.3.64 MADC, through its revised submission dated 22nd March 2024, submitted that the revised cost for NITB as ₹ 722.50 Crores (incl GST). The base cost of ₹ 645.09 Crores considered in this estimate was substantiated through the letter of award dated 15th March 2024. 5.3.65 The Authority notes that the cost per Sq.m. of NITB as per MADC’s revised submission is as follows: Consultation Paper No. 02/2024-25 Page 74 of 130CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FIRST CONTROL PERIOD Table 83: Cost per Sq.m. for the proposed NITB as submitted by MADC in its revised submission Particulars Ref. Unit Amount Base cost A ₹ in Crores 645.09 GST B = A*12% ₹ in Crores 77.41 Total Cost C = A+B ₹ in Crores 722.50 Total area of the new Terminal Building D Sq.m. 53,349 Cost per sq.m. in FY26 E=C/D ₹ 1,35,429 5.3.66 The Authority notes the justification provided by MADC for the construction of NITB, as indicated in Table 65. Considering that the existing terminal building is very congested even for present traffic & taking into account the projected growth in the passenger traffic, including commencement of international traffic from FY 2026-27, as proposed to be considered by the Authority (as per Table 62) and to enhance the peak hour passenger capacity, the Authority recognizes the need for new Integrated Terminal Building. 5.3.67 The Authority, based on the discussion with MADC, notes that the construction of NITB is projected to commence in FY 2024-25 and is expected to be completed in 24 months. 5.3.68 The Authority notes that the tender document for the NITB mentions that work is to be completed in a period of 2 years including Design, Engineering, Procurement, Construction, Testing, Commissioning and Handover. The Authority also notes that while the LOA is dated 15th March 2024, the works are expected to commence from April 2024 only. Considering an average time of 24-30 months for construction, the Authority proposes to capitalize the NITB in the second half of the FY 2026-27. 5.3.69 The Normative cost approved by the Authority vide its Order No. 07/2016-17 dated 13th June 2016 (Normative Approach to Building Blocks in Economic Regulation of Major Airports) for Terminal Buildings is ₹ 65,000/- per Sq.m. (Base Year FY 2015-16). The cost of following items of specification have been considered for analysis of the prescribed rate per sq.m. - cost of terminal building, air conditioning, fire-fighting system, water supply, passenger facilities viz FIDS, Furniture, Signages and Security surveillance, airlines related services viz Check-in, CUTE, CUSS and Baggage Reconciliation System, In-line X ray screening, Standalone screening, BHS for arrival and departure, Escalators, Elevators, Travelators and PBB. 5.3.70 In this respect, the Authority has considered a normative cost of ₹ 1,00,000 per sq.m. (Base Year FY 2020-21) as per recent tariff orders, based on the superior specifications, processes and the architectural features of modern Terminal Buildings. The Authority is of the view that as the work on Terminal Building projected by MADC would be carried out over the First Control Period, it would be reasonable and justifiable to derive the project cost based on inflation-adjusted normative cost up to FY 2026-27 (using WPI inflation index) to address the time value of money. 5.3.71 In the Order No.07/2016-17 dated 13th June 2016 on “In the matter of Normative Approach to Building blocks in Economic Regulation of Major Airports – Capital costs Regarding” the ceiling cost mentioned is inclusive of taxes applicable at that time, which is 12%. Subsequently, GST has been introduced wherein the GST rate is 18%. Hence, the inflation adjusted normative cost is worked out below by considering the additional 6% resulting in a total GST rate of 18%. The inflation adjusted normative costs, thus derived is presented in the below table: Consultation Paper No. 02/2024-25 Page 75 of 130CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FIRST CONTROL PERIOD Table 84: Details of Inflation adjusted normative cost derived by the Authority Inflation adjusted Inflation adjusted Year Inflation Rate* normative cost @ normative rates 18% GST # Base Amount 1,00,000 1,05,357 FY22 7.14% 1,07,140 1,12,880 FY23 9.42% 1,17,233 1,23,513 FY24 -0.70% 1,16,412 1,22,648 FY25 3.10% 1,20,021 1,26,450 FY26 3.70% 1,24,461 1,31,129 FY27 3.70% 1,29,067 1,35,981 *Inflation rates considered as per Chapter 8 of this Consultation Paper # Inflation adjusted base amount (inclusive of 12% GST) (A) = ₹ 1,00,000 per sq.m. Inflation adjusted base amount (exclusive of 12% GST) (B=A*100/112) = ₹ 89,286 per sq.m. Add GST @ 18% (C=B*18%) = ₹ 16,071 per sq.m. Normative cost including GST (D = B+C) = ₹ 1,05,357 per sq.m. 5.3.72 The revised estimate of ₹ 722.50 Crores for NITB, the cost per sq.m. works out to ₹ 1,35,429 per sq.m. which is less than the Inflation adjusted normative cost (incl. of 18% GST) considered by the Authority for FY 2026-27. The Authority, therefore, proposes to consider the value of the terminal building at ₹ 722.50 crores, as proposed by MADC as per Table 85. 5.3.73 Based on the nature of the components of this project, the Authority proposes to classify the same as “Common Assets” to be split in TBLR for the purposes of determination of aeronautical portion of capex additions proposed in the First Control Period. 5.3.74 Based on the above analysis, the Authority proposes to consider capitalization of Aeronautical portion of the estimated cost of the project, in FY 2026-27, as follows: Table 85: Cost proposed to be considered by the Authority for the project “New integrated Terminal Building” in the First Control Period Particulars Ref. Unit Amount Total cost considered by MADC A ₹ in Crores 722.50 Total area of NITB proposed by MADC B Sq.m. 53,349 Cost per sq.m. in FY26 C = (A*10^7)/B ₹ 1,35,429 Normative Cost computed by AERA for FY27 D ₹ 1,35,981 (Table 84) E = ((Lower of C Normative Cost considered by AERA ₹ in Crores 722.50 and D)*B)/10^7 Year of Capitalization - - FY27 Common (Based Classification of Project - - on TBR) Aeronautical portion (Table 105) F % 95% Aeronautical portion of cost proposed by the G = E*F ₹ in Crores 686.38 Authority 5.3.75 Based on the above analysis, the Authority’s proposes the following with regard to Planned CAPEX: Consultation Paper No. 02/2024-25 Page 76 of 130CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FIRST CONTROL PERIOD Table 86: Comparison of Planned Capital Expenditure submitted by MADC and proposed by the Authority for the First Control Period (₹ in crores) MADC's revised The Authority's proposal submission* Particulars Total Year of Total Aeronautical Year of Capex capitalization Capex portion capitalization Planned CAPEX Construction of Water Pond 18.02 FY25 18.02 17.12 FY26 Air cargo facility and hangars 51.59 FY25 51.59 51.59 FY26 Recarpeting the runway 61.68 FY24 Moved to O&M Expenses New Integrated Terminal 722.50 FY26 722.50 686.38 FY27 Building Total Planned Capex 853.79 792.11 755.09 *The Authority has compared the revised capex submission by MADC for the purpose of its analysis in Table 87. 5.3.76 Comparison of Total Capex as submitted by MADC and Capex as proposed by the Authority: Table 87: Comparison of Total Capital Expenditure submitted by MADC and proposals made by the Authority (₹ in crores) MADC's revised The Authority's proposal submission* Particulars Total Year of Total Aeronautical Year of Capex capitalization Capex portion capitalization WIP CAPEX Capex Incurred for FY23 - - 0.50 0.42 FY23 Development /Redevelopment of cityside infrastructure and ancillary 66.00 FY24 63.21 63.21 FY25 buildings at Airside and cityside of Shirdi International Airport Construction of Apron 35.90 FY24 29.01 29.01 FY24 Extension of existing runway and 44.00 FY24 35.09 35.09 FY26 RESA Construction of Isolation Bay and 9.50 FY24 9.50 9.50 FY26 associated works on airside Seating Lounge 8.87 FY24 8.87 8.42 FY24/ FY25 Total WIP Capex - A 164.27 - 146.18 145.65 - Planned CAPEX Construction of Water Pond 18.02 FY25 18.02 17.12 FY26 Air cargo facility and hangars 51.59 FY25 51.59 51.59 FY26 Recarpeting the runway 61.68 FY24 Moved to O&M Expenses New Integrated Terminal Building 722.50 FY26 722.50 686.38 FY27 Total Planned Capex - B 853.79 792.11 755.09 TOTAL (A+B) 1018.06 938.29 900.74 *The Authority has compared the revised capex submission by MADC for the purpose of its analysis in Table 87. 5.3.77 Based on the above analysis, reasoning provided by MADC and the Authority’s considerations, the Authority proposes to consider the following Aeronautical portion of capex additions in the First Control Period: Consultation Paper No. 02/2024-25 Page 77 of 130CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FIRST CONTROL PERIOD Table 88: Aeronautical additions to RAB proposed by the Authority for the First Control Period for Shirdi International Airport (₹ in Crores) Particulars FY23 FY24 FY25 FY26 FY27 Total Capex Incurred in FY23 0.42 - - - - 0.42 Development / Redevelopment of cityside infrastructure and ancillary buildings at Airside & - - 63.21 - - 63.21 cityside of Shirdi International Airport (Table 71) Construction of Apron (Table 74) - 29.01 - - - 29.01 Extension of existing runway and RESA (Table 75) - - - 35.09 - 35.09 Construction of Isolation Bay & associated works on - - - 9.50 - 9.50 airside (Table 77) Seating Lounge (Table 78) - 0.63 7.79 - - 8.42 Construction of Water Pond (Table 81) - - - 17.12 - 17.12 Air cargo facility and hangars (Table 82) - - - 51.59 - 51.59 New Integrated Terminal Building (Table 85) - - - - 686.38 686.38 Total Aeronautical Additions to RAB 0.42 29.64 71.00 113.30 686.38 900.74 5.3.78 The Authority proposes to reduce (readjustment) 1% of the uncapitalized project cost from the ARR / target revenue as re-adjustment in case any particular capital project is not completed/ capitalized as per the approved capitalization schedule. It further proposes that if the delay in completion of the project was beyond the timeline given in the capitalization schedule, due to any reason beyond the control of MADC or its contracting agency and was properly justified, the same would be considered by the Authority while truing up the actual cost at the time of determination of tariff for the next Control Period. The re-adjustment in the ARR Target Revenue is to protect the interest of the stakeholders who are paying for services provided by MADC and is also an encouragement for MADC to commission/ capitalize the proposed assets as per the approved CAPEX plan/ schedule. 5.3.79 To summarize, based on the above detailed discussions, the Authority proposes to consider aeronautical expenditure of ₹ 900.74 Crores as addition to RAB for the First Control Period. Gross additions to Capex as proposed by the Authority amounts to ₹ 938.29 crores vis-à-vis the additions to capex as submitted by MADC of ₹ 1018.06 Crores. Since MADC has not submitted the Aeronautical RAB in its revised submission, the Authority has analysed the major reason for difference between total capex additions between MADC submission and the Authority’s proposal as below: • Capitalization of small items omitted from MADC submission but present in FAR in FY 2022-23 – ₹ 0.50 Crores. • Development / Redevelopment of cityside infrastructure and ancillary buildings at Airside and cityside of Shirdi International Airport considered only at awarded cost by the Authority - impact of ₹ 2.79 Crores. • Construction of Apron – considered only at awarded cost by the Authority – impact of ₹ 6.89 Crores. • Extension of existing runway and RESA – considered only at awarded cost by the Authority – impact of ₹ 8.91 Crores. • Runway Recarpeting – Considered as part of O&M expenses by the Authority – impact of ₹ 61.68 Crores. 5.3.80 The Authority’s proposal of additions to CAPEX and RAB for the First Control Period is as follows: Consultation Paper No. 02/2024-25 Page 78 of 130CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FIRST CONTROL PERIOD Table 89: Additions to CAPEX and RAB proposed by the Authority for the First Control Period (₹ in crores) Particulars FY23 FY24 FY25 FY26 FY27 Total Gross value of additions 0.51 29.68 71.41 114.20 722.50 938.29 Aeronautical portion of additions 0.42 29.64 71.00 113.30 686.38 900.74 5.4 MADC’s submission regarding Depreciation and Regulatory Asset Base (RAB) for the First Control Period 5.4.1 MADC has submitted the following computation of depreciation on RAB for Shirdi International Airport for the First Control Period: Table 90: Head wise breakup of depreciation for the First Control Period as per MADC submission (₹ in crores) Particulars* FY23 FY24 FY25 FY26 FY27 Total Computers - End User Devices 0.03 0.22 0.41 3.67 6.73 11.07 Computers - Services & Network - 0.01 0.01 0.10 0.20 0.32 Electrical installations 2.85 3.67 4.68 13.81 22.67 47.67 Furniture & Fixtures - Trolleys - - - 0.02 0.03 0.06 Furniture and Fixtures other than trolleys 0.22 0.28 0.32 1.21 2.12 4.14 Office equipment 0.96 0.22 0.23 0.92 1.62 3.95 Building 3.86 6.59 10.44 17.47 23.36 61.74 Plant & Machinery 2.56 2.18 2.18 2.17 2.17 11.25 Software - 0.03 0.06 0.55 1.01 1.65 Vehicle 0.03 0.03 0.02 0.01 - 0.09 Total 10.52 13.24 18.36 39.93 59.91 141.95 Aeronautical portion 95% 95% 95% 95% 95% 95% Aeronautical portion of Depreciation 9.99 12.57 17.44 37.93 56.92 134.85 *This is based on the original submission of MADC dated 7th July 2023. Revised submission by MADC dated 22nd March 2024 has only total capital additions, it does not contain details of aeronautical RAB, depreciation etc. 5.4.2 Based on the Capital Expenditure and the depreciation computations as above, MADC has submitted the following RAB for the First Control Period: Table 91: MADC’s submission of Average RAB for the First Control Period (₹ in crores) Particulars* Ref. FY23 FY24 FY25 FY26 FY27 Total Opening RAB A 143.80 133.81 294.70 346.42 869.58 Aeronautical portion of Commissioned Assets (Table B - 173.47 69.16 561.09 - 803.71 63) Grant received C - - - - - - Depreciation (Table 90) D 9.99 12.57 17.44 37.93 56.92 134.85 Closing RAB E = A+B-C-D 133.81 294.70 346.42 869.58 812.66 RAB for Calculating ARR F = (A+E)/2 138.81 214.26 320.56 608.00 841.12 *This is based on the original submission of MADC dated 7th July 2023. Revised submission by MADC dated 22nd March 2024 has only total capital additions, it does not contain details of aeronautical RAB, depreciation etc. Consultation Paper No. 02/2024-25 Page 79 of 130CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FIRST CONTROL PERIOD 5.5 Authority’s examination regarding Depreciation and Regulatory Asset Base (RAB) for the First Control Period 5.5.1 For the purpose of its analysis, the Authority has considered only the revised capital additions submitted by MADC dated 22nd March 2024. However, the Authority has also examined the methodology used by MADC in its model and MYTP submitted in July 2023 in the paragraphs to follow. 5.5.2 The Authority notes that MADC has computed depreciation on straight line method considering the useful life as per Companies Act 2013 for all the capex additions until FY 2022-23, though the additions in FY 2022-23 were not considered by MADC in its Capex included as part of RAB. For the proposed additions to capex from FY 2023-24 to FY 2026-27, the Authority notes that MADC has computed depreciation on straight line method based on the following useful life: Table 92: Useful life considered by MADC for proposed addition from FY24 to FY27 Particulars Useful life adopted by MADC Computer - End User Devices 3 Computer – Software 3 Computers-Service and Network 6 Electrical Installation 10 Furniture and Fixture – trolley 3 Furniture and Fixtures without trolley 7 Office Equipment 15 Operational Building 30 Plant and Machinery 15 Terminal Building 30 Utility Building 30 Vehicle 8 5.5.3 Based on the additions as proposed by the Authority, following are the Asset class wise depreciation computed using useful life as per Order No. 35/2017-18 dated 12th January 2018 on “Determination of useful life of Airport assets”. Table 93: Depreciation as proposed by the Authority for the First Control Period for Shirdi International Airport (₹ in crores) Particulars FY23 FY24 FY25 FY26 FY27 Total Cargo Building - - - 0.77 1.55 2.32 Computer - End User Devices 0.02 0.02 0.20 0.41 4.31 4.96 Computer - Software 0.00 0.00 0.02 0.03 0.32 0.38 Computers - Server and Network 0.00 0.00 0.01 0.01 0.10 0.12 Electrical Installation 2.90 2.91 3.60 4.55 15.08 29.06 Furniture and Fixture - trolley 0.00 0.00 0.01 0.01 0.03 0.05 Furniture and Fixture without trolley 0.19 0.21 0.64 0.69 1.76 3.49 Office Equipment 0.48 0.06 0.30 0.56 3.03 4.43 Building 3.85 3.85 4.71 5.80 13.23 31.44 Runway, Taxiway, Apron - 0.48 0.97 2.14 2.14 5.73 Plant & Machinery 2.11 2.11 2.11 2.11 2.11 10.54 Security Equipment 0.16 0.16 0.16 0.16 0.16 0.80 Vehicle 0.03 0.03 0.02 0.01 0.00 0.08 Total 9.75 9.85 12.74 17.24 43.81 93.39 Consultation Paper No. 02/2024-25 Page 80 of 130CAPITAL EXPENDITURE (CAPEX), DEPRECIATION AND REGULATORY ASSET BASE (RAB) FOR THE FIRST CONTROL PERIOD 5.5.4 The variance between depreciation as submitted by MADC (₹ 134.85 crores) and as proposed by the Authority (₹ 93.39 crores) is on account of i) shifting of year of capitalization of certain proposed assets and ii) consideration of actual awarded costs for “Seating lounge” and “Construction of Water Pond”. 