Adani Group likely to acquire 72% stake in Andhra's Krishnapatnam Port
By Business-standard 20-Aug-2019
The two parties have signed a confidentiality agreement in this regard. Unconfirmed reports put the proposed deal value at Rs 5,500 crore.
Promoted by the Hyderabad-based CVR (Navayuga) group, KPCL had developed the project 10 years earlier, under a concession agreement signed with the state government. The port commenced operations in April 2008 and handled 54.37 million tonnes of cargo in 2018-19. The proposed acquisition includes equity stake held by the 3i Group, an international private equity investment player. It invested a little over $160 million in the company during the early days of port operations. After the acquisition, the Navayuga group will retain 28 per cent stake in the port firm, besides a key management role, say sources, either as chairman or managing director (MD).
“KPCL managing director Chinta Sashidhar of the promoter group will hold the position of chairman or MD after the acquisition, as desired by the Adanis,” a top source in the company told Business Standard. When the deal will conclude is unclear, as the process of due-diligence is on.
Port operations in Andhra have been on Adani Group's radar for some time. The country’s biggest private port operator had tried to acquire Gangavaram port around three years earlier.
However, the latter's promoters were unwilling to divest stake. Last year, Adani won the contract to develop a new port, at Bhavanapadu in Srikakulam district of Andhra.
The Navayuga group's decision to sell majority stake in its flagship port company comes in the wake of a stressed financial situation for this privately held infrastructure player. Two of its projects in Andhra — a Rs 4,500 crore construction contract for the Polavaram scheme and development of a port at Machilipatnam — were recently cancelled by the new government of Y S Jagan Mohan Reddy.
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Krishnapatnam port had earlier undergone deep financial turmoil, after iron ore export, a major bulk cargo handled early on by it, had completely stopped. Operations have picked up momentum in recent years with a rise in coal import required by the large coastal thermal power projects located in its catchment area. Also, from other bulk cargo such as edible oil import and container terminal operations.
Besides well-developed port infrastructure, the company has around 1,300 acres that can be used for development of port-based industries. Founded by C Visweswara Rao, the CVR group has annual turnover of $1 billion and an order book of $10 billion, according to its website, comprising power, steel, port development, information technology and export.
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