Adani Ports In Talks With Essar Group To Acquire Its Ports Business

  • 05-March-2015
  • Adani Ports In Talks With Essar Group To Acquire Its Ports Business

Gautam Adani led Adani Ports & Special Economic Zone (APSEZ) is said to be in talks with Essar Group to acquire its ports business. According to multiple sources in the know, early stage discussions have been ongoing between both sides and may soon progress to a formal diligence.

Essar Ports, one of the largest private sector player by capacity and throughput, has an operational footprint on both western and eastern coast of the country and can handle liquid (mainly oil), dry bulk (mainly coal), general cargo and small volumes of container crago for specialized project equipment. Its existing aggregate capacity stands at 104 million metric tonnes per annum (MMTPA) across its facilities in Vadinar and Hazira in Gujarat and Paradip in Orissa. The company is looking to expand capacity to 194 MMTPA by 2017. However, officials close to Essar said, the steel-to-mobile retail conglomerate, has identified two of its businesses - power and ports - and is open to divesting either one of them fully to reduce its high group level debts.

On the other hand, Adanis, in June 2014, took over Dharma Port - an equal JV between L&T and Tata Steel - for Rs 5500 crore, in what was the largest deal among private port operators in the country. APSEZ, whose market value has doubled in the last one year, is today the largest multi-port operator of India. From being a single port operator in Mundra, Gujarat, it has spread its presence across 8 ports in India. The company has an aggressive expansion blueprint to increase its annual cargo handling capacity from 108 million tonnes (as on Dec 31st) to 200 million tonnes by 2020.

Sources said, the promoters of Essar, the Ruia family, are expecting an enterprise value of over Rs 15,000 crore for the business which is inclusive of its debt of Rs 5836 crore debt, as of end-FY14. However, post its expansions in Orissa and Gujarat, analysts expect debt levels to go up to Rs 7000 crore. The current market cap of Essar Ports is Rs 5070 crore, with the stock seeing a sudden spurt of 7% in the last 24 hours of trading.

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