5.5.5 Based on the additions proposed and the depreciation re-computed by the Authority using rates as defined in Order No. 35/2017-18 dated 12th January 2018, the following is the average RAB proposed by the Authority. Table 94: RAB proposed by the Authority for the First Control Period for Shirdi International Airport (₹ in Crores) Particulars Ref FY23 FY24 FY25 FY26 FY27 Total Opening RAB A 151.48* 142.15 161.95 220.21 316.27 (+) Additions (Table 89) B 0.42 29.65 71.00 113.30 686.38 900.74 (-) Depreciation (Table 93) C 9.75 9.85 12.74 17.24 43.81 93.39 Closing RAB D=A+B-C 142.15 161.95 220.21 316.27 958.84 Average RAB E=(A+D)/2 146.82 152.05 191.08 268.24 637.56 1,395.74 *Opening RAB for FY23 taken from closing RAB for FY22 as per Table 16 5.5.6 The Authority notes that MADC would be eligible to claim GST Input Tax Credits on procurement of certain movable property and Airport Operator in its CAPEX estimates has considered estimated GST credits where possible. The Authority expects that MADC would properly account for such credits in its submissions in accordance with Chapter V of The Central Goods and Services Tax Act, 2017 at the time of true up of the RAB for the First Control Period. The Authority may examine the accounting of input tax credits and make necessary adjustments in this regard at the time of determination of tariffs for the Second Control Period. 5.6 Authority’s proposal regarding Capital Expenditure (CAPEX), Depreciation and Regulatory Asset Base (RAB) for the First Control Period Based on the material before it and its analysis, the Authority proposes the following with regard to Average RAB for the First Control Period: 5.6.1 To consider the aeronautical capital expenditure for the First Control Period as per Table 88 for Shirdi International Airport. 5.6.2 To consider RAB and depreciation for the First Control Period as per Table 94 for Shirdi International Airport. 5.6.3 To reduce (adjust) 1% of the uncapitalized project cost from the ARR in case any particular capital project is not completed /capitalized as per the approved capitalization schedule, as mentioned in para 5.3.78. The same will be trued up during the true up of the First control period at the time of determination of tariff for the next control period. 5.6.4 To True up the Capital expenditure, RAB and depreciation at the time of determination of Aeronautical Tariff in the next control period, based on evaluation of reasonableness and efficiency. Consultation Paper No. 02/2024-25 Page 81 of 130RETURN ON LAND FOR THE FIRST CONTROL PERIOD 6 RETURN ON LAND FOR THE FIRST CONTROL PERIOD 6.1 MADC’s submission regarding Return on Land for the First Control Period 6.1.1 MADC has claimed the following Return on Land for the first control period: Table 95: MADC’s submission on Return on Land for Shirdi International Airport for the First Control Period (₹ in Crores) Particulars FY23 FY24 FY25 FY26 FY27 Total Return on Land – Aero* 6.13 6.13 6.13 6.13 6.13 30.65 *Refer Table 18 for the basis of computation adopted by MADC. 6.2 Authority’s examination regarding Return on Land for the First Control Period 6.2.1 The Authority notes that MADC has acquired land of 350.85 Hectares (866.97 Acres), for the development of Shirdi International Airport for ₹ 68.41 crores (₹ 64.80 crores in FY 2017-18 and ₹ 3.61 crores in FY 2021-22). 6.2.2 Para 4.1.2 of the land return order No. 42/2018-19 dated 5th March 2019, states that “The return will be given only on the cost of land used for aeronautical activities”. However, the Authority notes that return on land is being claimed by MADC for the full area of airport i.e. 350.85 Hectares for the First Control Period – even though some areas of the land parcel are not utilized (after considering the developments proposed in the First Control Period). 6.2.3 The Authority, through its independent consultants during their site visit to the Shirdi International Airport noted that there are some areas of the airport premises that are yet to be put to use/ planned for construction in the First Control Period. 6.2.4 The Authority requested details of area of land used by the Airport Operator, however, only partial details were received. The Authority through its independent consultant, has re-computed the area of land in use and those that will be used for proposed capex during the First Control Period– from the master plan of the airport shared by MADC. Table 96: Usage of Land at Shirdi International Airport during the First Control Period Proposed Particulars FY22 FY23 FY24 FY25 FY26 FY27 Capex Additions Total land area - A 35,08,500 35,08,500 35,08,500 35,08,500 35,08,500 35,08,500 Total of undeveloped area Plot 1 (as indicated in 10,925.00 10,925.00 10,925.00 10,925.00 10,925.00 10,925.00 Master Plan shared) Plot 2 (as indicated in 12,375.00 12,375.00 12,375.00 12,375.00 12,375.00 12,375.00 Master Plan shared) Plot 3 (as indicated in 7,935.00 7,935.00 7,935.00 7,935.00 7,935.00 7,935.00 Master Plan shared) Plot 4 (as 7,740.00 7,740.00 7,740.00 7,740.00 7,740.00 7,740.00 Consultation Paper No. 02/2024-25 Page 82 of 130RETURN ON LAND FOR THE FIRST CONTROL PERIOD Proposed Particulars FY22 FY23 FY24 FY25 FY26 FY27 Capex Additions indicated in Master Plan shared) Plot 5 (as indicated in 7,509.00 7,509.00 7,509.00 7,509.00 7,509.00 7,509.00 Master Plan shared) Plot 6 (as indicated in 7,830.00 7,830.00 7,830.00 7,830.00 7,830.00 7,830.00 Master Plan shared) Constructio Proposed Sewage 3,967.50 3,967.50 3,967.50 3,967.50 - - n of water Treatment Plant pond Taxi Parking Future Expansion 5,462.50 5,462.50 5,462.50 5,462.50 5,462.50 5,462.50 Phase II New Terminal Building (-) 19,750.00 19,750.00 19,750.00 19,750.00 19,750.00 - NITB Existing Terminal Building Terminal Building Expansion Phase 10,229.31 10,229.31 10,229.31 10,229.31 10,229.31 10,229.31 III Extension Extended Runway, of Existing RESA and 70,200.00 70,200.00 70,200.00 - - - runway and Blastpad RESA Constructio Extended Apron 58,394.00 58,394.00 - - - - n of Apron Apron Expansion 14,580.00 14,580.00 14,580.00 14,580.00 14,580.00 14,580.00 Phase II Apron Expansion 30,450.80 30,450.80 30,450.80 30,450.80 30,450.80 30,450.80 Phase III Proposed Cargo Air Cargo 33,089.76 33,089.76 33,089.76 33,089.76 - - Terminal Facility Constructio n of Isolation Isolation Bay - 1,79,138.07 1,79,138.07 1,79,138.07 1,79,138.07 - - Bay and Work in Progress associated works on airside Developme nt /Redevelop ment of cityside Armoury Block, infrastructu Admin Block, re and 25,840.00 25,840.00 25,840.00 - - - Utility Block, ancillary Hangar, etc., buildings at Airside and cityside of Shirdi Internation al Airport Total of undeveloped area 5,05,415.94 5,05,415.94 4,47,021.94 3,50,981.94 1,34,786.61 1,15,036.61 - B Consultation Paper No. 02/2024-25 Page 83 of 130RETURN ON LAND FOR THE FIRST CONTROL PERIOD Proposed Particulars FY22 FY23 FY24 FY25 FY26 FY27 Capex Additions % of undeveloped 14% 14% 13% 10% 4% 3% land area C=B/A % of developed land area 86% 86% 87% 90% 96% 97% D=100%-C 6.2.5 Based on the area of land utilized at the end of each FY of the First Control Period as per Table 96, the return on land has been calculated in Table 97. 6.2.6 Order No.42/2018-19 dated 5th March, 2019 on “Determination of Fair Rate of Return (FRoR) to be provided on Cost of Land incurred by various Airport Operators in India”, mentions in para 4.1.4 that, “in case land is purchased by the airport operating company either from private parties or from government, the compensation shall be in the form of equated annual instalments computed at actual cost of debt or SBI base rate + 2% whichever is lower over a period of thirty years.” The rate of return should be cost of debt or SBI rate plus 2% whichever is lower. 6.2.7 During the First Control Period, the Authority notes that MADC has obtained an interest free loan from PM Gati Shakti for the construction of Cargo Terminal. The Authority notes that the interest free loan is the only debt obtained by MADC and the rate of interest thereon is 0. The Authority also proposes to use 95%:5% as Aeronautical: Non-Aeronautical ratio for the purpose of determination of the Aeronautical land area in use by MADC for Shirdi International Airport. 6.2.8 Return on land as computed by the Authority for the First Control Period is given in the following table: Table 97: Return on land proposed by the Authority for the First Control Period Particulars Ref. Unit FY23 FY24 FY25 FY26 FY27 Total Cost of Land to be ₹ in A 68.41 68.41 68.41 68.41 68.41 considered crores SBI Rate B % 6.65% 6.65% 6.65% 6.65% 6.65% Rate considered for C = Equated Annual % 8.65% 8.65% 8.65% 8.65% 8.65% B+2% Instalment Area of land under use D % 86.00% 87.00% 90.00% 96.00% 97.00% (Table 96) Aeronautical portion of E 95.00% 95.00% 95.00% 95.00% 95.00% total land area Equated Annual ₹ in instalments (for 30 F* 5.27 5.33 5.52 5.89 5.95 27.96 crores years) *(A*C*((1+C) ^30))/(((1+C) ^30)-1)*D*E 6.3 Authority’s proposal regarding Return on Land for the First Control Period Based on the material before it and its analysis, the Authority proposes the following with regard to Return on Land for the First Control Period: 6.3.1 To consider Return on Land for the First Control Period for Shirdi International Airport as per Table 97. Consultation Paper No. 02/2024-25 Page 84 of 130FAIR RATE OF RETURN (FRoR) FOR THE FIRST CONTROL PERIOD 7 FAIR RATE OF RETURN (FRoR) FOR THE FIRST CONTROL PERIOD 7.1 MADC’s submission regarding Fair Rate of Return (FRoR) for the First Control Period 7.1.1 The cost of equity (COE) is estimated based on the COE values approved for AAI in their respective proposals as the structure is similar to and report by M/s SBI Capital Markets Ltd (SBI CAPS) on the fair return on equity for the Indian airport sector. Table 98: Fair Rate of Return submitted by MADC for the First Control Period (₹ in crores) Particulars FY23 FY24 FY25 FY26 FY27 Debt - 55.00 55.00 55.00 55.00 Reserve and Surplus (120.73) (146.22) (175.57) (227.63) (274.09) Equity 69.05 171.16 214.61 753.16 706.71 Total Equity (51.67) 24.94 39.04 525.53 432.62 Debt + Equity (51.67) 79.94 94.04 580.53 487.62 Cost of debt - - - - - Cost of equity 14.00% 14.00% 14.00% 14.00% 14.00% Individual year gearing - 0.69 0.58 0.09 0.11 Weighted average gearing 0.30 - - - - Weighted average cost of debt - - - - - Cost of equity 14.00% - - - - Fair Rate of Return 9.85% 9.85% 9.85% 9.85% 9.85% 7.1.2 In FY 2023-24, MADC got approval under PM Gati Shakti Scheme for financial assistance to the extent of ₹ 55 crores as an interest-free loan for a period of 50 years. These funds were received by MADC on 3rd May 2023. 7.1.3 MADC, after considering the cost of debt at 0%, and actual gearing, has arrived at a fair rate of return to be 9.85% for the First Control Period. 7.1.4 MADC has revised its submission for FRoR for the First Control Period to 12.94%. This was done in the presentation made to officials of AERA on their visit to Shirdi International Airport on 16th February 2024. MADC had also mentioned that “In attached presentation, FRoR has been changed as there was an error in the model submitted to you earlier” in the email with the revised FRoR. 7.2 Authority’s examination regarding Fair Rate of Return (FRoR) for the First Control Period 7.2.1 The Authority notes that MADC has claimed FRoR of 9.85% in their initial submission and MYTP. The Authority also notes the formula and methodology errors in computation of FRoR. 7.2.2 AERA Guidelines prescribe determination of Fair Rate of Return comprising of Cost of Equity and Cost of Debt based on Capital Asset Pricing model as given below: 5.1.3 Cost of Equity The Authority shall estimate cost of equity, for a Control period, by using the Capital Asset Pricing Model (CAPM) for each Airport Operator, subject to the consideration of such factors as the Authority may deem fit. 7.2.3 The Authority notes the following with respect to evaluation of FRoR for Shirdi International Airport: i. Shirdi International Airport was a Non-Major Airport up to October 2021 and has been notified as a Major Airport by MoCA through notification in Gazette No. S.O. 4596 (E). Consultation Paper No. 02/2024-25 Page 85 of 130FAIR RATE OF RETURN (FRoR) FOR THE FIRST CONTROL PERIOD ii. The traffic volume at Shirdi International Airport is much lower as compared to other Major Airports. Traffic for the recent year - FY 2023-24 is only 7.24 lakh passengers and during the First control period, the traffic is expected to reach a maximum of only upto 1.79 Mn. Passengers by the end of the control period 2026-27, still significantly below the threshold of 3.50 Mn passengers which is the minimum passenger volume for considering an Airport as a Major Airport (based on actual annual passenger throughput). It is important for the Airports having very low traffic base to ensure that the operations at the airport are viable by considering charges which are reasonable and optimum so as to attract more traffic. iii. Financing of Shirdi International Airport is largely through the funding / Grants issued by the Government of Maharashtra, which is considered as Shareholder funds. In order to ensure balanced approach in funding of Airport Projects, the Authority always encourages optimum leverage of debt being considered by Airports. The Authority has, in various earlier tariff determinations, underscored the importance of having efficient funding plan for Airport Capital Expenditure requirements, which will also help in optimizing the Aeronautical charges. Funding the entire project through funds from Shareholders does not result in optimization of funding sources and in turn, leads to additional charges being levied on the users of the Airport, as the resultant Aggregate Revenue Requirement computed in this scenario is higher. 7.2.4 The Authority, in the recent Tariff Orders for similar AAI Airports, has generally considered FRoR @ 14% (Cost of Equity @14% and actual Cost of Debt/ Gearing Ratio, wherever applicable). Shirdi Airport, like AAI Airports, is also owned & operated by the Govt. Undertaking (MADC). However, considering the factors as explained above, particularly the low traffic base, the Authority, proposes to consider 9% as a Fair Rate of Return for the First Control Period. The Authority invites specific comments from the stakeholders in this regard, on evaluation of which, a final decision will be taken by the Authority 7.3 Authority’s proposal regarding Fair Rate of Return (FRoR) for the First Control Period Based on the materials before it and its analysis, the Authority proposes the following with regards to FRoR for the First Control Period 7.3.1 To consider Fair Rate of Return of 9% for the First Control Period as explained in para 7.2.4. Consultation Paper No. 02/2024-25 Page 86 of 130INFLATION FOR THE FIRST CONTROL PERIOD 8 INFLATION FOR THE FIRST CONTROL PERIOD 8.1 MADC’s submission regarding Inflation for the First Control Period 8.1.1 MADC has submitted inflation rate of 5% for all the operating and maintenance expenses including employee expenses, utility expenses, Airport operating expenses, administrative and general expenses, repair and maintenance and other operating expenses and non-aeronautical revenues for the First Control Period. 8.1.2 MADC considered WPI of 5% as per the RBI survey of professional forecasters on macroeconomic indicators – Result of the 79th round released on 7th December 2022 for the First Control Period as summarized in the table below: Table 99: Inflation rates submitted by MADC for the First control period Particulars FY23 FY24 FY25 FY26 FY27 WPI Inflation 5.00% 5.00% 5.00% 5.00% 5.00% 8.2 Authority’s examination regarding Inflation for the First Control Period 8.2.1 The Authority has examined the submission made by MADC on inflation to be considered during the First Control Period and notes that MADC has considered 5% for the First Control Period. However, the Authority proposes to consider the recent “Results of the Survey of Professional Forecasters on Macroeconomic Indicators - Round 87th released on 5th April 2024 published by the Reserve Bank of India (RBI). 8.2.2 Accordingly, the Authority considers the actual Wholesale Price Index (All commodities) inflation for FY 2022-23 and the mean of WPI inflation forecast (All commodities) for FY 2023-24 till FY 2025-26 as given in the 87th round of Professional Forecasters on Macroeconomic Indicators of RBI for the First Control Period assuming that the inflation rate would be stable and remain constant for FY 2026-27. Accordingly, the following table shows the inflation rates as proposed by the Authority for the First control period. Table 100: Inflation rates proposed by the Authority for the First control period Particulars FY23 FY24 FY25 FY26 FY27 WPI Inflation 9.42% (0.70%) 3.10% 3.70% 3.70% 8.3 Authority’s proposal regarding Inflation for the First Control Period Based on the materials before it and its analysis, the Authority proposes the following for the First Control Period: 8.3.1 To consider Inflation for the First Control Period for Shirdi International Airport as per Table 100. Consultation Paper No. 02/2024-25 Page 87 of 130OPERATING & MAINTENANCE (O&M) EXPENSES FOR THE FIRST CONTROL PERIOD 9 OPERATING & MAINTENANCE (O&M) EXPENSES FOR THE FIRST CONTROL PERIOD 9.1 MADC submission regarding Operating & Maintenance (O&M) expenses for the First Control Period 9.1.1 MADC has stated that Aeronautical O&M expenses for the First Control Period has been estimated based on the following assumptions: • Construction of New Integrated Terminal Building (NITB): As per MADC MYTP submission, the construction of the NITB of 53,349 sq.m. is expected to be completed in FY 2025-26. The details of increase in NITB is shown below. Table 101: Details of increase in terminal building area as projected by MADC Particulars Existing FY26 Total Terminal Building Area (in Sq. m.) 2,750 53,349 % increase - 1840% 9.1.2 Considering the capitalization of the NITB, as shown in the above table, MADC has projected a one- time increase in FY 2026-27 of various expenses such as employee cost, utility expenses, administration and general expenses. • Inflation: MADC has considered the inflationary increase Y-o-Y of 5% towards all expenses except employee cost in the First Control Period. • Base Year: FY 2022-23 has been considered as the base year and the relevant percentage increase has been applied over the immediately preceding year to estimate expenses for the other Financial Years. 