The Andhra Pradesh Cabinet has approved the Krishnapatnam port deal, clearing the decks for Adani Ports and Special Economic Zone Ltd (APSEZ) to close the transaction for buying a controlling stake of 75 per cent in Krishnapatnam Port Company Ltd (KPCL) for an enterprise value of ₹13,572 crore.
KPCL runs a private deep-water port at Krishnapatnam in Andhra Pradesh’s Nellore district.
“The change in shareholding in Krishnapatnam Port Company has been approved by the Cabinet today,” a top AP government official told
The development caps an extraordinary week for Gautam Adani in which his power unit – Adani Power Rajasthan Ltd – won approval from the Supreme Court on Monday 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.
On the same day, Adani struck a deal to acquire the debt of GVK Airport Developers Limited from the lenders, which will help the group pick a controlling stake in Mumbai International Airport Ltd and Navi Mumbai International Airport Limited.
The Krishnapatnam port deal was first reported by BusinessLine on August 19, 2019, before it was officially announced on January 3 this year.
The equity portion of the Krishnapatnam deal (excluding the debt held by the port operating company of about ₹6,212 crore) is valued at about ₹7,360 crore.
The deal is APSEZ’s biggest acquisition yet in India’s port sector in terms of value and size, and helps it build scale in an industry that is dominated by the 12 state-owned ports. Krishnapatnam is India’s second biggest private port and the largest in Andhra Praadesh.
CCI approval
The deal has received approval from the Competition Commission of India.
The acquisition will give APSEZ, India’s biggest private port operator, access to the country’s largest waterfront area (for a port) of 12.5 kms and a transit storage area of 6,790 acres, of which, 4,621 acres 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 ten years each.
Currently, the port has a draft of 18.5 metres, a depth that can accommodate fully-loaded capesize vessels of 200,000-tonne capacity.
The port, located 180 kilo metres north of Chennai, currently has a capacity to handle 64 million tonnes (mt) of cargo from 13 berths. The cargo handling capacity can be scaled up to 250 mt a year, according to the master plan.
Krishnapatnam Port Company is 90.6 per cent 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 tonnes (mt) 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 mt of cargo, accounting for 24 per cent 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.