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Business News/ Companies / News/  Adani may be eyeing Essar port assets
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Adani may be eyeing Essar port assets

The two conglomerates have engaged in preliminary talks to explore a potential transaction that will be mutually beneficial for both the parties

Adani Group’s unit Adani Ports and Special Economic Zone is India’s largest port operator and owns and operates six ports and terminals—Mundra, Dahej and Hazira in Gujarat, Dhamra in Odisha, Mormugao in Goa and Visakhapatnam in Andhra Pradesh. Photo: Mint (Mint)Premium
Adani Group’s unit Adani Ports and Special Economic Zone is India’s largest port operator and owns and operates six ports and terminals—Mundra, Dahej and Hazira in Gujarat, Dhamra in Odisha, Mormugao in Goa and Visakhapatnam in Andhra Pradesh. Photo: Mint
(Mint)

Mumbai: The Adani Group is in early-stage talks with Essar Group to buy some ports and related assets, according to two persons familiar with the development.

The two conglomerates have engaged in preliminary talks to explore a potential transaction that will be mutually beneficial for both the parties, the two people said on condition of anonymity.

“The companies are in early stages of discussion. They are yet to finalize the potential maritime and logistics assets and respective valuations," one of the two said.

Mint could not verify the potential value of the assets that are being discussed.

Spokespersons for both groups denied a deal.

The second person, a senior banker, added that Essar had been looking to sell some port assets and was talking to Adani and a few others.

The discussions are still at a nascent stage, a third person, also a banker, added. “We haven’t received any confirmation," said this person, who works in a state-owned bank and did not wish to be identified.

“Essar Ports owns strategic port assets which are integrated with Essar’s other key businesses like Essar Steel, Essar Oil and Essar Power. We deny your information and it is not our policy to comment on market speculation," an Essar spokesperson said.

An Adani Group spokesperson said the group does not comment on market speculation.

The port assets of Essar Group are managed by its listed entity Essar Ports Ltd, which is one of India’s largest port operators and provides port and terminal services for liquid, dry bulk and general cargo.

Essar Ports is in the midst of delisting from stock exchanges, citing a lack of investor appetite for port assets. The move gives the promoters the flexibility to find strategic investors, even sell some assets, analysts said.

Essar Ports has an existing aggregate capacity of 104 million metric tonnes per annum (mmtpa) across two facilities located at Vadinar (58 mmtpa) and Hazira (30 mmtpa) in Gujarat, on the west coast of India.

The company is in the process of increasing its aggregate ports capacity to 194 million tonnes per annum (mtpa) with expansion of the Hazira facility from 30 mtpa at present to 50 mtpa; the addition of a new 20 mtpa dry bulk terminal at Salaya in Gujarat; an 18 mmtpa coal import terminal at Paradip in Odisha and a 32 mtpa iron ore export terminal consisting of three berths at Visakhapatnam in Andhra Pradesh.

Adani Group’s unit Adani Ports and Special Economic Zone Ltd is India’s largest port operator and owns and operates six ports and terminals—Mundra, Dahej and Hazira in Gujarat, Dhamra in Odisha, Mormugao in Goa and Visakhapatnam in Andhra Pradesh.

Mundra Port, which is the largest port in India, benefits from top-notch infrastructure and SEZ (special economic zone) status. It crossed the 100 mmt mark for cargo handling in the financial year 2014. Adani is also developing ports at Tuna Tekra in Kandla, Gujarat, and Ennore in Tamil Nadu.

Currently, Essar Ports gets negligible revenue from third-party clients. The port company gets business largely from Essar Group companies such as Essar Power Ltd and Essar Oil Ltd.

The port operator has been expecting third-party clients to contribute 5% of revenue in the current financial year, which it wants to increase to 30% by 2017-18 once all its port projects are completed.

“Emergence of specialized port companies instead of captive and commercial (port) users, can help create the scale needed for strategic development of the Indian coastline," said Manish Agarwal, leader, infrastructure, at consultancy firm PricewaterhouseCoopers India. He was speaking about port companies in general and not commenting on a possible transaction between the Adani and Essar groups.

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Published: 04 Mar 2015, 12:12 AM IST
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