9.1.3 MADC in their MYTP submission for all tariff years has considered 95% of the total expenses as pertaining to Aeronautical activities. 9.1.4 The Aeronautical (O&M) expenses submitted by MADC for Shirdi Airport for the First Control Period are as presented below: Table 102: O&M Expenses submitted by MADC for the First Control Period (₹ in crores) Particulars Ref FY 23 FY 24 FY 25 FY 26 FY 27 Total Administration & General A 0.73 0.76 0.80 0.84 1.77 4.90 Expenses Airport Operating Expenses B 5.84 6.13 6.44 6.76 7.10 32.27 License Fees C 0.04 0.06 - 0.06 - 0.16 Employee Cost D 5.21 7.88 8.48 13.26 14.27 49.10 Power Expenses E 1.91 2.01 2.11 2.21 4.64 12.88 Water Expenses F 0.22 0.23 0.24 0.26 0.27 1.22 Water Withdrawal Expenses G - 1.58 2.05 2.57 4.25 10.45 Repair & Maintenance H 3.95 2.14 3.21 6.08 8.41 23.79 Total O&M expenses I=Sum(A:H) 17.90 20.79 23.33 32.04 40.71 134.77 Aero % J 95% 95% 95% 95% 95% 95% Consultation Paper No. 02/2024-25 Page 88 of 130OPERATING & MAINTENANCE (O&M) EXPENSES FOR THE FIRST CONTROL PERIOD Particulars Ref FY 23 FY 24 FY 25 FY 26 FY 27 Total Total Aeronautical O&M K=I*J 17.01 19.75 22.16 30.44 38.67 128.03 expenses 9.1.5 The growth rates assumed by MADC for Aeronautical O&M expenses have been presented in the below table: Table 103: Growth rates assumed by MADC for Aeronautical O&M Expenses for the First Control Period Particulars Basis FY 23 FY 24 FY 25 FY 26 FY 27 Y-o-Y Growth Administration & General Expenses Inflation % - 5% 5% 5% 5% Airport Operating Expenses Inflation % - 5% 5% 5% 5% Employee Cost Inflation% - 7.62% 7.62% 7.62% 7.62% Power Expenses Inflation % - 5% 5% 5% 5% Water Expenses Inflation % 5% 5% 5% 5% Water Withdrawal Expenses Inflation % - 5% 5% 5% 5% Repair & Maintenance Average RAB % - 1% 1% 1% 1% One-time increase on account of New Integrated Terminal Building (NITB) Administration & General Expenses Growth % - - - - 100% Power Expenses Growth % - - - - 100% 9.2 Authority’s examination regarding Operating & Maintenance (O&M) expenses for the First Control Period 9.2.1 The Authority has examined the basis for the estimation of Aeronautical O&M expenses as submitted by MADC for the First Control Period. The Authority has conducted a detailed analysis of Aeronautical O&M expenses submitted by MADC in the following order: i. Allocation Ratios ii. Examination of reasonableness and necessity of O&M expenses iii. Re-allocation of expenses into Aeronautical and Non-Aeronautical expenses. Allocation Ratios 9.2.2 The Authority notes in its examination that MADC has allocated all expenses into Aeronautical and Non-Aeronautical in the ratio of 95%:5%. However, the Authority in line with the methodology followed in other airports, notes that expenses should be allocated based on relevant ratios as given below. In this regard, the Authority has analyzed and computed the following ratios for appropriate segregation of expenses into Aeronautical and Non-Aeronautical for the First Control Period. Employee Head Count Ratio (EHCR) 9.2.3 The Authority notes that as part of its MYTP submission, MADC has provided department-wise split of the employee headcount with location of employees (Shirdi/HQ) for the first control period. The Authority requested MADC for detailed department wise CTC with head count for FY 2021-22 and 2022-23. MADC provided the actual head count of employees, department-wise working at Shirdi International Airport for FY 2021-22 and FY 2022-23. The Authority notes that there is difference in the Consultation Paper No. 02/2024-25 Page 89 of 130OPERATING & MAINTENANCE (O&M) EXPENSES FOR THE FIRST CONTROL PERIOD total cost and headcount between the details shared by MADC as above and the MTYP submission. The difference in head count is explained by MADC as follows: “As discussed during the site visit, the reason for the difference in the value is due to consideration of CTC. The model contains the actual expenses whereas the format requested from MADC containing details of the employees are related to CTC. This resulted into deviation.” While the MYTP submitted has an estimate of 99 employees in FY 2022-23, the actual head count is 107 as per the response submitted by MADC to the Authority’s queries. MADC has not provided the details for the differential employee head count despite seeking clarifications. 9.2.4 The Authority proposes to adopt the actual head count data as given by MADC for FY 2022-23 of 107 as the base for assessing the Employee Head Count ratio of the First Control Period for Shirdi International Airport. 9.2.5 The Authority had requested MADC for actual employee head count for FY 2023-24 which was not received until the time of publishing of this consultation paper. The Authority directs MADC to submit the actual employee head count for FY 2023-24 before the stakeholders’ consultation meeting to be held by AERA. 9.2.6 After examining the functions of each department, the Authority has determined that the duties of employees listed below extend beyond aeronautical activities and encompass the overall operations of the airport. As a result, the Authority proposes reclassification of the departments of following employees as Common instead of completely Aeronautical: • Airport Directorate Office • Finance and Accounts • Administration 9.2.7 The Authority also notes that there is no dedicated employee who is looking after non-aeronautical activities as submitted by AO. However, noting the above, the Authority proposes to consider the Aero: Non-Aero allocation to be 95%: 5% as submitted by MADC. Terminal Building Ratio (TBLR) 9.2.8 The Authority notes that the data regarding aeronautical areas and non-aeronautical areas were not made available by MADC for the First Control Period in the MYTP submission. 9.2.9 However, considering the current area of the Terminal Building and lack of space for aeronautical and non-aeronautical activities, the Authority proposes to consider the ratio of 95%:5% as the Terminal Building Ratio (TBLR) for the period from FY23 to FY27. The Authority will review the Terminal area allocation in the future control periods. 9.2.10 The Authority notes that MADC has not submitted details of the segregation of area between Aeronautical and Non-Aeronautical in the NITB. Hence the Authority proposes to consider the allocation ratio of 95:5 for NITB also, in FY 2026-27. Consultation Paper No. 02/2024-25 Page 90 of 130OPERATING & MAINTENANCE (O&M) EXPENSES FOR THE FIRST CONTROL PERIOD Gross Block Ratio (GBR) 9.2.11 The Authority proposes to consider the Gross Block Ratio (GBR) determined based on the allocation of assets into Aeronautical and Non-Aeronautical using EHCR and TBLR. The GBR so determined is as given below: Table 104: Revised Gross Block Ratio proposed by the Authority for the First Control Period (₹ in crores) Particulars Ref. FY 23 FY 24 FY 25 FY 26 FY 27 Aeronautical Gross Block A 183.41 213.06 284.06 397.36 1083.74 Non-Aeronautical Gross Block B 1.61 1.64 2.05 2.95 39.07 Total Gross Block C=A+B 185.02 214.7 286.11 400.31 1122.81 Percentage Aeronautical D=A/C 99.13% 99.24% 99.28% 99.26% 96.52% 5-year average Gross Block Ratio E 98.69% Summary of Allocation Ratios proposed by the Authority for the First Control Period 9.2.12 The Allocation ratios proposed by the Authority for Shirdi International Airport for the First Control Period are as follows: Table 105: Allocation Ratios proposed by the Authority for the First Control Period Particulars FY 23 FY 24 FY 25 FY 26 FY 27 Employee Head Count Ratio (EHCR) 95.00% 95.00% 95.00% 95.00% 95.00% Terminal Building Ratio (TBLR) 95.00% 95.00% 95.00% 95.00% 95.00% Gross Block Ratio (GBR) 98.69% 98.69% 98.69% 98.69% 98.69% O&M expenses and its allocation into Aeronautical & Non-Aeronautical expenses for the First Control Period 9.2.13 The Authority has compared the total O&M expenses as per MADC submission with the audited financial statements and noted certain differences in FY 2022-23. Upon enquiry, the Authority was informed that these differences pertain to CISF expenses which has been excluded by MADC for preparation of MYTP submission. 9.2.14 The Authority’s analysis of different heads of O&M expenses for First Control Period is detailed below: A. Administration & General (A&G) Expenses: Table 106: Break up Administration & General (A&G) Expenses as submitted by MADC (₹ in crores) Particulars Ref FY 23* FY 24 FY 25 FY 26 FY 27 Total Admin – Advertisement A 0.25 0.26 0.27 0.29 0.60 1.67 Admin - Consultancy Charges B 0.09 0.10 0.10 0.11 0.23 0.63 Admin – Fuel C 0.10 0.11 0.11 0.12 0.24 0.68 Admin - Legal Fees D 0.02 0.03 0.03 0.03 0.06 0.17 Admin – Misc E 0.07 0.07 0.08 0.08 0.17 0.47 Admin - Office Expenses F 0.17 0.18 0.19 0.20 0.42 1.16 Admin - Travelling Expenses G 0.02 0.02 0.02 0.03 0.05 0.14 Total Admin & General Expense H=Sum(A:G) 0.72 0.77 0.80 0.86 1.77 4.92 Aeronautical Ratio I 95% 95% 95% 95% 95% Aero Admin & General Expense J=H*I 0.68 0.73 0.76 0.82 1.68 4.67 * The expense for FY 23 is based on actual figure for the year. Consultation Paper No. 02/2024-25 Page 91 of 130OPERATING & MAINTENANCE (O&M) EXPENSES FOR THE FIRST CONTROL PERIOD 9.2.15 The Authority notes that MADC has considered the actual total expenses amounting to ₹ 0.72 Crore incurred in FY 2022-23 towards total Administration and general expenses. Thereafter, MADC has considered an increase of 5% Y-o-Y for the remaining tariff years of the First Control Period. The Authority also notes that MADC has considered an additional increase of 100% of existing expense in FY 2026-27 on account of NITB being operational from FY 2025-26. 9.2.16 The Authority examined the details of Administration & General expenses head for FY 2022-23 and notes that the expense comprises advertisement, consultancy, office expenses, legal fees and travelling expenses. 9.2.17 The Authority notes that MADC has incurred ₹ 0.09 crores in FY 2022-23 for Consultancy charges towards third party inspection of the construction of Jack Well, Pump House, Rising Main, ESR & Water Treatment & RCC Water Pond with HDPE Lining. 9.2.18 The Authority notes that these consultancy charges amounting to ₹ 0.09 Crores for FY 2022-23 is a one- time expense and hence should not be considered for projection of future operating expense. Therefore, the Authority proposes to rationalize the one-time expenditure by excluding 50% of the actual incurred amount of ₹ 0.04 Crores (i.e., 50% of ₹ 0.09 Crores), from FY 2022-23 expenditure and then use that as a base for applying inflation factor and one time increase for FY 2023-24 to FY 2026-27. 9.2.19 The Authority, in the past for similar airports had considered a one-time additional increase in admin. & general expenses due to the increase in the Terminal Building area etc. Based on the above approach, the Authority proposes to consider an additional increase of 100% in administration and general expenses in the second half of the fifth tariff year (i.e. 50% increase in FY 2026-27) of the First Control Period. 9.2.20 The Authority notes that ₹ 0.17 Crores was included in Administration & General Expenses in FY 2022- 23 on account of legal fees which includes fees paid to advocate for various matters in court and other charges. The Authority proposes to exclude the legal expenses incurred by the Airport Operator as a part of operating expenses, in line with the Authority’s approach at other similar airports. 9.2.21 However, with respect to the Y-o-Y growth rate the Authority proposes to consider the increase towards inflationary effect as per Table 100 as against the 5% claimed by MADC. 9.2.22 The Authority proposes to apportion the admin and general expenses on the basis of the Gross Block Ratio (GBR) and Employee Head Count Ratio (EHCR) as per Table 105. 9.2.23 The details of Administration and general expenses claimed by MADC and proposed by the Authority are as given table below: Table 107: Administration and general expenses proposed by the Authority for the First Control Period (₹ in crores) Allocation Particulars FY 23* FY 24 FY 25 FY 26 FY 27 Total Ratio/Ref As per MADC A&G expenses – Aero (Table 106) A 0.68 0.73 0.76 0.82 1.68 4.67 As per the Authority Admin – Advertisement GBR 0.24 0.24 0.25 0.26 0.40 1.39 Admin - Consultancy Charges GBR 0.05 0.05 0.05 0.05 0.08 0.26 Admin – Fuel GBR 0.10 0.10 0.10 0.10 0.16 0.57 Admin – Misc GBR 0.07 0.07 0.07 0.07 0.12 0.40 Admin - Office Expenses GBR 0.17 0.17 0.17 0.18 0.28 0.97 Consultation Paper No. 02/2024-25 Page 92 of 130OPERATING & MAINTENANCE (O&M) EXPENSES FOR THE FIRST CONTROL PERIOD Allocation Particulars FY 23* FY 24 FY 25 FY 26 FY 27 Total Ratio/Ref Admin - Travelling Expenses EHCR 0.02 0.02 0.02 0.02 0.03 0.12 Total Aero Admin & General B 0.65 0.64 0.66 0.69 1.07 3.71 Expense considered by the Authority Difference# C=B-A -0.04 -0.09 -0.10 -0.13 -0.61 -0.97 * The expense for FY 23 is based on the actual figure for the year. B. Airport Operating Expenses 9.2.24 The Authority notes that MADC has considered the actual expenses incurred for FY 2022-23 and thereafter MADC has claimed a 5% Y-o-Y increase for the remaining tariff years of the First Control Period. 9.2.25 The Authority examined the Airport Operating Expenses and notes that they included the following: Table 108: Breakup of Airport operating expenses submitted by MADC for the First Control Period (₹ in crores) Particulars FY 23* FY 24 FY 25 FY 26 FY 27 Total Ambulance Charges 0.69 0.72 0.76 0.8 0.84 3.81 CNS & ATM Services 3.53 3.71 3.9 4.09 4.3 19.53 Collection Charges 0.06 0.07 0.07 0.07 0.08 0.35 IMD Charges 0.78 0.82 0.86 0.9 0.95 4.31 Miscellaneous Charges 0.14 0.14 0.15 0.16 0.17 0.76 PAPI Maintenance 0.22 0.23 0.24 0.26 0.27 1.22 Others employee-related expenses 0.26 0.27 0.29 0.3 0.31 1.43 Outsourcing - Vehicle Expenses 0.16 0.17 0.18 0.18 0.19 0.88 Total 5.84 6.13 6.45 6.76 7.11 32.29 Allocation Ratio 95% 95% 95% 95% 95% Aeronautical Total 5.55 5.82 6.13 6.42 6.75 30.68 * The expense for FY 23 is based on actual figure for the year. 9.2.26 The Authority, as per discussion in para 2.6.2, at this stage, proposes not to consider “CNS and ATM Services” expenses and “Outsourcing – Vehicle Expenses” claimed by AO under the Airport Operating Expenses. Accordingly, the Authority proposes to exclude CNS & ATM expenses amounting to ₹ 19.53 Crores and Outsourcing – Vehicle Expenses (which are of the nature of hiring vehicle for AAI, CNS staff pick up and drop service) totally amounting to ₹ 0.88 Crores for the First Control Period similar to the stand taken in Pre-Control Period. 9.2.27 Considering the nature of expenses, the Authority has re-classified the below expenses from Airport Operating Expenses to other heads as detailed in table below: Table 109: Re-classification of expenses from Airport Operating expenses to other heads as per the Authority (₹ in crores) FY FY FY Particulars Re-Classified to Expenses FY 26 FY 27 Total 23 24 25 PAPI Maintenance Repair & Maintenance 0.22 0.23 0.24 0.26 0.27 1.22 Others employee-related Employee Cost 0.26 0.27 0.29 0.3 0.31 1.43 expenses Total 0.48 0.50 0.53 0.56 0.58 2.65 Consultation Paper No. 02/2024-25 Page 93 of 130OPERATING & MAINTENANCE (O&M) EXPENSES FOR THE FIRST CONTROL PERIOD 9.2.28 The Authority examined the actual expense incurred by MADC during FY 2022-23 and proposes to consider the same. However, with respect to Y-o-Y growth rate the Authority proposes to consider the increase towards inflationary effect as per Table 100 as against the 5% claimed by MADC except in the case of Collection Charges – where the projection has been done based on growth in passenger traffic for the First Control Period. The Authority also proposes to apportion the individual expenses under airport operating expenses on the basis of the nature of expenses as Aeronautical (100%) and Employee Head Count Ratio (EHCR) as per Table 105. 9.2.29 The details of Airport Operating Expenses claimed by MADC & and proposed by the Authority is as given below: Table 110: Airport operating expenses claimed by MADC and proposed by the Authority for the First Control Period (₹ in crores) Allocation Particulars FY 23* FY 24 FY 25 FY 26 FY 27 Total Ratio/Ref As per MADC Airport Operating Expenses – Aero A 5.55 5.82 6.13 6.42 6.75 30.68 (Table 108) As per the Authority Ambulance Charges Aero 0.69 0.68 0.71 0.73 0.76 3.57 Collection Charges Aero 0.06 0.06 0.09 0.11 0.15 0.46 IMD Charges Aero 0.78 0.78 0.80 0.83 0.86 4.04 Miscellaneous Charges GBR 0.13 0.13 0.14 0.14 0.15 0.70 Airport operating expenses B 1.67 1.65 1.73 1.81 1.91 8.77 proposed by the Authority Difference C=B-A -3.88 -4.17 -4.40 -4.61 -4.84 -21.90 * The expense for FY 23 is based on actual for the year. C. License Fees: 9.2.30 MADC has submitted that they will be incurring ₹ 0.065 crores towards license fees for the Aerodrome in FY 2023-24 and FY 2025-26. The Authority via query raised on 4th September 2023 requested for the actual payment receipt for FY 2023-24 and MADC vide reply dated 18th October 2023 submitted the payment receipt dated 25th July 2023 amounting to ₹ 0.065 Crores towards renewal of aerodrome license. 