Bangalore: French shipping firm Louis Dreyfus Armateurs SA (LDA) has bought a 49% stake in the bulk port handling business of port logistics firm ABG Infralogistics Ltd, a top company official said.
“The deal is done,” said Saket Agarwal, managing director of ABG Infralogistics. An official announcement will be made on Friday, he said over the phone from Mumbai.
Louis Dreyfus will pay Rs90 crore to ABG Infralogistics for the stake purchase, Agarwal said. The deal was cleared by India’s Foreign Investment Promotion Board (FIPB) a few months earlier. FIPB vets all foreign investments coming into India. The deal comes even as the world battles a crash in commodity demand and prices, triggered mainly by the global economic slowdown.
Ahead of the sale, ABG Infralogistics had hived off its bulk cargo handling assets operating at Union government-owned New Mangalore, Paradip and Vizag ports into a separate subsidiary ABG Bulk Handling Pvt. Ltd.
The firm was also recently awarded another bulk cargo handling facility at Haldia dock of Kolkata port, owned by the Union government. These facilities can handle bulk cargo such as coal, iron ore, fertilizers, grains and cement.
Following the stake sale, ABG Bulk Handling Pvt. Ltd will be renamed ABG LDA Bulk Handling Pvt. Ltd in which ABG will have 51% stake.
“ABG and LDA will participate in the auction process for various bulk cargo handling projects at Indian ports. As and when we are successful in winning new contracts, we will infuse fresh capital,” Agarwal, who will also be a director on the board of ABG LDA Bulk Handling, said.
Executives at Louis Dreyfus could not be reached immediately for comment on Thursday.
Analysts say that except for iron ore, the overall bulk cargo handling business at India’s ports has not been affected much by the global slowdown because the local economy is largely driven by domestic demand and is less dependent on exports.
Among the principal commodities handled at India’s 12 big Union government-owned ports, thermal coal used to fire power plants grew by 11.18% to 44.02 million tonnes (mt) in the year to March from 40mt a year earlier.
Coking coal, used for steel plants, jumped 7.13% to 27.13mt during the same period from 25.32mt a year ago.
In the year to March, iron ore traffic registered a marginal growth of 2.49% to 94.08mt, from 92mt the previous year.
The petroleum, oil and lubricants (POL) cargo handled by these ports grew by 4.16% to 176mt, from 169mt a year earlier.
ABG Infralogistics had last year sold a 11.8% stake in the firm to PSA International Pte Ltd, the world’s second biggest container port operator owned by Temasek Holdings Pte Ltd, the investment arm of the Singapore government.
The Singapore firm also invested about Rs350 crore to buy 49% stake each in ABG Kandla Container Terminal Pvt. Ltd and ABG Kolkata Container Terminal Pvt. Ltd, the entities floated by ABG Infralogistics to run the two container handling facilities at Union government-owned Kandla and Kolkata ports, respectively.
After these stake buys, PSA said it was not interested in ABG Infralogistics’ bulk port handling business.
Hence, this business was spun off into a separate unit to give it a focused attention and to attract a potential buyer, Agarwal said.