Adani Group keen on churning more container traffic from VPT

Visakhapatnam: Visakha Container Terminal Pvt Ltd (VCTPL), a BOT operator of Visakhapatnam Port Trust (VPT), is redrawing its strategy to face competition from Gangavaram Port Limited (GPL).

Post-acquisition by Adani Ports and Special Economic Zone Ltd (APSEZ), there are reports that GPL is planning to operationalise container berth targeting a major slice from the business handled by VPT. Part of the container traffic routed through VCTPL comes from Mundra, the largest private port in the country, which is owned by APSEZ.

Reliable sources in the port industry told Bizz Buzz that Gangavaram Port has already completed the development of berth No. 9 into a container terminal and is awaiting acquisition of necessary equipment and cranes to make it operational sometime in the first quarter of next fiscal.

VCTPL is investing heavily in its expansion, which was initiated before the talk of acquisition of Gangavaram Port by the Adani Group. As per the pre-revised outlay, the expansion project is estimated to cost Rs633 crore. VCTPL is the joint venture of JM Baxi Group and Dubai Port (DP) World. It is blessed with a natural draft of 16 metres and plans to expand capacity to 1.5 million TEUs. It is gearing up to handle post-Panamax ships with STS cranes.

The project proponent has plans to convert it into a regional transhipment hub with containers from Kolkata, Haldia, Paradeep, Kakinada, Chhattisgarh and Yangon (Myanmar). VCTPL has already been given the status of a gateway port to handle containers bound for Nepal. Kolkata-Haldia ports have similar facilities.

Recently, the BOT operators from Visakhapatnam had represented to the Union Minister for Shipping, Ports and Waterways on the apprehensions over diversion of some of its traffic to Gangavaram from VCTPL due to price war. GPL being a private port and not under any regulation from the Government of India whereas Visakhapatnam Port Trust is bound by regulations of Tariff Authority for Major Ports (TAMP). This does not ensure a level-playing field, a BOT operator said. Since inception, VCTPL has recorded a year-on-year CAGR growth of 22 per cent.

In FY21, GPL had a cargo volume of 32.8 MMT, revenue of Rs1,057 crore and EBITDA of Rs625 crore and PAT of Rs494 crore. In Q1 FY22, GPL handled 8.7 MMT of cargo and reported revenue of Rs.313 crore, EBITDA of Rs 215 crore and PAT of Rs 192 crore.

APSEZ, India's largest private ports & logistics company, and the flagship transportation arm of the diversified Adani Group, has recently completed the acquisition of Government of Andhra Pradesh's (GoAP) stake of 10.4 per cent for an amount of Rs645 crore. The total investment for the complete acquisition is valued at Rs6,200 crore.

The boards of APSEZ and GPL had also approved the merger of GPL with APSEZ taking into consideration GPL's valuation of Rs.120 per share and fair value of APSEZ at Rs754.8 per share, resulting in a swap ratio of 159 shares in APSEZ for 1,000 shares in GPL for 58.1 per cent stake held by DVS Raju and family in GPL. The merger, which has an appointed date of April 1, 2021 and is subject to NCLT approvals, is expected to conclude by March 31, 2022.

Earlier, in April, 2021, APSEZ had acquired 31.5 per cent from Windy Lakeside Investment Ltd, a Warburg Pincus affiliate, and had signed an agreement for controlling stake of 58.1 per cent held by DVS Raju and family. Post-merger of GPL and APSEZ, DVS Raju and family will receive approximately 4.8 crore shares resulting in ~2.2 per cent stake in APSEZ worth Rs.3,604 crore.

Gangavaram Port is a 64 MMT capacity non-major port established under concession from Government of Andhra Pradesh (GoAP) that extends till 2059. APSEZ has already acquired Krishnapatnam Port in Andhra Pradesh and Dhamra in neighbouring Odisha. The Adani Group has become a partner in development of Colombo Port's Western Container Terminal.