9.2.31 Based on the actual expense incurred by MADC for FY 2023-24, the Authority notes that the projections as submitted by MADC are justified. The Authority, therefore, proposes to consider the projections as submitted by MADC for the First Control Period. As indicated in paragraph 3.8.25 ,the Authority has apportioned the license fee incurred in FY 2021-22 over 2 years (being the duration of validity of license) between FY 2021-22 and FY 2022-23 which works out to Rs. 0.03 Crores instead of Rs. 0.04 Crores as submitted by MADC for FY 2022-23. The Authority has followed similar treatment of apportioning the expenses incurred over 2 years for License Fees projected to be incurred in First Control Period also. This expense being aeronautical in nature, the allocation ratio has been considered to be 100%. Consultation Paper No. 02/2024-25 Page 94 of 130OPERATING & MAINTENANCE (O&M) EXPENSES FOR THE FIRST CONTROL PERIOD Table 111: License Fees claimed by MADC and proposed by the Authority for the First Control Period (₹ in crores) Particulars Ref. FY 23* FY 24 FY 25 FY 26 FY 27 Total As per MADC License Fee claimed by MADC A 0.04 0.07 - 0.07 - 0.17 As per the Authority License Fee proposed by the Authority B 0.03 0.03 0.03 0.03 0.03 0.16 Difference C=B-A -0.01 -0.03 0.03 -0.03 0.03 -0.01 * The expense for FY 23 is based on the actual figure for the year. D. Employee Cost 9.2.32 MADC has submitted the following projections in relation to Employee Cost and the total employee headcount: Table 112: Employee Cost submitted by MADC for the First Control Period (₹ in crores) Particulars FY 23 FY 24 FY 25 FY 26 FY 27 Total Employee Cost 5.21 7.88 8.48 13.26 14.27 49.09 Allocation Ratio 95% 95% 95% 95% 95% Aeronautical Employee Cost 4.95 7.48 8.05 12.59 13.55 46.62 Employee Head Count Claimed by MADC 99 139 139 202 202 - Increase in Employee Head Count Y-o-Y - 40% - 45% - - Increase in Y-o-Y Salary Cost - 7.62% 7.62% 7.62% 7.62% - 9.2.33 The Authority notes that MADC has provided an average employee cost of ₹ 0.052 crores per annum for FY 2022-23, with a projected annual increase of 7.62% Y-o-Y for the remaining tariff years of the First Control Period. This average cost includes the salary expenses of all departments. 9.2.34 The Authority observes that MADC has taken into account the salaries of employees across different roles and levels within the organization, resulting in a representative figure for the average cost. Along the same lines, the Authority obtained actual data of employee head count for FY 2022-23 from MADC and notes that the actual employee count for the FY 2022-23 is 107 which the Authority proposes to consider. Based on the same, the resulting change in average employee salary cost is ₹ 0.049 crores per annum for FY 2022-23. 9.2.35 The Authority enquired on the rationale for considering 7.62% as increase in Y-o-Y employee cost projected by MADC. MADC, during the site visit at Shirdi International Airport together with the Authority’s consultant, reiterated that it was based on internal estimates and there was no working for the same. 9.2.36 MADC has furnished specific documents such as an internal record outlining the increment ranges for regular, contractual, and deputation employees. The average increment rate falls within the range of 6% to 7.5% for the fiscal year 2022. Additionally, as per the official notification issued by the Government of Maharashtra under GR no. 1323, the 7th Pay Commission revision in Dearness Allowance (D.A.) is effective from July 1, 2022. This revision stipulates an increase in D.A. from 38% to 42%, indicating a 4% change in D.A. However, both documents do not provide the basis of calculation for MADC's adopted increment rate of 7.62%. Consultation Paper No. 02/2024-25 Page 95 of 130OPERATING & MAINTENANCE (O&M) EXPENSES FOR THE FIRST CONTROL PERIOD 9.2.37 However, aligning with the uniform approach taken by the Authority for employee cost across other airports, the Authority proposes to rationalize the growth rate to 6% year-on-year for all years of the First Control Period, starting from FY 2023-24. 9.2.38 Further, the Authority observes that MADC has projected a one-time increase of 40% in employee head count for FY 2023-24 and 45% in FY 2025-26. On specific enquiry, MADC has submitted that both the increases are attributed to the construction of NITB and the resultant increase in operations. However, the Authority proposes to continue with the same number of employees as in FY2022- 23 till FY 2025- 26 and thereafter increase the same by 45% in FY 2026-27 in line with the timeline for commissioning of New Terminal Building. 9.2.39 The Authority examined the “Other employee expenses” incurred by MADC during FY 2022-23 amounting to ₹ 0.26 Crores which was classified under Airport Operating Expense and based on the nature of expense, the Authority proposes to reclassify the same under Employee cost head. The Authority also proposes to apply the growth rate of 6% year-on-year to this head also. 9.2.40 The Authority also proposes to re-allocate employee cost on the basis of Employee Head Count Ratio (EHCR) as per Table 105. 9.2.41 Taking the above factors into consideration, the Authority proposes the following employee costs for the First Control Period: Table 113: Employee costs proposed by the Authority for the First Control Period (₹ in crores) Particulars Ref FY 23* FY 24 FY 25 FY 26 FY 27 Total As per MADC Employee Costs – Aero (Table 112) A 4.95 7.48 8.05 12.59 13.55 46.62 As per the Authority Total No. of Employees B 107 107 107 107 155 Average Cost per employee C 0.049 0.052 0.055 0.058 0.061 Total Employee Cost D=B*C 4.95 5.25 5.56 5.90 9.06 30.72 Others - Employee Related E 0.25 0.26 0.28 0.29 0.31 1.39 (re-classified) Employee Costs proposed by the F=D+E 5.20 5.51 5.84 6.19 9.37 32.10 Authority Difference G=F-A 0.25 -1.97 -2.21 -6.40 -4.18 -14.52 * The expense for FY 23 is based on actual figure for the year. E. Power Expenses 9.2.42 The Authority notes that MADC has considered the actual expenses incurred in FY2022-23 amounting to ₹ 1.91 Crores as a base and projected an increase of 5% Y-o-Y basis for the remaining tariff years of the First Control Period. MADC has also considered an additional increase of 100% on account of the proposed increase in the Terminal Building area in FY 2026-27. 9.2.43 The Authority examined the actual expense incurred for FY 2022-23 and notes that MADC had considered the expense without adjusting for any recoveries from the concessionaires. On further analysis, the Authority notes that ₹ 0.12 Crores, i.e., 6.58% of the total electricity expenses, were recovered from the concessionaires in FY 2022-23. The Authority therefore proposes to consider the same proportion i.e. 6.58% as electricity recovery for the First Control Period. Consultation Paper No. 02/2024-25 Page 96 of 130OPERATING & MAINTENANCE (O&M) EXPENSES FOR THE FIRST CONTROL PERIOD 9.2.44 However, with respect to the Y-o-Y growth rate of power expenses, the Authority proposes to consider the increase based on inflation index as per Table 100, as against the 5% claimed by MADC. The Authority therefore has projected the actual power expenses (gross) for the first control period considering the inflationary effect as per Table 100, then proceeded to reduce 6.58% of that amount and the remaining amount net of recovery is proposed by the Authority as power expenses. 9.2.45 The Authority, in the past for other similar airports had considered a one-time increase in power expenses on account of increase in Terminal Building area. Based on the above approach, the Authority proposes to consider an additional increase of 100% in power expenses in the second half of the fifth tariff year of the First Control Period. 9.2.46 Since the power expenses has been estimated after making adjustments for recoveries from the concessionaires, the resulting expense is treated as 100% Aeronautical. This is consistent with that position followed by the Authority in other similar airports. The Authority, therefore, proposes to consider the same basis for the First Control Period. 9.2.47 The details of power expenses claimed by MADC & proposed by the Authority is as given below: Table 114: Power expenses claimed by MADC and proposed by the Authority for the First Control Period (₹ in crores) Particulars Ref. FY 23* FY 24 FY 25 FY 26 FY 27 Total As per MADC with 5% Y-o-Y increase Power expense – Aero A 1.81 1.90 2.00 2.10 4.41 12.22 As per the Authority with inflation index Power expenses B 1.91 1.90 1.96 2.03 3.15 10.95 Less: Recovery C 0.13 0.12 0.13 0.13 0.21 0.72 Power expense proposed by the D=B-C 1.78 1.77 1.83 1.89 2.95 10.23 Authority Difference E=D-A -0.03 -0.13 -0.17 -0.21 -1.46 -1.99 * The expense for FY 23 is based on actual figure for the year. F. Water Expenses Table 115: Water expenses claimed by MADC for the first Control Period (₹ in crores) Particulars FY 23* FY 24 FY 25 FY 26 FY 27 Total Water expense claimed by MADC 0.22 0.23 0.24 0.26 0.27 1.22 Allocation Ratio 95% 95% 95% 95% 95% Water expenses - Aero 0.21 0.22 0.23 0.24 0.26 1.16 9.2.48 The Authority has examined MADC submission and notes that MADC has considered the actual expense incurred of ₹ 0.21 Crores for FY 2022-23 and thereafter, projected based on an increase of 5% Y-o-Y for the remaining tariff years of the First Control Period. The details are as follows: 9.2.49 MADC via communication to the Authority dated 5th January 2024, has submitted that: “The updated business model shared by us on July 07,2023 contains water expenses, water withdrawal charges, and water demand related information for the future projections. In view of the factual changes and errors in the estimation of the projection, we are revising the following items.” 9.2.50 Given below is the revised estimate for water charges submitted by MADC on 5th January 2024: Consultation Paper No. 02/2024-25 Page 97 of 130OPERATING & MAINTENANCE (O&M) EXPENSES FOR THE FIRST CONTROL PERIOD Table 116: Revised Water expenses submitted by MADC on 5-Jan-2024 (₹ in crores) Particulars FY 23 FY 24 FY 25 FY 26 FY 27 Total Water expense claimed by MADC 0.22 0.23 0.18 - - 0.63 Allocation Ratio 95% 95% 95% - - Water expenses - Aero 0.21 0.22 0.17 - - 0.60 9.2.51 The Authority proposes to consider the actual expense incurred as submitted by MADC for FY 2022-23. 9.2.52 The Authority notes that MADC has not considered water expenses post FY 2024-25 for the following reasons as mentioned in their letter. “Water pond completion is projected for Dec’24. Accordingly, the water withdrawal charges will continue till the commencement of operations at the pond.” 9.2.53 Based on the above assumption, the projection for FY 2024-25 is made for 9 months only considering that the water pond will be operational by Dec’24. Consequently, from Jan’25 the water withdrawal charges have not been projected by MADC. 9.2.54 However, based on the Authority’s proposal to postpone the capitalization of water pond to Dec’25, the Authority has retained the water expense submission by MADC until FY 2024-25. For FY 2025-26, the Authority has applied an inflationary increase on the FY 2024-25 amount and pro-rated for 9 months assuming capitalization of water pond in Dec’25. 9.2.55 With respect to the Y-o-Y growth rate, the Authority proposes to consider the increase towards inflationary effect as per Table 100 as against the 5% claimed by MADC. The Authority also proposes to apportion the water expenses into Aeronautical and Non-Aeronautical based on the Gross Block Ratio as per Table 105. 9.2.56 The details of water expenses claimed by MADC & proposed by the Authority are as given below: Table 117: Water expenses claimed by MADC and proposed by the authority for the First Control Period (₹ in crores) Particulars Ref. FY 23* FY 24 FY 25 FY 26 FY 27 Total As per MADC Revised Water expense – Aero A 0.21 0.22 0.17 - - 0.60 (Table 116) As per the Authority Water expense proposed by the B 0.22 0.22 0.22 0.17 - 0.83 Authority Difference C=B-A 0.01 - 0.05 0.17 - 0.23 * The expense for FY 23 is based on actual figure for the year. G. Water Withdrawal Expenses Table 118: Water Withdrawal charges claimed by MADC for the First Control Period (₹ in crores) Particulars FY 23 FY 24 FY 25 FY 26 FY 27 Total Water Withdrawal Charges - 1.58 2.05 2.57 4.25 10.45 Allocation Ratio - 95% 95% 95% 95% Water Withdrawal Charges - Aero - 1.50 1.95 2.44 4.04 9.93 No. of consumption units (in lakhs) 9.00 11.83 14.66 17.50 27.5 Consultation Paper No. 02/2024-25 Page 98 of 130OPERATING & MAINTENANCE (O&M) EXPENSES FOR THE FIRST CONTROL PERIOD Particulars FY 23 FY 24 FY 25 FY 26 FY 27 Total Y-o-Y Growth in consumption Units - 31% 24% 19% 57% 9.2.57 MADC has projected the Water Withdrawal Expenses by considering an expense of ₹ 1.58 crores in FY 2023-24 and increasing Y-o-Y by 5% for the remaining tariff years of the First Control Period. The Authority notes that MADC has not incurred any actual water withdrawal charges for FY 2022-23. 9.2.58 The Authority notes that to arrive at the above numbers for the first control period, MADC has projected a base of 9 lakh cubic meter units for FY 2022-23. Additionally, MADC has estimated increase in units of 31% in FY 2023-24, 24% in FY 2024-25, 19% in FY 26, and 57% in FY 27. Based on discussion it was noted that these projections were based on MADC’s internal estimates with regard to traffic and construction of NITB. 9.2.59 As indicated in above para 9.2.49, MADC has revised their estimate via letter dated 5th January 2024 on the assumption that the water pond will be commissioned in December 2024. Hence the revised projection contains projections for 3 months in FY 2024-25 and 12 months each for FY 2025-26 and FY 2026-27. Table 119: Revised Water Withdrawal Expenses projected by MADC (₹ in crores) Particulars FY 23 FY 24 FY 25 FY 26 FY 27 Total Water Withdrawal Charges - - 0.02 0.15 0.23 0.40 Allocation Ratio - - 95% 95% 95% - Water Withdrawal Charges – Aero - - 0.02 0.14 0.22 0.38 Consumption in cubic metres - 64,006 76,807 1,21,314 1,80,222 4,42,349 Water Cost per cubic metre - 11.00 11.55 12.13 12.73 - Y-o-Y increase in Water Cost per unit - 5% 5% 5% 5% - 9.2.60 The Authority also notes that Water usage was estimated at 488 cubic meters per day for a period of three months. This calculation was made with the anticipation of a new pond being constructed by December 2024, and its utilization planned accordingly. The Authority has reviewed this demand based on the assumptions given by MADC and found them to be reasonable, in line with the traffic projections for First Control Period. 9.2.61 However, the Authority as indicated in para 5.3.49 proposes to capitalize the pond only in Dec’25 – FY 2025-26. Hence, the Authority proposes to take only 3 months proportionate cost for FY 2025-26 as proposed by MADC (revised). For FY 2026-27, the Authority proposes to consider the cost as proposed by MADC (revised). 9.2.62 With respect to the Y-o-Y growth rate claimed by AO, the Authority proposes the increase towards inflationary effect as per Table 100. The Authority also proposes to apportion the water withdrawal expenses into Aeronautical and Non-Aeronautical based on the Gross Block Ratio as per Table 105. Table 120: Water withdrawal expenses projected by MADC and proposed by the authority for the First Control Period (₹ In crores) Particulars Ref. FY 23 FY 24 FY 25 FY 26 FY 27 Total As per MADC Revised Water withdrawal expense – A - - 0.02 0.14 0.22 0.38 Aero (Table 119) As per the Authority Consultation Paper No. 02/2024-25 Page 99 of 130OPERATING & MAINTENANCE (O&M) EXPENSES FOR THE FIRST CONTROL PERIOD Particulars Ref. FY 23 FY 24 FY 25 FY 26 FY 27 Total Water withdrawal expense proposed by B - - - 0.04 0.22 0.25 the Authority Difference C=B-A - - -0.02 -0.11 - -0.13 H. Repair and Maintenance Expenses: 9.2.63 MADC has submitted the following Repair and Maintenance Expense for the First Control Period: Table 121: Repair and maintenance expense claimed by MADC for First Control Period (₹ In crores) Particulars Ref. FY 23* FY 24 FY 25 FY 26 FY 27 Total Total R&M expense projected by MADC A 3.95 2.14 3.21 6.08 8.41 23.79 Allocation Ratio B 95% 95% 95% 95% 95% R&M Expense – Aero projected by C=A*B 3.75 2.03 3.05 5.78 7.99 22.60 MADC 9.2.64 The Authority examined the expenses towards repair and maintenance and noted that the same had been projected towards Civil, Terminal, Airside, Vehicle and Others. 9.2.65 The amount claimed by MADC works to 1-2% of the Opening RAB of the respective financial year as shown in table below: Table 122: Repair and maintenance expense claimed by MADC as a percentage of opening RAB as proposed by the Authority (₹ in crores) Particulars Ref. FY 23 FY 24 FY 25 FY 26 FY 27 Total Opening RAB as considered by the Table 151.48 142.15 161.95 220.21 316.27 Authority (A) 94 R&M Expense – Aero as claimed by Table 3.75 2.03 3.05 5.78 7.99 22.60 MADC (B) 121 R&M Expense as a percentage of 2.48% 1.43% 1.88% 2.62% 2.53% Opening RAB (C=B/A) 9.2.66 The Authority notes that the amount claimed by MADC is lower than 6% of Opening RAB (net Block of Assets) for the respective tariff years as benchmarked in other Airports by the Authority. Therefore, the Authority proposes to consider the repair and maintenance expenses as submitted by MADC for the First Control Period. 9.2.67 The Authority has re-classified expenses pertaining to PAPI Maintenance which were claimed by MADC in Airport Operating Expenses amounting to ₹ 0.22 Crores in FY 2022-23 and considered as 100% Aeronautical expenses. With respect to the Y-o-Y growth rate claimed by AO, the Authority proposes the increase the same based on inflation rates as detailed in Table 100. 