MUMBAI: Gautam Adani-led Adani Ports and Special Economic Zone on Friday scooped up the strategic Dhamra port on the east coast of India for an enterprise value of Rs 5,500 crore.
The company signed a definitive agreement to buy the port from a 50:50 joint venture of Tata Steel and Larsen & Toubro, on a day when Narendra Modi-led Bharatiya Janata Party won a massive mandate in the general elections.
The deal, culminating after over one-and-a-half years of negotiations, is the largest port sector deal in India after the 2005 acquisition of Pipapav Port in Gujarat by APM Terminals BV from SKIL Infrastructure.
ET broke the story in its online edition on Friday, over 30 minutes before the news was officially announced. Dhamra port, one of the deepest ports in eastern India, was awarded the rights by the Odisha government in 2004 to develop and operate for 30 years. The contract can be extended for two additional periods of 10 years each. The port commenced operations in 2011 from two fully mechanized berths capable of handling coking coal, steam and thermal coal, limestone and iron ore. In FY14, Dhamra handled cargo of 14.3 million tonne. It also has 63 km of private rail connectivity.
Being strategically located to serve the mineral belt of the eastern states and in between rivals government-controlled Haldia and Paradip ports, Dhamra was once considered strategic for Tata Steel, considering its mega Kalinagar greenfield steel plant is also coming up in the same state and is due for production from next fiscal. But over time, an overleveraged balance sheet forced Tata Steel to identify the asset as non core. In 2012, a formal process to sell the company was initiated by both Tata and L&T.
For months, Dhamra Port Company was awaiting environment and coastal regulation zone clearances for the crucial second phase of the port. A fully functional Dhamra port will have 13 berths capable of handling about 100 million tonne a year of cargo including dry, liquid bulk, containerised and other general cargo. The second phase of development will begin within 90 days and completion is targeted in 30 months, said Adani port executives.
For Adani, this has been a long, patient wait but it is perfectly aligned to his aspirations of becoming a large player across both the east and west coasts of the country with a string of private ports. The Bombay Stock Exchangelisted Adani Ports and
SEZ is 75% owned by Adani Enterprises, the flagship of Adani group. The company owns and operates five ports, of which three— Dahej, Hazira and Mundra—are in Gujarat.
The acquisition of Dhamra port will help the company ramp up its capacity to over 200 million tonne by 2020, making it a leader among private sector port operators in the country. Adani's family company also runs a coal loading terminal at Abbot Point in Queensland in Australia.
"The Dhamra port acquisition now gives us an opportunity to replicate the development and phenomenal growth of the Mundra port on the east and, thereby, continue to execute on our pan-India strategy," said Gautam Adani, chairman of Adani group.
The race to acquire Dhamra had seen many local and global players line up but Adani Ports and SEZ always had the edge. Interestingly, for months now, Adanis have been manning the port themselves as "consultants".
Tata Steel will assure Dhamra 5 million tonne of cargo this year and the minimum assured volume will go up every year as Kalinganagar ramps up.
Source : economictimes.indiatimes.com