Cabinet approves Krishnapatnam Port deal
APSEZ will now be able to close the transaction for buying a controlling stake of 75%
The Andhra Pradesh Cabinet has approved the Krishnapatnam Port deal, clearing the decks for Adani Ports and Special Economic Zone (APSEZ).
APSEZ will now be able to close the transaction for buying a controlling stake of 75% in Krishnapatnam Port Company (KPCL) for an enterprise value of Rs 13,572 crore.
KPCL runs a private deepwater port at Krishnapatnam in Andhra Pradesh’s Nellore district.
Apart from this, the Adani Power Rajasthan had won approval from the Supreme Court on 31 August 2020 to collect compensatory tariff from three Rajasthan power distribution companies to recover the higher cost of imported coal for its 1,200 MW Kawai thermal power plant.
The equity portion of the Krishnapatnam deal (excluding the debt held by the port operating company of about Rs 6,212 crore) is valued at about Rs 7,360 crore.
Krishnapatnam is India’s second biggest private port and the largest in Andhra Pradesh. The deal has received approval from the Competition Commission of India.
The acquisition will give APSEZ access to the country’s largest waterfront area of 12.5 km and a transit storage area of 6,790 acre, of which, 4,621 acre is in possession of the port operating company.
Krishnapatnam, a port owned by the Andhra Pradesh government, was given to the Hyderabad-based CVR Group for development and operations on a 30-year contract beginning March 2009. The port contract can be automatically extended in two blocks of 10 years each.
Currently, the port has a draft of 18.5 mtr, a depth that can accommodate fully-loaded capesize vessels of 2,00,000 tonne capacity.
The port, located 180 kilo mtr north of Chennai, currently has a capacity to handle 64 million tonne of cargo from 13 berths. The cargo handling capacity can be scaled up to 250 million a year, according to the master plan.
The Krishnapatnam Port Company is 90.6 percent owned by the CVR Group, which has interests in construction, ports, power, steel, information technology and exports.
This will be APSEZ’s third acquisition on the eastern coast after the purchase of Dhamra Port in 2014 and Kattupalli Port in 2016.
The deal will also help APSEZ expedite the vision of handling 400 million tonne of cargo by 2025, and expand its market share among India’s ports.
APSEZ’s nine strategically located ports and terminals – Mundra, Dahej, Kandla and Hazira in Gujarat, Dhamra in Odisha, Mormugao in Goa, Visakhapatnam in Andhra Pradesh, Kattupalli and Ennore in Tamil Nadu – have the capacity to handle a combined 395 million tonne of cargo, accounting for 24 percent of the country's total port capacity.
APSEZ is also developing a container transhipment port at Vizhinjam in Kerala and a container terminal at Yangon in Myanmar.