9.2.68 The details of the repair & maintenance claimed by AO & and proposed by the Authority is as given below: Table 123: Repair and maintenance expenses claimed by MADC and proposed by the authority for the First Control Period (₹ in crores) Particulars Ref. FY 23* FY 24 FY 25 FY 26 FY 27 Total As per MADC R&M Expenses – Aero A 3.75 2.03 3.05 5.78 7.99 22.60 (Table 121) Consultation Paper No. 02/2024-25 Page 100 of 130OPERATING & MAINTENANCE (O&M) EXPENSES FOR THE FIRST CONTROL PERIOD Particulars Ref. FY 23* FY 24 FY 25 FY 26 FY 27 Total As per the Authority Aero R&M Expenses B 3.75 2.03 3.05 5.78 7.99 22.60 R&M PAPI Maintenance (re-classified) C 0.22 0.22 0.23 0.23 0.24 1.14 Total Aeronautical R&M Expenses - D=B+C 3.97 2.25 3.28 6.01 8.23 23.74 Proposed by the Authority Difference# E=D-A 0.22 0.22 0.23 0.23 0.24 1.14 * The expense for FY 23 is based on actual figure for the year. #The repair and maintenance expense proposed by the Authority is higher on account of PAPI maintenance re-classified into R&M expenses from Airport Operating Expenses. I. Runaway Re-carpeting Expenses: 9.2.69 MADC submitted that an amount of ₹ 25 Crores is projected towards capital expenditure on runway recarpeting and taxiway works and that this will be incurred during FY 2023-24 and FY 2024-25. (₹ 20 Cr. in FY 2023-24 & ₹ 5 Cr. in FY 2024-25). 9.2.70 As per the DGCA report on surveillance inspection, the following is observed – “Runway surface condition found deteriorated in the entire stretch of runway. Sand patch test also failed at many places. Operator to submit short term and long-term mitigation plan”. In light of the DGCA observation, MADC thereafter submitted the work proposal to AAI for re-carpeting. However, as of December 2023 the work of re-carpeting is yet to commence. 9.2.71 Based on the revised submission as detailed in para 5.2.7 , MADC in its letter dated 22nd March 2024, has submitted that runway recarpeting costs are now estimated at ₹ 61.68 Crores (all inclusive). MADC has also submitted the MOU that it has entered with AAI dated 7th December 2023 as a basis for this cost estimation. MADC has also clarified that ₹ 61.68 Crores is comprised of ₹ 48.88 Crores as the base cost which is then added with 7% departmental costs and 18% GST as agreed in the MOU. 9.2.72 The Authority notes that the date of the MOU is 7th December 2023 and the MOU stipulates that the work will be completed within 12 month of issue of Work Order. The work order has not been made available to the Authority. The Authority expects that the completion of work relating to recarpeting of Runway in FY 2025-26. 9.2.73 The Authority notes that MADC has submitted that the Pavement Classification Number (PCN) value of the runway is not likely to increase post implementing the runway recarpeting work. Due to no increase in PCN on account of re-carpeting work being proposed by MADC, the Authority proposes to consider the cost of re-carpeting of runway and taxiway as an Operating and Maintenance Expenses in FY 2025- 26 at a total revised cost of ₹ 61.68 Crores, which will be amortized over a period of 5 years commencing from FY 2025-26 (i.e. ₹ 12.34 Crores in each FY). The Authority also proposes a return equal to FRoR to be provided on the unamortized portion of the runway recarpeting expenses. Computation for the same is as follows: Table 124: Return on unamortized portion of Runway recarpeting expenses proposed by the Authority for Shirdi International Airport for the First Control Period (₹ in crores) Particulars Ref FY23 FY24 FY25 FY26 FY27 Total Opening Balance A - - - - 49.34 Runway recarpeting expenses estimated to B 61.68 - 61.68 be incurred during the year Runway recarpeting expenses amortized C 12.34 12.34 24.67 Consultation Paper No. 02/2024-25 Page 101 of 130OPERATING & MAINTENANCE (O&M) EXPENSES FOR THE FIRST CONTROL PERIOD Particulars Ref FY23 FY24 FY25 FY26 FY27 Total during the year Closing Balance D=A+B-C - - - 49.34 37.01 FRoR (Refer para 7.2.4) E 9.00% 9.00% 9.00% 9.00% 9.00% Return on unamortised portion of runway F=A*E - - - - 4.44 4.44 recarpeting expenses Table 125: Total Runway recarpeting Expenses for the First Control Period as proposed by the Authority for Shirdi International Airport (₹ in crores) Particulars Ref FY23 FY24 FY25 FY26 FY27 Total As per MADC Runway Re-carpeting Cost A - - - 61.68 - 61.68 As per the Authority Runway recarpeting costs B - - - 12.34 12.34 24.67 Return on unamortised portion of C - - - - 4.44 4.44 recarpeting expenses Total runway recarpeting expenses proposed by the D=B+C - - - 12.34 16.78 29.11 Authority Difference E=D-A - - - -49.34 16.78 -32.61 9.2.74 Considering the changes above, the Authority has recalculated the aeronautical operating and maintenance expenditure for the First Control Period as follows: Table 126: Aeronautical Operating and Maintenance expenses proposed by the Authority for the First Control Period (₹ in crores) Particulars Ref FY 23 FY 24 FY 25 FY 26 FY 27 Total As per MADC Total Aeronautical O&M Expenses A 17.01 19.75 22.16 30.44 38.67 128.03 As per the Authority Administration & General Exp. B 0.65 0.64 0.66 0.69 1.07 3.71 (Table 107) Airport Operating Expenses C 1.67 1.65 1.73 1.81 1.91 8.77 (Table 110) License Fees (Table 111) D 0.03 0.03 0.03 0.03 0.03 0.16 Employee Cost (Table 113) E 5.20 5.51 5.84 6.19 9.37 32.10 Power Expenses (Table 114) F 1.78 1.77 1.83 1.89 2.95 10.23 Water Expenses (Table 117) G 0.22 0.22 0.22 0.17 - 0.83 Water Withdrawal Expenses (Table H - - - 0.04 0.22 0.25 120) Repair & Maintenance (Table 123) I 3.97 2.25 3.28 6.01 8.23 23.74 Runaway Re-carpeting (Table 125) J - - - 12.34 16.78 29.11 Total Aeronautical O&M Expenses K=Sum(B:J) 13.52 12.08 13.59 29.17 40.55 108.91 Difference L=K-A -3.49 -7.67 -8.57 -1.26 1.88 -19.12 9.2.75 As can be seen above, the Authority proposes a total O&M expense for the First Control Period amounting to ₹ 108.91 crores as against ₹ 128.03 crores submitted by MADC. The difference in O&M Expenses as per the Authority vis-à-vis MADC is mainly due to the following adjustments, revisions and rationalization in O&M expenses carried out by the Authority: Consultation Paper No. 02/2024-25 Page 102 of 130OPERATING & MAINTENANCE (O&M) EXPENSES FOR THE FIRST CONTROL PERIOD • Exclusion of expenses related to legal fees, rationalization of consultancy charges and provision of additional increase of 100% in A&G expenses amounting to ₹ 0.95 crores due to increase in Terminal Building area in FY 2026-27. • Exclusion of expenses related to CNS/ ATM & outsourcing of vehicle expenses (CNS) amounting to ₹ 21.94 crores in Airport Operating Expenses. • Rationalization of employee head count and resulting employee cost amounting to ₹ 14.55 crores. • Adjustment of power recovery and rationalization of additional increase of 100% in power expenses amounting to ₹ 2.01 crores. • Reduction in water expenses due to revised submission by MADC amounting to ₹ 0.56 crores. • Reduction in water withdrawal expenses due to revised submission by MADC amounting to ₹ 9.55 crores. • Runway recarpeting expenses shifted from RAB to Operating Expenses (₹ 29.11 crores). • Re-allocation of the expenses into aeronautical and non-aeronautical expenses. • Revision of Y-o-Y growth rates of various expenses as per the Inflation rates proposed by AERA. 9.2.76 The Authority expects MADC to bring in efficiencies in the incurrence of O&M expenses and cost relatedness for the benefit of airport users and in line with AERA Guidelines & International Civil Aviation Organization (ICAO) Principles relating to airport user charges. 9.3 Authority’s proposal regarding Operating and Maintenance Expenses for the First Control Period Based on the material before it and on its examination, the Authority proposes the following with regard to O&M expenses for the First Control Period: 9.3.1 To consider Aeronautical O&M Expenses for the First Control Period as per Table 126. 9.3.2 To consider the True up of O&M expenses incurred by MADC during the First Control Period subject to evaluation of reasonableness and efficiency, at the time of tariff determination for the next Control Period. Consultation Paper No. 02/2024-25 Page 103 of 130NON-AERONAUTICAL REVENUE (NAR) FOR THE FIRST CONTROL PERIOD 10 NON-AERONAUTICAL REVENUE (NAR) FOR THE FIRST CONTROL PERIOD 10.1 MADC’s submission regarding Non-Aeronautical Revenue for the First Control Period 10.1.1 MADC’s submission on Non-Aeronautical Revenue estimation comprises the following: • Revenue related to existing terminal building • Revenues estimated due to extension of existing terminal building • Revenues arising from New Integrated Terminal Building (NITB) that is proposed to be commissioned in FY 2025-26. (All Non-Aeronautical Revenue arising from new terminal building have been projected for FY 2026-27 by MADC) 10.1.2 MADC has considered the following streams of Non-Aeronautical Revenue in its submission under each category: Table 127: Streams of Non-Aeronautical Revenue projected by MADC for the First Control Period Existing Terminal Extension to Existing New Integrated Streams of Revenue Building Terminal Building Terminal Building Area (Sq.m.) 2,750 2,250 53,349 License Fee – Airlines    License Fee – Concessionaire    Advertisement    Taxi Rentals    Food Court and Utility Block    Miscellaneous Income    10.1.3 In its submission for the First Control Period, MADC has considered actual non-aeronautical revenue for FY 2022-23 and projections for the period from FY 2023-24 to FY 2026-27, as detailed below: Table 128: MADC’s Submission on Non-Aeronautical Revenue for Shirdi International Airport for the First Control Period (₹ in crores) Particulars FY23 FY24 FY25 FY26 FY27 Total Existing Terminal License Fee - Airlines 0.76 0.84 0.92 1.02 1.12 4.66 License Fee - Concessionaire 0.69 0.73 0.79 0.85 0.91 3.96 Advertisement - 0.42 0.44 0.46 0.48 1.80 Taxi Rentals 0.01 - - - - 0.02 Miscellaneous Income 0.41 - - - - 0.41 Total - A 1.87 1.99 2.15 2.33 2.51 10.85 Extension to Existing Terminal License Fee - Airlines - 0.17 0.76 0.83 0.91 2.67 License Fee - Concessionaire - 0.15 0.65 0.69 0.75 2.24 Advertisement - 0.10 0.44 0.46 0.48 1.48 Miscellaneous Income - 0.03 0.14 0.15 0.17 0.49 Total - B - 0.45 1.99 2.13 2.31 6.88 New Terminal License Fee - Airlines - - - - 7.54 7.54 License Fee - Concessionaire - - - - 10.05 10.05 Advertisement - - - - 3.83 3.83 Consultation Paper No. 02/2024-25 Page 104 of 130NON-AERONAUTICAL REVENUE (NAR) FOR THE FIRST CONTROL PERIOD Particulars FY23 FY24 FY25 FY26 FY27 Total Miscellaneous Income - - - - 1.76 1.76 Revenue from Food Court and Utility - - - - 0.53 0.53 Block Total - C - - - - 23.71 23.71 Total NAR (A+B+C) 1.87 2.44 4.14 4.46 28.53 41.44 10.1.4 The growth rates assumed by MADC has been presented in the table below: Table 129: Y-o-Y Growth Rate assumed by MADC for Non-Aeronautical Revenue for the First Control Period Particulars FY23 FY24 FY25 FY26 FY27 Existing Terminal License Fee - Airlines - 10.00% 10.00% 10.00% 10.00% License Fee - Concessionaire - 7.50% 7.50% 7.50% 7.50% Advertisement - - 5.00% 5.00% 5.00% Taxi Rentals - - - - - Miscellaneous Income - - - - - Extension to Existing Terminal License Fee – Airlines - - 10.00% 10.00% 10.00% License Fee - Concessionaire - - 7.50% 7.50% 7.50% Advertisement - - 5.00% 5.00% 5.00% Miscellaneous Income - - 8.85% 8.85% 8.85% 10.2 Authority’s examination regarding Non-Aeronautical Revenue for the First Control Period 10.2.1 The Authority sought information such as concessionaire wise breakup, ledger extracts, sample agreements etc., to review the nature of revenue and the assumptions made by MADC in its MYTP submission. 10.2.2 The Authority notes that, MADC, in its submission to the Authority vide letter dated 7th July 2023, has stated that it has cancelled the plan of extension of the existing terminal building as it is planning to manage with temporary seating lounge, cost for which has been projected as part of the Capital Expenditure in MADC’s revised MYTP submission. Hence the Authority proposes not to consider Non- Aeronautical Revenue amounting to ₹ 6.88 crores pertaining to extension of existing terminal building submitted by MADC, for arriving at the Non-Aeronautical Revenue and ARR for the First Control Period. 10.2.3 The Authority has further analyzed each head of income and its assumptions (Existing Terminal Building and NITB) and its analysis is presented in the following paragraphs. License Fee – Airlines & Concessionaires A. Existing Terminal 10.2.4 The Authority notes that, for FY 2022-23, MADC has segregated the total actual license fee received including license fee from airlines, other aeronautical concessionaires (CGF service providers) and non- aeronautical concessionaires of ₹ 1.45 crores in the proportion 53:47 between “License Fee – Airlines” and “License Fee – Concessionaires” respectively. This was done in line with the actual proportion of such heads to the total license fee in FY 2021-22. Consultation Paper No. 02/2024-25 Page 105 of 130NON-AERONAUTICAL REVENUE (NAR) FOR THE FIRST CONTROL PERIOD 10.2.5 The Authority further notes that MADC has projected the “License Fee – Airlines” at an escalation of 10% p.a. and projected the “License Fee – Concessionaires” at an escalation of 7.50% p.a., with FY 2022-23 as the base (as indicated in para 10.2.4). 10.2.6 The Authority sought the party wise breakup of the license fee from MADC for FY 2022-23. From the breakup provided by MADC, the Authority notes that the following is the actual classification for FY 2022-23: Table 130: Comparison of License fee for FY23 as provided by MADC and as proposed by the Authority (₹ in crores) FY23 Classification Particulars Ref. As per As per the As per the As per MADC MADC Authority Authority License Fee - Airlines A 0.76 0.41 Non-Aeronautical Aeronautical License Fee - Refueller B - 0.66 - Aeronautical License Fee - Ground Handling C - 0.01 - Aeronautical License Fee – Concessionaires D 0.68 0.26 Non-Aeronautical Non-Aeronautical License Fee - Car Parking E 0.10 - Non-Aeronautical F=A+B+C Total 1.44 1.44 +D+E 10.2.7 The Authority, in line with its decision taken in other Airports, proposes to consider the license fee from airlines and other aeronautical concessionaires (CGF service providers) as aeronautical revenue and exclude the same from non-aeronautical revenue similar to that considered in other airports. 10.2.8 On analysis of sample agreements with two of the major non-aeronautical concessionaires forming part of item D of Table 130, the Authority notes that the escalation is at 10% p.a. Hence, the Authority proposes to project the license fee from non-aeronautical concessionaires at an escalation of 10% p.a., with the actual license fee from concessionaires (excl. car parking) of ₹ 0.26 crores for FY 2022-23 as the base. With respect to license fee from car parking, the same has been dealt with separately in para 10.2.18 and 10.2.19. 10.2.9 Based on the above facts and analysis, the Authority proposes the following license fee from non- aeronautical concessionaires (excl. car parking) and corresponding escalation Y-o-Y for the First Control Period: Table 131: License fee from Non-Aeronautical Concessionaires from the existing terminal proposed by the Authority for the First Control Period (₹ in crores) Particulars FY23 FY24 FY25 FY26 FY27 Total License Fee – Concessionaire 0.26 0.28 0.31 0.34 0.37 1.56 Escalation Percentage - 10% 10% 10% 10% B. New Integrated Terminal Building (NITB) 10.2.10 The Authority notes that MADC has projected license fee from airlines for FY 2026-27 in the NITB based on area allocation of 1,875 Sq.m. and rental of ₹ 2,500 per Sq.m. per month with an escalation of 5% p.a. (Base Year - 2021). 10.2.11 Similarly, the Authority also notes that MADC has projected license fee from concessionaires for FY 2026-27 based on the area allocation of 1,250 Sq.m. and rental of ₹ 5,000 per Sq.m. per month at an escalation of 5% p.a. (Base Year 2021). Consultation Paper No. 02/2024-25 Page 106 of 130NON-AERONAUTICAL REVENUE (NAR) FOR THE FIRST CONTROL PERIOD 10.2.12 The Authority notes that as per the terminal building ratio of 95%:5% proposed by it for the First Control Period, the non-aeronautical portion (5%) of the total area of the proposed NITB of 53,349 Sq.m. works out to 2,667 Sq.m however, the Authority for its analysis has considered 2,600 Sq.m. The Authority proposes considering 2,600 Sq.m. as the area allocated for non-aeronautical concessionaires in the NITB. 10.2.13 Based on the Authority’s proposal to consider capitalization the NITB from 1st October 2026, the license fee is considered for a period of 6 months from Oct 26 to Mar 27. 10.2.14 As indicated in para 10.2.7, the Authority proposes to consider the license fee from airlines as aeronautical revenue and exclude the same from non-aeronautical revenue. 