Adani Ports and Special Economic Zones said it will write down its investment in the project in full
The company said it cannot comment on the divestment made by KLP Fund as it depends on the latter's internal policy
Adani Ports and Special Economic Zone Limited once again assured it will abandon its project in Myanmar and write down its investments in full in a scenario where the nation is sanctioned under United States' Office of Foreign Assets Control. The clarification to stock exchange came in the wake of reports of Norwegian pension fund KLP divesting stake in the company on grounds of its ties with the Myanmar military breach.
"The Company is in discussion with its US based counsels to ensure that the Company is in compliance with the OFAC [Office of Foreign Assets Control] sanctions programs. In a scenario wherein Myanmar is classified as a sanctioned country under the OFAC or if OFAC opines that we are in violation of the current sanctions, the company has plans to abandon the project and will write-down its investments in the project in full," Adani Ports said in a filing on Wednesday.
The write down will not materially affect the balance sheet as it is equivalent to about 1.3 per cent of the total assets of the company, Adani Ports mentioned. The company also reiterated that it has zero tolerance policy which ensures that there is no contravention of US and other sanctions.
Questions have been raised by international investors over Adani Ports' involvement in the project to build a container terminal in the city of Yangon on land leased from a Myanmar military-owned conglomerate. International community has condemned the military coup in Myanmar on February 1 and subsequent harsh crackdown on mass protests, in which hundreds lost their lives. Nations have imposed sanctions on military figures and military-controlled entities in Myanmar.
Adani Ports said it is unable to comment on the divestment made by the KLP Fund "as the Funds decide the investment plans basis their internal policy". KLP Fund was holding 1.05 lakh equity shares (0.005 per cent of paid-up capital) as on March 31, 2021, the company informed.
"Adani's operations in Myanmar and its business partnership with that country's armed forces constitutes an unacceptable risk of contributing to the violation of KLP's guidelines for responsible investment," KLP had recently said in a statement.
KLP said it was divesting because the Yangon container terminal is being built on land owned by the Myanmar military and that there is an "imminent danger" the armed forces could use the port to import weapons and equipment, or as a naval base.