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Adani Ports and Special Economic Zone Ltd (APSEZ) is leading the race to develop Sri Lanka’s stalled East Container Terminal at Colombo port, in what would be the second overseas venture for India’s largest private port operator.

APSEZ, the flagship of the Adani group, and a local partner have reportedly received in-principle approval to sign a deal with the Sri Lanka Ports Authority, which will hold a majority stake in the project, Bloomberg reported on Tuesday.

The Adani group declined to respond to queries from Mint.

The conglomerate led by billionaire Gautam Adani had last year signed an agreement to develop a $275 million container terminal at Yangon port in Myanmar.

An analyst who attended APSEZ’s quarterly earnings call on Tuesday cited Karan Adani chief executive officer and whole-time director of APSEZ as saying that the Colombo project was a government-to-government deal and that it was too premature to comment on any development.

Bloomberg said a preliminary agreement regarding the port was finalized last year, but Sri Lankan President Gotabaya Rajapaksa had “announced a review after protests by labour unions who feared foreign control over the strategic project". The Sri Lankan government has been leaning towards re-establishing trade and investment ties with India and weaning itself away from Chinese investment after rising debt at the Hambantota port forced the government to cede control to a Chinese firm. PTI reported in August that port workers at Colombo had stopped work to protest the privatization of the eastern container terminal under “Indian pressure".

The Adani group is keen to expand its port operations and container terminal network within Southeast Asia, an industry expert said on condition of anonymity. “The group has also looked at making investments in Chittagong port in Bangladesh. Colombo port is among the busiest harbours for container traffic in the region."

On its Myanmar investment, APSEZ said last year that the Yangon terminal would also “act as a network point to feed into our upcoming trans-shipment hub at Vizhinjam. Furthermore, the proposed container terminal will be integrated with our ports/terminals along the east and south coast of India, unlocking synergies by offering multiple entry/exit points for shipping lines which wish to call on this region." APSEZ will have a 50-year ownership and lease arrangement on the terminal with a capacity of 0.8 million TEUs (twenty foot equivalent units).

Meanwhile, on Tuesday, APSEZ reported a 31% rise in net profit in the September quarter at 1,393.69 crore, compared to the 1,059.2 crore that it reported a year ago and 84% higher on a sequential basis.

APSEZ grew its market share during the quarter by 3 percentage points to 24% of all-India cargo volume while its Mundra port in Gujarat continued to be the largest container handling port in India with 1.33 million TEUs in Q2. Revenue rose to 2,903 crore in the September quarter from 2,821 crore in the year-ago period.

In October, APSEZ also completed the 12,000 crore purchase of a 75% stake in the Krishnapatnam port in Andhra Pradesh. The port is expected to handle 20 million tonnes of cargo in the second half of this fiscal, adding to APSEZ’s own cargo throughput target of 225-230 million tonnes for FY21.

“APSEZ has returned to growth trajectory, registering a cargo volume growth of 36% on a q-o-q basis," Karan Adani said in a statement. “The port Ebidta improved to 71% on continuous focus on operational efficiency. Our focus continues to be on preserving cash and ensuring adequate liquidity," he said, adding “APSEZ is on course to achieve 500 mt of cargo throughput by FY25."

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