10.2.15 Based on the analysis of the agreement with one of the concessionaires of existing terminal, the Authority proposes that the rate of ₹ 5,000 per Sq.m. per month (Base Year 2021) adjusted for inflation as per Table 100 as a reasonable rate. 10.2.16 Based on the above facts and analysis, the Authority proposes the following license fee from non- aeronautical concessionaires for NITB for FY 2026-27: Table 132: License fee from non-aeronautical concessionaires proposed by the Authority for FY27 Particulars Ref. Unit Values Projected area for non-aeronautical portion out of total 53,349 A Sq.m. 2,600 Sq.m. of built-up area of new terminal building Inflation adjusted Rate per Sq.m. per month for FY27 B ₹ 6,453 No. of months C - 6 License Fee from non-aeronautical concessionaire for FY27 D = (A*B*C)/10^7 ₹ in Crores 10.07 10.2.17 The Authority’s proposal of license fee from non-aeronautical concessionaires for the First Control Period is as follows: Table 133: License fee from Non-Aeronautical Concessionaires from the new terminal proposed by the Authority for the First Control Period (₹ in crores) Particulars FY23 FY24 FY25 FY26 FY27 Total License Fee – Concessionaire - - - - 10.07 10.07 License Fee – Car Parking A. Existing Terminal 10.2.18 The Authority notes that MADC has not projected the license fee income from car parking for the First Control Period. On discussion with MADC, the Authority was informed that car parking is not concessioned out yet and the tender is floated only in December 2023. 10.2.19 However, the Authority proposes to consider the minimum reserved license fee of ₹ 1,00,000 per month for FY 2024-25 and escalation of 5% and 10% for FY 2025-26 and FY 2026-27 respectively based on the tender floated by MADC, as given below: Table 134: License fee from Car Parking from the existing terminal proposed by the Authority for the First Control Period (₹ in crores) Particulars FY23 FY24 FY25 FY26 FY27 Total License Fee – Car Parking 0.10 - 0.12 0.13 0.14 0.49 Consultation Paper No. 02/2024-25 Page 107 of 130NON-AERONAUTICAL REVENUE (NAR) FOR THE FIRST CONTROL PERIOD B. New Integrated Terminal Building (NITB) 10.2.20 The Authority notes that MADC has not projected any revenue from car parking for the new terminal building. Since the same has not been tendered yet, the Authority proposes not to consider any revenue from car parking for the new terminal for the First Control Period. However, the Authority proposes to true up the same based on actual revenue in the First Control Period at the time of determination of tariff for the Second Control Period. Revenue from Advertising A. Existing Terminal 10.2.21 The Authority notes that MADC has projected revenue from advertising considering a revenue of ₹ 300 per Sq.ft. per month for 1,000 Sq.ft. for existing terminal, at an inflation of 5% p.a. (Base Year 2021). 10.2.22 On discussion with MADC, the Authority is informed that advertising space is not concessioned yet, however the tender has been floated for the same in December 2023. Hence, the Authority proposes to consider the minimum reserved license fee of ₹ 5,00,000 per month and escalation of 10% annually based on the tender floated by MADC. Considering that the tender had been floated only in Q3 of FY 2023-24, the revenues have been projected from FY 2024-25 only. 10.2.23 Based on the above facts, the Authority proposes the following revenue from advertising in existing terminal for the First Control Period: Table 135: Revenue from Advertising in the existing terminal proposed by the Authority for the First Control Period (₹ in crores) Particulars FY23 FY24 FY25 FY26 FY27 Total Advertising Revenue - - 0.60 0.66 0.73 1.99 B. New Integrated Terminal Building (NITB) 10.2.24 The Authority notes that MADC has projected revenue from advertising based on ₹ 300 per Sq.ft. per month (Base Year 2021) for 6,000 Sq.ft. in NITB, together with an escalation of 10% p.a. year on year for FY 2026-27. 10.2.25 The Authority notes that the area of 6,000 Sq.ft. for advertising space in the new terminal building is reasonable to the total proportion of area of NITB considering a built-up area of 53,349 Sq.m. as per the area projected by MADC. Since the NITB capitalization proposed only in the second half of FY 2026- 27, only 6 months’ revenue is projected for advertising revenue. 10.2.26 The Authority notes that the revenue per sq ft in the contract in the existing terminal building works out to ₹ 500 per Sq.ft. per month (i.e. ₹ 5,00,000 of minimum guarantee for 1,000 Sq.ft.). The Authority estimates that the contract for NITB when negotiated will at least be ₹ 500 per Sq.ft. Hence, the Authority proposes to estimate advertising revenue in NITB for FY 2026-27 at ₹ 550 (post adjustment of inflation as per Table 100 considering base year as FY24) for 6 months for 6,000 Sq.ft. 10.2.27 Based on the above facts and analysis, the Authority proposes the following advertising revenue in NITB for FY 2026-27: Consultation Paper No. 02/2024-25 Page 108 of 130NON-AERONAUTICAL REVENUE (NAR) FOR THE FIRST CONTROL PERIOD Table 136: Advertising revenue in new terminal building proposed by the Authority for FY27 Particulars Ref. Unit Values Area of advertising space in new terminal building A Sq.ft. 6,000 Unit rate B ₹ 500 C = B*(1+Inflation Rate as per Inflation adjusted Rate per Sq.ft. per month for FY27 ₹ 550 Table 100) No. of months D - 6 License Fee from non-aeronautical concessionaire for ₹ in E = (A*C*D)/10^7 1.98 FY27 Crores 10.2.28 Based on the above, the Authority proposes to consider the advertisement revenue for the First Control period from new terminal as follows: Table 137: Revenue from advertising in the new terminal proposed by the Authority for the First Control Period (₹ in crores) Particulars FY23 FY24 FY25 FY26 FY27 Total Advertising Revenue - - - - 1.98 1.98 Taxi Rentals A. Existing Terminal 10.2.29 The Authority notes that MADC has considered the actual taxi rentals for FY 2022-23 and has not made any projections from FY 2023-24 to FY 2026-27 as it has not entered into any contract with any taxi operator and the revenue in the nature of taxi rentals has ceased to accrue from May 2022. 10.2.30 However, the Authority proposes to consider the revenue from taxi rentals as per actuals for the year ending FY 2022-23 and project the revenue from taxi rentals from FY 2023-24 to FY 2026-27 based on the inflation rates as per Table 100, which is as follows: Table 138: Taxi Rentals from the existing terminal proposed by the Authority for the First Control Period (₹ in crores) Particulars FY23 FY24 FY25 FY26 FY27 Total Taxi Rentals 0.01 0.01 0.02 0.02 0.02 0.08 B. New Integrated Terminal Building (NITB) 10.2.31 The Authority notes that MADC has not projected any taxi rental revenue when NITB becomes operational. 10.2.32 The Authority proposes to not consider any taxi rental for FY 2026-27 based on the fact that the tendering process for the same has not been initiated considering that the NITB is proposed to be considered in FY 2026-27. However, the Authority proposes to true up the same based on actual revenues for the First Control Period at the time of determination of tariff or the Second Control Period. Miscellaneous Income A. Existing Terminal 10.2.33 The Authority notes that MADC has not projected any miscellaneous income from FY 2023-24 onwards. The Authority sought the breakup of the miscellaneous income for FY 2022-23. Based on the breakup Consultation Paper No. 02/2024-25 Page 109 of 130NON-AERONAUTICAL REVENUE (NAR) FOR THE FIRST CONTROL PERIOD received from MADC, the Authority notes that miscellaneous income primarily consists of recovery of electricity charges and interest income from FD. 10.2.34 The Authority notes that MADC has considered the recovery of electricity of ₹ 0.02 crores out of total recovery of ₹ 0.12 crores as reduction from O&M Expenses. The Authority proposes to consider the remaining ₹ 0.10 crores also as reduction from O&M Expenses. Accordingly, the Authority proposes to consider recovery of electricity expenses as a deduction from O&M Expenses of the respective years and exclude the same from Non-Aeronautical Revenue. 10.2.35 The Authority notes that the Fixed deposits are proposed to be deployed for funding the Capital Expenditure. Hence, no interest income has been projected currently. The same will be considered based on actuals at the time of true up, during determination of tariff for the second control period. 10.2.36 Based on the above analysis, the Authority proposes the following miscellaneous income from existing terminal for the First Control Period: Table 139: Miscellaneous from the existing terminal proposed by the Authority for the First Control Period (₹ in crores) Particulars FY23 FY24 FY25 FY26 FY27 Total Miscellaneous Income 0.29 - - - - 0.29 B. New Integrated Terminal Building (NITB) 10.2.37 The Authority notes that MADC has projected miscellaneous income at 10% of total license fee together from airlines and concessionaires in FY 2026-27, amounting to ₹ 1.76 crores. The nature of such miscellaneous income in MADC’s MYTP submission, over and above lease rentals and other heads considered is not explained. Considering that NITB is only proposed to be operational for 6 months, the Authority proposes to consider the miscellaneous income considered by MADC and true up the same at the time of determination of tariff for the Second Control Period. Revenue from Food Court and Utility Block A. New Integrated Terminal Building (NITB) 10.2.38 The Authority notes that MADC has projected revenue from Food Court and Utility Block in the NITB amounting to ₹ 0.53 crores. The Authority notes that MADC plans to have a food court and utility block as per the master plan for NITB. 10.2.39 The Authority notes that the exact area of the food court and utility block in the new terminal building is yet to be firmed up. However, the Authority proposes to consider the amount of revenue projected by MADC for the First Control Period and true up the same based on actual revenues for the First Control Period at the time of determination of tariff for Second Control Period. 10.2.40 Based on the above analysis and facts, the Authority proposes the following Non-Aeronautical Revenue for the First Control Period: Consultation Paper No. 02/2024-25 Page 110 of 130NON-AERONAUTICAL REVENUE (NAR) FOR THE FIRST CONTROL PERIOD Table 140: Non-Aeronautical Revenue for Shirdi International Airport proposed by the Authority for the First Control Period (₹ in crores) Table/Para Particulars Ref. FY23 FY24 FY25 FY26 FY27 Total Ref As per MADC Non-Aeronautical Revenue Table 128 A 1.87 2.44 4.14 4.46 28.53 41.44 As per the Authority Existing Terminal License Fee – Table 131 B 0.26 0.28 0.31 0.34 0.37 1.56 Concessionaire License Fee – Car Parking Table 134 C 0.10 - 0.12 0.13 0.14 0.49 Advertising Revenue Table 135 D - - 0.60 0.66 0.73 1.99 Taxi Rentals Table 138 E 0.01 0.01 0.02 0.02 0.02 0.08 Miscellaneous Income Table 139 F 0.29 - - - - 0.29 G=Sum Total I - Existing Terminal 1.26 4.41 (B:F) 0.66 0.29 1.05 1.15 New Terminal License Fee – Table 133 H - - - - 10.07 10.07 Concessionaire Advertising Revenue Table 137 I - - - - 1.98 1.98 Miscellaneous Income 10.2.37 J - - - - 1.76 1.76 Revenue from Food Court 10.2.38 K - - - - 0.53 0.53 and Utility Block L=Sum Total II – New Terminal - - - - (H:K) 14.34 14.34 Non-Aeronautical Revenue proposed by the M=G+L 0.66 0.29 1.05 1.15 15.60 18.75 Authority Difference * N=M-A -1.21 -2.15 -3.09 -3.31 -12.93 -22.69 10.2.41 As can be seen above, the Authority proposes to consider the Non-Aeronautical Revenue for the First Control Period amounting to ₹ 18.75 crores as against ₹ 41.44 crores submitted by MADC. The difference is mainly due to the following adjustments, revisions, and rationalization carried out by the Authority: • License fee – Airlines considered by MADC as Non-Aeronautical Revenue whereas the Authority proposes to consider the same as Aeronautical Revenue amounting to ₹ 12.20 crores. • Exclusion of revenue pertaining to extension of existing terminal by MADC, not considered by the Authority amounting to ₹ 6.88 crores (refer para 10.2.2). • Reduction in revenue proposed by the Authority for License Fees collected from Concessionaires amounting to ₹ 2.38 crores due to various factors, such as, consideration of actual Y-o-Y escalation rates as per contracts by the Authority and shifting of NITB capitalisation to FY 2026-27 (leading to projections non-aero revenue only for 6 months in FY 2026-27 against full year revenue considered by MADC). • Reduction in revenue from advertisements in respect of New Terminal Building proposed by the Authority amounting to ₹ 1.66 crores, due to various factors (i.e. actual escalation rates taken by the Authority on based on tenders floated by MADC and shifting of capitalisation of NITB to second half of FY 2026-27, leading to revenue projections only for 6 months). Consultation Paper No. 02/2024-25 Page 111 of 130NON-AERONAUTICAL REVENUE (NAR) FOR THE FIRST CONTROL PERIOD • Inclusion of revenue proposed by the Authority for Car Parking towards existing terminal from FY 2025-26 based on tenders floated by MADC amounting to ₹ 0.39 crores. 10.3 Authority’s proposal regarding Non-Aeronautical Revenue for the First Control Period Based on the material before it and its analysis, the Authority proposes the following with regard to Non- Aeronautical Revenue for the First Control Period: 10.3.1 To consider License Fee from airlines and aeronautical concessionaires (CGF Services) as Aeronautical Revenues. 10.3.2 To consider Non-Aeronautical Revenue for the First Control Period in respect of the Shirdi International Airport as per Table 140. 10.3.3 To true up the non-aeronautical revenues for the First Control Period at the time of determination of tariff for the Second Control Period, subject to evaluation of efficiency and reasonableness. Consultation Paper No. 02/2024-25 Page 112 of 130TAXATION FOR THE FIRST CONTROL PERIOD 11 TAXATION FOR THE FIRST CONTROL PERIOD 11.1 MADC’s submission regarding Taxation for the First Control Period 11.1.1 MADC has submitted the computation of income tax based on the PBT which is arrived at after considering aeronautical revenues, non-aeronautical revenues, total operating expenses and depreciation computed separately for the purpose of tax. The computation of income tax submitted by MADC is as follows: Table 141: Taxation submitted by MADC for Shirdi International Airport for the First Control Period (₹ in crores) Particulars Ref. FY23 FY24 FY25 FY26 FY27* Total Aeronautical Revenue A 8.77 6.09 8.21 15.5 - 38.52 Non-Aeronautical Revenue B 1.87 2.45 4.13 4.46 - 12.91 Total Revenue C=A+B 10.64 8.54 12.3 19.9 - 51.43 Total O&M Expenses D 17.9 20.8 23.3 32.1 - 94.08 EBITDA E=C-D -7.26 -12.3 -11 -12.1 - -42.7 Depreciation (ARR) F 10.52 13.2 18.4 39.9 - 82.05 EBIT G=E-F -17.78 -25.5 -29.4 -52.1 - -125 Interest Cost on Debt H - - - - - - Interest Cost on Working Capital I - - - - - - PBT J=G-H-I -17.78 -25.5 -29.4 -52.1 - -125 Add: Depreciation (ARR) F 10.52 13.2 18.4 39.9 59.9 142 Less: Depreciation for Taxation K 8 10.9 15 35.7 52.6 122.2 PBT for Taxation L=J+F-K -15.26 -23.2 -26 -47.9 7.33 -105 Loss Carried Forward (Opening) M -100.07 -115 -139 -164 -212 - New Loss N -15.26 -23.2 -26 -47.9 - -112 Set Off O - - - - 7.33 7.33 Loss Carried Forward (Closing) P=M+N+O -115.33 -139 -164 -212 -205 - Net Taxable Income Q - - - - - - Tax Rate Applicable R 34.94% 34.94% 34.94% 34.94% 34.94% - Tax (As per normal provisions) S=Q*R - - - - - - MAT Rate T 17.47% 17.47% 17.47% 17.47% 17.47% - MAT U=Q*T - - - - - - Tax Payable (Higher of S or U) - - - - - - *The Authority notes that in the MYTP submission of MADC, the PBT for FY27 is inadvertently taken as ‘0’ due to error in formula. However, the actual loss worked out separately by MADC for FY27 amounts to ₹ 46.46 crores. 11.2 Authority’s examination regarding Taxation for the First Control Period 11.2.1 The Authority notes that MADC has carried forward loss of ₹ 100.07 Crores from FY 2017-18 till the beginning of the First Control Period. The Authority also notes that MADC has submitted NIL tax for all the years of the First Control Period. 11.2.2 As stated in para 3.11.3, MADC has considered Shirdi Airport as a whole (including Non-Aeronautical Revenue, cost etc.) for the purpose of determining the aeronautical taxation. However, The Authority proposes to consider only the Aeronautical P&L for the purpose of arriving at the aeronautical taxation. Further, the Authority takes cognizance of the fact that Aeronautical Taxation is dependent upon the tariff rate card to be approved by the Authority for Shirdi International Airport for the current control period. Therefore, the Authority proposes to determine the Aeronautical taxes for the current control period after its examination of the Tariff Rate Card to be submitted by MADC for the current control Consultation Paper No. 02/2024-25 Page 113 of 130TAXATION FOR THE FIRST CONTROL PERIOD period (which is within 7 days from the issuance of this consultation paper), post the completion of stakeholders’ consultation process. 11.2.3 For the purposes of this consultation paper, the Authority proposes to consider the Aeronautical taxation as NIL for the First Control period for reasons stated in para 11.2.2. 11.3 Authority’s proposal regarding Taxation for the First Control Period Based on the material before it and its analysis, the Authority proposes the following with regard to Taxation for the First Control Period: 11.3.1 To consider the Taxation for the First Control Period for Shirdi International Airport as NIL as per para 11.2.3. 11.3.2 To true up the Aeronautical Tax amount, taking into consideration all the relevant facts, at the time of tariff determination for the Second Control Period. Consultation Paper No. 02/2024-25 Page 114 of 130QUALITY OF SERVICE FOR THE FIRST CONTROL PERIOD 12 QUALITY OF SERVICE FOR THE FIRST CONTROL PERIOD 12.1 MADC’s submission regarding Quality of Service for the First Control Period 12.1.1 MADC has not made any submissions related to Quality of Service as part of its MYTP submission for the First Control Period. MADC clarifies that they have not performed any ASQ Survey for Shirdi International Airport and are in the process of getting registered for evaluation. 