Adani acquires Dhamra Port for Rs 5,500 crore

The acquisition now gives us an opportunity to replicate the development and phenomenal growth of the Mundra port, the company says

Adani Ports & Special Economic Zone (APSEZ), part of Adani Group said on Friday it had acquired Dhamra Port Company for Rs 5,500 crore.

Dhamra Port is a 50:50 joint venture between Tata Steel and L&T Infrastructure Development Projects. It is a major and newly developed port in Odisha’s Bhadrak district, about seven km from the old port of the same name. The agreement to develop the port was signed in April 1998.

Adani stated it had put through a definitive agreement with both these companies to acquire 100 per cent stake. It would be one of the biggest port sector deals in recent years and give APSEZ access to the east coast.

EYEING THE EAST

• THE DEAL: APSEZ to acquire 100% stake in DPCL for Rs 5,500 crore
• THE TARGET: Dhamra Port, a 50:50 joint venture between Tata Steel and L&T, which is a deep-draft, all-weather multi-user port in Odisha
• EXPERIENCE: The Adani company operates major ports in Mundra, Gujarat, besides terminals at Hazira, Dahej, Mormugao and Visakhapatnam
• CAPACITY: Dhamra handled a total cargo of 14.3 million tonnes in 2013-14; its capacity is planned to be expanded to 100 mt by 2020
• FUNDING: APSEZ plans to raise money through QIP to fund acquisition

“The acquisition gives us an opportunity to replicate the development and phenomenal growth of Mundra port on the eastern coast and, thereby, continue to execute on our pan-India strategy,” said Gautam Adani, chairman of Adani Group.

The port commenced operations in May 2011 and handled a total cargo of 14.3 million tonnes (mt) in 2013-14. It has two fully mechanised berths, 63 km of a private rail line connecting Bhadrak station to the main trunk line, and has already got environmental clearance for the development of 12 additional berths.

Naturally protected, with the ability to berth Capesize vessels and proximity to the richest mineral wealth in the country make it distinctive.

“Following the acquisition, the second phase of development will be initiated within 90 days and completion is targeted in 30 months. This continued expansion will allow Dhamra port to exceed 100 mt of cargo capacity by the year 2020 and, therefore, allow Adani Ports to fulfill its stated vision of becoming a 200 mt ports business well before the year 2020," the company said.

Founded in 1988, the $8.7-billion Adani Group has grown to become a global integrated infrastructure entity, with businesses in various industry verticals, resources, logistics and energy. APSEZ operates a major port at Mundra in Gujarat (with a capacity to handle a little over 200 mt of cargo a year), apart from terminals at Hazira and Dahej in Gujarat, Mormugao in Goa and Visakhapatnam in Andhra Pradesh. It is setting up a bulk cargo handling capacity at Tuna Tekra (Kandla) and a container terminal in Ennore, Tamil Nadu.

It is preparing to raise money for funding its expansion in the ports sector and plans a road show to reach potential investors. It is likely to raise money through a qualified institutional placement in Adani Ports, and the money could be used to fund its acquisition of Dhamra.

For the fourth quarter of 2013-14, the company had a consolidated profit after tax of Rs 530 crore, up 43 per cent. Net profit rose 7.2 per cent to Rs 1,740 crore, on a 43.4 per cent increase in total income to Rs 5,508 crore in the year ended March 2014 over the year ended March 2013.

The stock has been on a roll in recent months, doing better than the market. It rose 12.1 per cent over the past month till May as compared to the 5.2 per cent rise in the BSE exchange’s Sensex. The scrip had also outperformed the market in the past quarter, rising 47.7 per cent as against the Sensex's 16.9 per cent rise. The stock gained nearly two per cent in the day’s trade on the BSE on Friday, ending at Rs 224.65.