Adani to buy 75% in Krishnapatnam Port

Cancellation of the Polavaram project and an economic slowdownhad affected operations of the CVR Group.

Cancellation of the Polavaram project and an economic slowdownhad affected operations of the CVR Group.  

Internal accruals and cash balance will be used to fund the transaction worth ₹13,572 crore

Adani Ports and Logistics and Special Economic Zone Ltd. (APSEZ) will be acquiring 75% stake in Krishnapatnam Port Co. Ltd. (KPCL) in Nellore district of Andhra Pradesh for a total consideration of ₹13,572 crore from the CVR Group, said the company in a filing.

The balance stake will be held by the CVR Group.

The acquisition is in line with APSEZ’s strategy of expanding its footprint in Andhra Pradesh. The transaction would accelerate APSEZ’s move towards handling 400 million tonnes (MT) of cargo by 2025, said APSEZ in its statement.

The purchase consideration will be funded via internal accruals and existing cash balance, APSEZ said.

KPCL is the second-largest private sector port in the east, after Mundra in the west, that handled 54 MT of cargo during FY19. Mundra Port, which also belongs to the Adani Group, has been handling over 100 MT of cargo for the past few years consecutively.

Adani Group began due diligence at KPCL during the first week of November 2019 and at the time, it was said that the entire exercise would last a month or two and that thereafter, the Adanis would take a final call. On Friday, APSEZ announced its intention to acquire the stake.

The acquisition is subject to regulatory approvals and the transaction is expected to be completed in 120 days, the statement added.

Asserting that this acquisition would not only increase APSEZ’s market share to 27% from the current 22%, but also add remarkable value to pan-India footprint, Karan Adani, CEO and whole-time director, APSEZ, said “With the experience of successfully turning around acquisitions of Dhamra and Kattupalli ports, we are confident of harnessing the potential of KPCL and improving returns to stakeholders.”

Also, APSEZ would aim to enhance KPCL’s cargo handling volume to 100 MT in about seven years from the present capacity of 64 MT, the statement added. KPCL recorded a revenue of ₹2,394 crore in FY19 compared with ₹1,969 crore in FY18. KPCL, which is engaged in the business of handling containers, coal, break bulk and other bulk cargo, including liquid cargo, was till recently run by Hyderabad-based engineering major CVR Group.

CVR Group decided to hive off the company as it got into financial trouble when the Andhra Pradesh government cancelled the ₹3,200-crore Polavaram Hydel power project awarded to Navayuga Engineering, the flagship of the group.

Cancellation of the project and the economic slowdown had hit the operations of the group and that of KPCL. Since then, the promoters had been looking for a suitor to bail it out, said a former top official of KPCL who had quit recently.

On Friday, APSEZ shares declined 0.2% to ₹382.70 on the BSE.

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Printable version | Feb 26, 2020 4:13:00 AM |

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