12.2 Authority’s examination regarding Quality of Service for the First Control Period 12.2.1 The Authority notes that: • As per section 13 (1) (d) of the AERA Act, 2008, the Authority shall “monitor the set performance standards relating to quality, continuity and reliability of service as may be specified by the Central Government or any Authority authorized by it in this behalf.” • As per section 13(1)(a)(ii), the Authority is required to determine the tariff for Aeronautical services taking into consideration “the service provided, its quality and other relevant factors.” 12.2.2 The Authority notes that ACI World has developed an Airport Service Quality barometer that is released quarterly which enables airports worldwide to evaluate themselves against their competition and gain insights on enhancing customer experience. 12.2.3 The Authority notes that Shirdi International Airport is a relatively new airport therefore ASQ ratings were not available. The Authority would review the Quality-of-Service parameters based on the ASQ ratings achieved by Shirdi International Airport and would take action as appropriate at a later stage. Therefore, the Authority does not propose any adjustment in the tariff determination for the First Control Period on account of quality of services of Shirdi International Airport. 12.2.4 The Authority directs AO to conduct ASQ rating survey as is being carried out in other major airports and submit the same to the Authority. 12.3 Authority’s proposal regarding Quality of Service for the First Control Period Based on the material before it and its analysis, the Authority proposes the following regarding Quality of service for the First Control Period: 12.3.1 Not to consider any adjustment in the tariff determination for the First Control Period with regard to Quality of Services at Shirdi International Airport at this stage. Consultation Paper No. 02/2024-25 Page 115 of 130AGGREGATE REVENUE REQUIREMENT (ARR) FOR THE FIRST CONTROL PERIOD 13 AGGREGATE REVENUE REQUIREMENT (ARR) FOR THE FIRST CONTROL PERIOD 13.1 MADC’s submission regarding Aggregate Revenue Requirement (ARR) for the First Control Period 13.1.1 MADC has submitted ARR and UDF for the First Control Period as per the table below: Table 142: MADC’s submission regarding ARR and UDF for the First Control Period (₹ in crores) Particulars Ref. FY23 FY24 FY25 FY26 FY27 Total Average RAB A 138.81 214.26 320.56 608.00 841.12 FRoR B 9.85% 9.85% 9.85% 9.85% 9.85% Return on RAB C = A*B 13.68 21.11 31.59 59.92 82.89 209.19 Depreciation D 9.49 11.95 16.57 36.03 54.07 128.11 Amortization owing to land cost E 6.13 6.13 6.13 6.13 6.13 30.65 O & M Expenses F 17.01 19.76 19.12 30.44 38.67 125.00 Taxation G - - - - - - Less: 30% of Non-Aeronautical H 0.56 0.73 1.24 1.34 8.56 12.43 Revenue I = Net ARR 45.75 58.21 72.17 131.19 173.21 480.53 Sum(C:G)-H Additional revenue for initial J 278.70 - - - - years loss Total Forecasted ARR K = I+J 324.45 58.21 72.17 131.19 173.21 Discount Factor L 1.00 0.91 0.83 0.75 0.69 PV of Forecasted ARR M = K*L 324.45 52.99 59.80 98.95 118.93 655.12 Average Domestic UDF 2,690 Average International UDF 5,380 13.1.2 MADC has mentioned in its submission dated 3rd April 2023, that “the airport is proposing to work on a cost recovery model in the initial phase of operations and will eventually move to cost plus model once the traffic reaches the projected levels and operational efficiencies improve. MADC, thus proposes to charge a nominal UDF which will support the airport operations in the initial stage. The actual losses as per the building blocks will be trued-up in the subsequent control period.”. 13.2 Authority’s examination regarding Aggregate Revenue Requirement (ARR) for the First Control Period 13.2.1 The Authority’s various proposals regarding tariff determination exercise, based on examination/ review of regulatory building blocks, impact the computation of ARR and Yield. With respect to each element of the regulatory building blocks considered by MADC for computation of ARR and Yield as indicated in the Table 142, the Authority proposes to consider the regulatory building blocks as discussed in the previous chapters. 13.2.2 The Authority notes that Shirdi International Airport has a very low traffic volumes etc., which may not make the complete recovery of ARR possible, by way of Aeronautical charges. This will be evaluated in detail based on the Annual Tariff Proposal to be submitted by the Airport Operator. Determination of Aeronautical charges, including UDF, requires a delicate balance between cost recovery and its potential impact on air traffic demand. This balance is crucial for the financial viability of the airport and its ability to sustain operations while also ensuring that the tariffs remain competitive enough to attract and Consultation Paper No. 02/2024-25 Page 116 of 130AGGREGATE REVENUE REQUIREMENT (ARR) FOR THE FIRST CONTROL PERIOD retain airlines and passengers. Therefore, the Authority, based on the Tariff Rate Card to be submitted by MADC would decide the balance between cost recovery and its potential impact on air traffic demand. 13.2.3 In this regard, the Authority had drawn reference to the guiding principles issued by the International Civil Aviation Organization (“ICAO”) on charges for Airports and Air Navigation Services (ICAO DoC 9082), which lays down the main purpose of economic oversight which is to achieve a balance between the interest of Airports and the Airport Users. The said policy document also emphasizes balancing the interests of airports on one hand and aircraft operators, end users on the other, in view of the importance of the air transport system to States. This should be applied particularly during periods of economic difficulty. Therefore, the policy document recommends that States encourage increased cooperation between airports and aircraft operators to ensure that the economic difficulties facing them all are shared in a reasonable manner. 13.2.4 This may also be read in conjunction with the objectives of the National Civil Aviation Policy (NCAP) 2016, which intends to provide affordable and sustainable air travel for passengers/ masses. As per para 12 (c) of the NCAP, “In case the tariff in one particular year or contractual period turns out to be excessive, the Airport Operator and the Regulator will explore ways to keep the tariff reasonable and spread the excess amount over the future.” The above has also been conveyed by AERA vide its Order No. 14/2016-17 dated 12th January 2017. Air Freight Station (AFS) 13.2.5 The Authority notes the Policy Guidelines on ‘Air Freight Station’ (AFS) issued by MoCA in October 2014. This Policy shall create an off Airport Common User facility equipped with fixed installations of minimum requirements and offering services for handling International Air Cargo in the form of Air Freight Stations with a mandate to enable the Cargo Industry as follows: • Off-Airport common user facility equipped with fixed installations of minimum requirements and offering services for handling and temporary storage of import/ export goods, loaded and empty Unit Load Devices (ULD) and Cargo in bulk/ loose for outright export. • Create an enabling environment for promoting International Air Cargo operations by reaching out to hinterland regions of the Country besides de-congesting the congested Air Cargo terminals in some gateway International Airports that face high dwell time. • Authorizing some of the Inland Container Depots (ICD) to cater to the International Air Cargo operations, the existing facilities in these ICDs could be fully utilized. 13.2.6 The Authority notes that the above Policy Guidelines on AFS has larger national intent and it aims to strengthen and develop air cargo logistics in the Country and the same is expected to reduce the bottlenecks in air cargo logistics and help in ease of doing business, particularly for exporters. 13.2.7 The Authority directs MADC to submit a separate tariff rate in case the cargo is received from the approved AFS and factor it in the Tariff Rate Card. 13.2.8 The Authority also seeks comments from the stakeholders on application of tariff on AFS Cargo, as the Authority feels that the tariff on AFS Cargo should be significantly lesser than the tariff levied on the General Cargo (non-AFS cargo). Consultation Paper No. 02/2024-25 Page 117 of 130AGGREGATE REVENUE REQUIREMENT (ARR) FOR THE FIRST CONTROL PERIOD 13.2.9 The following table shows the proposed ARR as per the Authority. Table 143: ARR proposed by the Authority for the First Control Period (₹ in crores) Table Particulars Ref. FY23 FY24 FY25 FY26 FY27 Total Ref. Average RAB Table 94 A 146.82 152.05 191.08 268.24 637.56 FRoR B 9% 9% 9% 9% 9% RAB * FRoR - C = A*B 13.21 13.68 17.20 24.14 57.38 125.62 (+) Depreciation Table 93 D 9.75 9.85 12.74 17.24 43.81 93.39 (+) Return on Land Table 97 E 5.27 5.33 5.52 5.89 5.95 27.96 (+) Operating Table 126 F 13.52 12.08 13.59 29.17 40.55 108.91 Expenses (+) Taxation G - - - - - - H = Sum ARR - 41.75 40.94 49.05 76.44 147.69 355.88 (C:G) (+) PV of Under recovery of the period from 1st Table 48 I 17.74 - - - - 17.74 November 2021 to 31st March 2022 ARR - J = H+I 59.49 40.94 49.05 76.44 147.69 373.62 NAR Table 140 K 0.66 0.29 1.05 1.15 15.60 18.75 L= 30% of NAR - 0.20 0.09 0.32 0.35 4.68 5.64 K*30% Net ARR - M = J-L 59.29 40.85 48.73 76.09 143.01 367.98 Discount factor @ - N 1.00 0.92 0.84 0.77 0.71 9.00% PV of ARR - O= M*N 59.29 37.48 41.01 58.76 101.31 297.86 Sum of PV of ARR - P 297.86 Total passenger Table 62 Q 5.53 traffic (MPPA) Yield per passenger R=P/Q 538.42 (YPP) Total departing S 2.77 passenger traffic Yield per departing T=P/S 1,076.85 passenger 13.2.10 The Authority notes that, it is necessary to have the individual year-wise Tariff Card laying down the different aeronautical charges and the workings for the aeronautical revenues, in order to have a constructive stakeholder discussion and hence MADC is directed to submit the detailed Annual Tariff proposals in line with the ARR and Yield arrived at by the Authority within 7 days of issue of the Consultation Paper. 13.2.11 The Authority directs Airport Operator (MADC) to submit the Annual Tariff Proposal (Tariff Rate Card) within 7 days from issue of this Consultation Paper which will be put up for stakeholders’ consultation. Consultation Paper No. 02/2024-25 Page 118 of 130AGGREGATE REVENUE REQUIREMENT (ARR) FOR THE FIRST CONTROL PERIOD 13.3 Authority’s proposal regarding Aggregate Revenue Requirement (ARR) for the First Control Period Based on the material before it and based on its analysis, the Authority proposes the following with regard to ARR for the First Control Period: 13.3.1 To consider ARR for the First Control Period for Shirdi International Airport as per Table 143. 13.3.2 The Authority directs Airport Operator (MADC) to submit the Annual Tariff Proposal (Tariff Rate Card) within 7 days from issue of this Consultation Paper which will be put up for stakeholders’ consultation as par para 13.2.11. Consultation Paper No. 02/2024-25 Page 119 of 130SUMMARY OF AUTHORITY’S PROPOSALS PUT FORTH FOR STAKEHOLDERS’ CONSULTATION 14 SUMMARY OF AUTHORITY’S PROPOSALS PUT FORTH FOR STAKEHOLDERS’ CONSULTATION Chapter 2: Tariff Determination of Shirdi Airport 2.8.1 To consider the First Control Period in respect of Shirdi International Airport effective from FY 2022-23 to FY 2026-27. Chapter 3: Determination of Tariff for the period from 1st November 2021 to 31st March 2022 3.13.1 To consider the shortfall for the period from 1st November 2021 to 31st March 2022 to be carried forward to the First Control Period. 3.13.2 To consider Traffic as per Table 7. 3.13.3 To consider RAB and depreciation as per Table 16. 3.13.4 To consider FRoR as per para 3.7.6. 3.13.5 To consider Return on land as per Table 20. 3.13.6 To consider Aeronautical O&M Expenses as per Table 32. 3.13.7 To consider Non-Aeronautical Revenue as per Table 36. 3.13.8 To consider the Aeronautical Tax as per Table 47. 3.13.9 To consider the Aeronautical Revenue as per Table 40. 3.13.10 To consider under recovery of ₹ 17.74 crores as per Table 48 and adjust the same in the ARR for the First Control Period. Chapter 4: Traffic for the First Control Period 4.3.1 To consider the Passenger Traffic, ATM, Belly Cargo volume and Air Cargo volume for the First Control Period for Shirdi International Airport as per Table 62. 4.3.2 To true up the traffic volume (Passengers, ATM, Belly Cargo and Air Cargo) pertaining to the First Control Period, based on actual traffic, while determining the Tariff for Second Control Period. Chapter 5: Capital Expenditure (CAPEX), Depreciation and Regulatory Asset Base (RAB) for the First Control Period 5.6.1 To consider the aeronautical capital expenditure for the First Control Period as per Table 88 for Shirdi International Airport. 5.6.2 To consider RAB and depreciation for the First Control Period as per Table 94 for Shirdi International Airport. 5.6.3 To reduce (adjust) 1% of the uncapitalized project cost from the ARR in case any particular capital project is not completed /capitalized as per the approved capitalization schedule, as mentioned in para 5.3.78. The same will be trued up during the true up of the First control period at the time of determination of tariff for the next control period. 5.6.4 To True up the Capital expenditure, RAB and depreciation at the time of determination of Aeronautical Tariff in the next control period, based on evaluation of reasonableness and efficiency. Consultation Paper No. 02/2024-25 Page 120 of 130SUMMARY OF AUTHORITY’S PROPOSALS PUT FORTH FOR STAKEHOLDERS’ CONSULTATION Chapter 6: Return on Land for the First Control Period 6.3.1 To consider Return on Land for the First Control Period for Shirdi International Airport as per Table 97. Chapter 7: Fair Rate of Return (FRoR) for the First Control Period 7.3.1 To consider Fair Rate of Return of 9% for the First Control Period as explained in para 7.2.4. Chapter 8: Inflation for the First Control Period 8.3.1 To consider Inflation for the First Control Period for Shirdi International Airport as per Table 100. Chapter 9: Operating & Maintenance (O&M) Expenses for the First Control Period 9.3.1 To consider Aeronautical O&M Expenses for the First Control Period as per Table 126. 9.3.2 To consider the True up of O&M expenses incurred by MADC during the First Control Period subject to evaluation of reasonableness and efficiency, at the time of tariff determination for the next Control Period. Chapter 10: Non-Aeronautical Revenue (NAR) for the First Control Period 10.3.1 To consider License Fee from airlines and aeronautical concessionaires (CGF Services) as Aeronautical Revenues. 10.3.2 To consider Non-Aeronautical Revenue for the First Control Period in respect of the Shirdi International Airport as per Table 140. 10.3.3 To true up the non-aeronautical revenues for the First Control Period at the time of determination of tariff for the Second Control Period, subject to evaluation of efficiency and reasonableness. Chapter 11: Taxation for the First Control Period 11.3.1 To consider the Taxation for the First Control Period for Shirdi International Airport as NIL as per para 11.2.3. 11.3.2 To true up the Aeronautical Tax amount, taking into consideration all the relevant facts, at the time of tariff determination for the Second Control Period. Chapter 12: Quality of Service for the First Control Period 12.3.1 Not to consider any adjustment in the tariff determination for the First Control Period with regard to Quality of Services at Shirdi International Airport at this stage. Chapter 13: Aggregate Revenue Requirement (ARR) for the First Control Period 13.3.1 To consider ARR for the First Control Period for Shirdi International Airport as per Table 143. 13.3.2 The Authority directs Airport Operator (MADC) to submit the Annual Tariff Proposal (Tariff Rate Card) within 7 days from issue of this Consultation Paper which will be put up for stakeholders’ consultation as par para 13.2.11. Consultation Paper No. 02/2024-25 Page 121 of 130STAKEHOLDERS’ CONSULTATION TIMELINE 15 STAKEHOLDERS’ CONSULTATION TIMELINE 15.1.1 In accordance with the provision of Section 13(4) of the AERA Act, 2008, the proposals contained in the Chapter 14 – Summary of the Authority’s proposals read with the relevant discussion in the other chapters of the Paper is hereby put forth for Stakeholders’ Consultation. 15.1.2 For removal of doubts, it is clarified and explained that the contents of this Consultation Paper may not be construed as any Order or Direction by the Authority. The Authority shall pass an Order, in the matter, only after considering the submissions of the stakeholders in response hereto and by making such decisions fully documented and explained in terms of the provisions of the Act. 15.1.3 The Authority welcomes written evidence-based feedback, comments and suggestions from stakeholders on the proposals made in this Consultation Paper, latest by 18.07.2024. Secretary Airports Economic Regulatory Authority of India 3rd Floor, Udaan Bhawan Safdarjung Airport, New Delhi- 110003 Chairperson Consultation Paper No. 02/2024-25 Page 122 of 130ANNEXURE 16 ANNEXURE Annexure 1: Gross Value of Capital Additions as of 31st March 2022 – As proposed by the Authority 1A: Gross Value of “100% Aeronautical” Capital Additions as of 31st March 2022 Original Date of FY Asset Classification Description Amount of Classification Purchase Fixed Asset Furniture and Fixture without 10-05-2010 FY17 Security Cabins 0.09 Aeronautical trolley 29-08-2016 FY17 Plant and Machinery X-Ray Machine 0.32 Aeronautical 25-10-2016 FY17 Office Equipment Binocular 0.01 Aeronautical Bolero ZLX MH-17- 27-10-2016 FY17 Vehicle 0.10 Aeronautical AZ9634 X-Ray Baggage Inspection 07-12-2016 FY17 Plant and Machinery 0.15 Aeronautical system Furniture and Fixture without 07-12-2016 FY17 Passenger Baggage 0.06 Aeronautical trolley 31-03-2017 FY17 Vehicle Honda Splender 0.01 Aeronautical 31-03-2017 FY17 Office Equipment VHF Digital Base Station 0.01 Aeronautical 31-03-2017 FY17 Office Equipment Walkie Talkie 0.02 Aeronautical 31-03-2017 FY17 Plant and Machinery Airfield Crash Fire Tender 4.94 Aeronautical Furniture and Fixture without 04-05-2017 FY18 Check-in Counter 0.04 Aeronautical trolley Furniture and Fixture without 15-06-2017 FY18 S.S. Messege Frame 0.00 Aeronautical trolley Furniture and Fixture without 15-06-2017 FY18 S.S. Que Manager 0.02 Aeronautical trolley Furniture and Fixture without 01-08-2017 FY18 Barricades 0.01 Aeronautical trolley 03-08-2017 FY18 Office Equipment Hand Held Metal detector 0.01 Aeronautical 14-08-2017 FY18 Office Equipment Proximity suit 0.02 Aeronautical 04-09-2017 FY18 Plant and Machinery Air Field Crash Fire Tender 0.01 Aeronautical 11-10-2017 FY18 Office Equipment Fire safety Equipment 0.02 Aeronautical Mahindra Imperio DC VX 28-10-2017 FY18 Vehicle 0.09 Aeronautical 2WD BS-4 30-10-2017 FY18 Office Equipment Bullet Proof Morcha 0.01 Aeronautical 31-10-2017 FY18 Office Equipment 0.00 Aeronautical 18-11-2017 FY18 Office Equipment Weighting scale 0.00 Aeronautical Furniture and Fixture without 18-11-2017 FY18 Road Barrier 0.00 Aeronautical trolley ATC Signal Gun with 01-03-2018 FY18 Plant and Machinery 0.04 Aeronautical Charger Flight Information Display 01-04-2018 FY19 Office Equipment System & Public Address 1.88 Aeronautical System 01-04-2018 FY19 Office Equipment IP based CCTV System 0.79 Aeronautical Internal Signages in 01-04-2018 FY19 Office Equipment 0.19 Aeronautical Terminal Building Concertina Coil over 01-04-2018 FY19 Operational Building 0.31 Aeronautical Compound Wall 01-04-2018 FY19 Utility Building Fire station 1.10 Aeronautical Consultation Paper No. 02/2024-25 Page 123 of 130ANNEXURE Original Date of FY Asset Classification Description Amount of Classification Purchase Fixed Asset Compound Wall, Storm 01-04-2018 FY19 Operational Building Water Drainage, Security 104.75 Aeronautical Tower and Airport Lighting Laying of Power & OFC for 01-04-2018 FY19 Electrical Installation 0.30 Aeronautical Metrological Services Electrical Sub Station & 01-04-2018 FY19 Electrical Installation 2.50 Aeronautical DVOR Power supply, Apron Flood 01-04-2018 FY19 Electrical Installation Lighting, Perimeter 9.65 Aeronautical Lighting & Allied works Fire Fighting & HVAC 09-06-2018 FY19 Office Equipment System in Terminal 1.42 Aeronautical Building 12-06-2018 FY19 Office Equipment Fire Accessories 0.01 Aeronautical Furniture and Fixture without 02-07-2018 FY19 Charpoy 0.04 Aeronautical trolley 03-07-2018 FY19 Plant and Machinery Baggage Handling System 0.86 Aeronautical Protective Clothing/ 13-07-2018 FY19 Office Equipment 0.01 Aeronautical Proximity Suit 13-07-2018 FY19 Plant and Machinery Riffle Rack 0.01 Aeronautical Furniture and Fixture without 29-08-2018 FY19 Frisking Booth Ladies 0.01 Aeronautical trolley 21-09-2018 FY19 Office Equipment Walkie Talkie 0.02 Aeronautical Furniture and Fixture without 15-10-2018 FY19 Passenger Baggage 0.08 Aeronautical trolley Furniture and Fixture without 15-10-2018 FY19 Check in Counters 0.02 Aeronautical trolley Entrance Gate, Boundary 30-10-2018 FY19 Operational Building Wall, Under Ground Tank 2.02 Aeronautical and Crash Gate 03-11-2018 FY19 Plant and Machinery Bulletproof Santry Post 0.01 Aeronautical Schedule Aircraft Billing 03-11-2018 FY19 Computer - Software 0.01 Aeronautical software Furniture and Fixture without 15-12-2018 FY19 Porta Cabin for CISF 0.48 Aeronautical trolley 19-12-2018 FY19 Plant and Machinery Hospital Equipment 0.01 Aeronautical 07-01-2019 FY19 Office Equipment Dragon Search Light 0.01 Aeronautical Furniture and Fixture without 04-02-2019 FY19 Amplifier 0.00 Aeronautical trolley Trans receiver of VHF 21-02-2019 FY19 Office Equipment 0.02 Aeronautical frequency 14-03-2019 FY19 Plant and Machinery Nitrogen Cylinder 0.01 Aeronautical 31-03-2019 FY19 Plant and Machinery Medical Equipment 0.02 Aeronautical 31-03-2019 FY19 Office Equipment Water Level Indicator 0.00 Aeronautical Digital Tyre Inflator & Air 31-03-2019 FY19 Office Equipment 0.02 Aeronautical Compressor 31-03-2019 FY19 Plant and Machinery Hospital Equipment 0.00 Aeronautical Furniture and Fixture without 31-03-2019 FY19 Chairs & Tables 0.00 Aeronautical trolley Furniture and Fixture without 09-04-2019 FY20 S.S. Que Manager 0.01 Aeronautical trolley 01-06-2019 FY20 Furniture and Fixture - trolley Wheel Trolly 0.00 Aeronautical Consultation Paper No. 02/2024-25 Page 124 of 130ANNEXURE Original Date of FY Asset Classification Description Amount of Classification Purchase Fixed Asset 19-07-2019 FY20 Plant and Machinery Nitrogen Cylinder 0.01 Aeronautical Furniture and Fixture without 28-07-2019 FY20 Chairs & Tables 0.00 Aeronautical trolley Furniture and Fixture without 09-08-2019 FY20 Chairs & Tables 0.00 Aeronautical trolley Protective Clothing/ 17-12-2019 FY20 Office Equipment 0.03 Aeronautical Proximity Suit 21-12-2019 FY20 Computer - End User Devices Breath Analyzer System 0.02 Aeronautical 24-12-2019 FY20 Plant and Machinery Airfield Crash Fire Tender 9.27 Aeronautical 12-02-2020 FY20 Plant and Machinery Conveyor 0.02 Aeronautical 14-02-2020 FY20 Office Equipment Fire Extinguisher 0.03 Aeronautical Furniture and Fixture without 20-02-2020 FY20 Network Rack (DVOR) 0.00 Aeronautical trolley 31-03-2020 FY20 Computer - Software Pass Software 0.01 Aeronautical 31-03-2020 FY20 Office Equipment Fire Accessories 0.03 Aeronautical X-Ray Baggage Inspection 31-03-2020 FY20 Plant and Machinery 0.59 Aeronautical system 24-06-2020 FY21 Office Equipment CCTV Shirdi 0.01 Aeronautical 24-06-2020 FY21 Office Equipment CCTV Shirdi 0.00 Aeronautical 30-06-2020 FY21 Electrical Installation AGL Lights 3.29 Aeronautical 16-07-2020 FY21 Office Equipment Fire Accessories 0.07 Aeronautical Furniture and Fixture without 25-07-2020 FY21 Chairs & Tables 0.00 Aeronautical trolley Vehicle Mounted Bird 02-09-2020 FY21 Vehicle 0.02 Aeronautical Scaring Device 04-09-2020 FY21 Office Equipment CCTV Shirdi 0.00 Aeronautical 09-09-2020 FY21 Office Equipment Walkie Talkie 0.02 Aeronautical Furniture and Fixture without 25-09-2020 FY21 Chairs Spares 0.01 Aeronautical trolley Software Schedule Aircraft 08-01-2021 FY21 Computer - Software 0.00 Aeronautical Billing Software Schedule Aircraft 11-01-2021 FY21 Computer - Software 0.00 Aeronautical Billing 10-02-2021 FY21 Office Equipment Breath Analyzer System 0.01 Aeronautical Furniture and Fixture without 03-03-2021 FY21 Chairs & Tables 0.00 Aeronautical trolley 31-03-2021 FY21 Office Equipment VHF digital base station 0.05 Aeronautical Power supply, Apron Flood 01-04-2021 FY22 Electrical Installation Lighting, Perimeter 2.02 Aeronautical Lighting & Allied works 01-04-2021 FY22 Plant and Machinery Airfield Crash Fire Tender 0.36 Aeronautical 01-04-2021 FY22 Plant and Machinery Airfield Crash Fire Tender 0.07 Aeronautical Airfield Ground Lighting 01-04-2021 FY22 Electrical Installation 1.01 Aeronautical Systems Airfield Ground Lighting 01-04-2021 FY22 Electrical Installation 3.49 Aeronautical Systems Electrification Of 21-04-2021 FY22 Electrical Installation Rehabilitation & IT System 0.54 Aeronautical DVOR Airfield Ground Lighting 22-04-2021 FY22 Electrical Installation 1.81 Aeronautical Systems Consultation Paper No. 02/2024-25 Page 125 of 130ANNEXURE Original Date of FY Asset Classification Description Amount of Classification Purchase Fixed Asset Night Visibility Marker 02-06-2021 FY22 Electrical Installation 0.03 Aeronautical (Aviation Lamp) 08-09-2021 FY22 Office Equipment IP based CCTV System 0.00 Aeronautical Non editable Windows 01-11-2021 FY22 Computer - Software based BA randomiser 0.00 Aeronautical software Total Gross Aeronautical - A 155.36 Total Aeronautical RAB (100% 155.36 Aero) - B Consultation Paper No. 02/2024-25 Page 126 of 130ANNEXURE 1B: Gross Value of “Common” Capital Additions as of 31st March 2022 Date of Original Amount FY Asset Classification Description Classification Purchase of Fixed Asset 24-04-2016 FY17 Office Equipment Stabilizer 0.01 Common 21-06-2016 FY17 Office Equipment Fax Machine 0.00 Common 22-06-2016 FY17 Computer - End User Devices Printer 0.00 Common 22-06-2016 FY17 Office Equipment Air conditioner 0.02 Common 22-06-2016 FY17 Office Equipment Refrigetors 0.00 Common 22-06-2016 FY17 Office Equipment Water Purifiers 0.00 Common 22-06-2016 FY17 Plant and Machinery DG Sets 0.11 Common 29-07-2016 FY17 Computer - End User Devices Laptop 0.01 Common 30-08-2016 FY17 Computer - End User Devices Computers Hardware 0.02 Common 31-08-2016 FY17 Office Equipment Stabilizer 0.00 Common 31-08-2016 FY17 Furniture and Fixture without trolley Cupboard 0.00 Common 01-09-2016 FY17 Furniture and Fixture without trolley Wodden Table 0.01 Common 08-11-2016 FY17 Computer - End User Devices Computers Hardware 0.00 Common 08-11-2016 FY17 Furniture and Fixture without trolley Cupboard 0.00 Common 08-11-2016 FY17 Furniture and Fixture without trolley office Chairs 0.01 Common 08-11-2016 FY17 Furniture and Fixture without trolley Wodden Table 0.00 Common 01-04-2017 FY18 Computer - End User Devices Printer 0.00 Common 04-07-2017 FY18 Computer - End User Devices Computers Hardware 0.02 Common 29-09-2017 FY18 Furniture and Fixture without trolley LG LED 49 0.01 Common 29-09-2017 FY18 Furniture and Fixture without trolley LG REF 215 Ltr 0.00 Common 14-10-2017 FY18 Computer - End User Devices Printer 0.00 Common 14-10-2017 FY18 Office Equipment Lamintion machine 0.00 Common 18-11-2017 FY18 Furniture and Fixture without trolley Office Chairs 0.02 Common 18-11-2017 FY18 Furniture and Fixture without trolley Office Chairs 0.01 Common 18-11-2017 FY18 Furniture and Fixture without trolley Office Chairs 0.01 Common 18-11-2017 FY18 Furniture and Fixture without trolley Wodden Table 0.00 Common 18-11-2017 FY18 Furniture and Fixture without trolley Dustbin 0.01 Common 31-03-2018 FY18 Plant and Machinery Paper Shredder Machin 0.00 Common 31-03-2018 FY18 Furniture and Fixture without trolley Office Chairs 0.02 Common 31-03-2018 FY18 Furniture and Fixture without trolley Sofa Set 0.02 Common 31-03-2018 FY18 Furniture and Fixture without trolley Wodden Cabinate 0.01 Common 01-04-2018 FY19 Furniture and Fixture without trolley Porta Cabin 0.14 Common 01-04-2018 FY19 Terminal Building Terminal Building 6.56 Common 01-04-2018 FY19 Terminal Building Terminal Building 1.00 Common Power supply, Infrastucture, 01-04-2018 FY19 Electrical Installation internal Electrical & IT system 3.00 Common in Terminal Building 09-05-2018 FY19 Furniture and Fixture without trolley 2 Porta Cabin 0.20 Common 08-06-2018 FY19 Computer - End User Devices Computers Hardware 0.02 Common 15-06-2018 FY19 Furniture and Fixture without trolley office Chairs 0.00 Common 15-06-2018 FY19 Furniture and Fixture without trolley Wodden Table 0.01 Common 02-07-2018 FY19 Furniture and Fixture without trolley office Chairs 0.00 Common 02-07-2018 FY19 Furniture and Fixture without trolley Wodden Cabinate 0.07 Common 02-07-2018 FY19 Furniture and Fixture without trolley Dinning Table 6 Seater 0.02 Common 26-07-2018 FY19 Computer - End User Devices Printer 0.01 Common 19-09-2018 FY19 Plant and Machinery Acqua Guard 0.02 Common 15-10-2018 FY19 Furniture and Fixture without trolley office Chairs 0.02 Common 01-11-2018 FY19 Computer - End User Devices Printer 0.00 Common 03-11-2018 FY19 Office Equipment Stabilizer 0.14 Common 15-12-2018 FY19 Furniture and Fixture without trolley LED Hair 39 Inch 0.00 Common Mixer Grinder Crompton 750 15-12-2018 FY19 Furniture and Fixture without trolley 0.00 Common W Consultation Paper No. 02/2024-25 Page 127 of 130ANNEXURE Date of Original Amount FY Asset Classification Description Classification Purchase of Fixed Asset Washing Machine Haier Semi 15-12-2018 FY19 Furniture and Fixture without trolley 0.00 Common auto 9 kg 15-12-2018 FY19 Furniture and Fixture without trolley Fridge Voltas 320Ltr 0.00 Common 15-12-2018 FY19 Furniture and Fixture without trolley Pedestal Fan 0.00 Common 15-12-2018 FY19 Furniture and Fixture without trolley Refrigeator Whirlpool 340L 0.00 Common 02-01-2019 FY19 Furniture and Fixture without trolley Porta Cabin 0.03 Common 28-03-2019 FY19 Furniture and Fixture without trolley office Chairs- Shirdi 0.01 Common 28-03-2019 FY19 Furniture and Fixture without trolley Wooden Cabinet 0.01 Common 28-03-2019 FY19 Furniture and Fixture without trolley Wooden Table 0.01 Common 29-03-2019 FY19 Furniture and Fixture without trolley office Chairs- Shirdi 0.00 Common 29-03-2019 FY19 Furniture and Fixture without trolley Wooden Cabinet 0.00 Common 31-03-2019 FY19 Office Equipment Biometric Attendance Machin 0.00 Common 31-03-2019 FY19 Furniture and Fixture without trolley Book Case 0.00 Common 31-03-2019 FY19 Furniture and Fixture without trolley Water Fountain 0.02 Common 05-04-2019 FY20 Furniture and Fixture without trolley Dustbin 0.01 Common 06-05-2019 FY20 Plant and Machinery Booster Pump 0.00 Common 06-05-2019 FY20 Plant and Machinery Booster Pump 0.00 Common 01-06-2019 FY20 Furniture and Fixture without trolley office Chairs- Shirdi 0.00 Common 01-06-2019 FY20 Furniture and Fixture without trolley office Table 0.00 Common 01-06-2019 FY20 Furniture and Fixture without trolley Steel Almirah Shirdi 0.00 Common 01-06-2019 FY20 Furniture and Fixture without trolley Water Cooler 0.00 Common 11-06-2019 FY20 Furniture and Fixture without trolley Digital Sign Board 0.00 Common 19-06-2019 FY20 Computer - End User Devices UPS Circle Power 0.00 Common 20-06-2019 FY20 Furniture and Fixture without trolley Cubical Door 0.00 Common 04-07-2019 FY20 Computer - End User Devices Scanner 0.01 Common 12-07-2019 FY20 Furniture and Fixture without trolley office Chairs- Shirdi 0.01 Common 14-07-2019 FY20 Plant and Machinery Booster Pump 0.00 Common 16-07-2019 FY20 Plant and Machinery Booster Pump 0.00 Common 18-07-2019 FY20 Computer - End User Devices Hard Drive 0.00 Common 06-08-2019 FY20 Furniture and Fixture without trolley Wooden Counter 0.02 Common 07-08-2019 FY20 Furniture and Fixture without trolley Digital Sign Board 0.00 Common 10-09-2019 FY20 Furniture and Fixture without trolley office Chairs- Shirdi 0.01 Common 26-11-2019 FY20 Furniture and Fixture without trolley office Chairs- Shirdi 0.01 Common 06-01-2020 FY20 Computer - End User Devices Printer - Shirdi 0.00 Common 31-03-2020 FY20 Furniture and Fixture without trolley Wooden Table 0.01 Common 18-05-2020 FY21 Office Equipment Motor Pump 0.00 Common 01-06-2020 FY21 Furniture and Fixture without trolley Cubical Table 0.01 Common 25-07-2020 FY21 Furniture and Fixture without trolley Cabinet & Storewell 0.00 Common 25-07-2020 FY21 Furniture and Fixture without trolley Office Chairs 0.00 Common 31-07-2020 FY21 Electrical Installation Video Conferencing System 0.09 Common 14-08-2020 FY21 Computer - End User Devices Computer Hardware 0.01 Common 19-08-2020 FY21 Electrical Installation Samsung TV VC 0.01 Common 25-09-2020 FY21 Furniture and Fixture without trolley Staff Locker 0.00 Common UPS 15 KVA FIN 216V 75AH 19-10-2020 FY21 Electrical Installation 0.08 Common Ex(FR) 18 OTR SP - Consul 19-10-2020 FY21 Electrical Installation Video Conferencing System 0.00 Common 27-02-2021 FY21 Plant and Machinery TDEC 501 ECU 0.07 Common 29-03-2021 FY21 Plant and Machinery Booster Pump 0.00 Common 31-03-2021 FY21 Computer - End User Devices Computers Hardware 0.03 Common 31-03-2021 FY21 Furniture and Fixture - trolley Garbage trolley 0.01 Common 500M3 RCC GSR Pump 01-04-2021 FY22 Plant and Machinery 0.60 Common House & Water Filtering Plant Power Supply Infrastructure 01-04-2021 FY22 Electrical Installation 1.37 Common External & IT System Consultation Paper No. 02/2024-25 Page 128 of 130ANNEXURE Date of Original Amount FY Asset Classification Description Classification Purchase of Fixed Asset 01-04-2021 FY22 Plant and Machinery Drainage Infrastructure 15.04 Common 08-06-2021 FY22 Computers - Service and Network Wireless Internet Facility 0.01 Common 16-06-2021 FY22 Computer - End User Devices Computer Hardware 0.00 Common 18-06-2021 FY22 Computer - End User Devices HP 240GB Laptop 0.01 Common EPSON Eco Tank M 15140 18-06-2021 FY22 Computer - End User Devices 0.01 Common Printer 29-06-2021 FY22 Plant and Machinery RO Plant 500 LPH 0.03 Common 14-07-2021 FY22 Computer - End User Devices Colour Printer 0.00 Common Terminal use Mobile (Smart 10-02-2022 FY22 Office Equipment 0.00 Common Phone) Total: Gross Common - C 29.08 Total Aeronautical RAB (Common) - D 27.63 Original Date of FY Asset Classification Description Amount of Classification Purchase Fixed Asset Non 27-09-2017 FY18 Plant and Machinery Brush Cutter 0.07 Aeronautical Total: Gross Non-Aero – E 0.07 Total Aeronautical RAB (Non-Aero) - - F Total Gross (A+C+E) 184.53 Total Aeronautical RAB (B+D+F) 183.01 Consultation Paper No. 02/2024-25 Page 129 of 130ANNEXURE 1C: Gross Value of “Non-Aeronautical” Capital Additions as of 31st March 2022 Date of Original Amount FY Asset Classification Description Classification Purchase of Fixed Asset Non 27-09-2017 FY18 Plant and Machinery Brush Cutter 0.07 Aeronautical Total: Non-Aero - C 0.07 Total – A+B+C 184.53 Consultation Paper No. 02/2024-25 Page 130 of 130