Adani Ports to acquire remaining 25% stake in Krishnapatnam Port, shares fall

Gautam Adani | Founder and Chairman, Adani Group | (Image: Reuters)

Adani Ports and Special Economic Zone Ltd has signed an agreement with Vishwa Samudra Holdings Pvt Ltd, to acquire 25 percent stake of Adani Krishnapatnam Port Ltd for a consideration of Rs 2,800 crore, the company said in an exchange filing on Monday.

Following this acquisition, Adani Port will increase its stake from 75 percent to 100 percent in Krishnapatnam Port, the country's second largest private sector port.

Adani Ports said that the investment is in line with it's strategy to increase its footprint in Andhra Pradesh.

The acquisition is subject to approvals under applicable laws, including approval of the Competition Commission of India. The transaction is expected to be completed within 3 months, the company said.

"The consolidation of our ownership in Krishnapatnam Port reinforces Adani Port's stride towards 400 MMT by 2025 and achieving our broader strategy of cargo parity between west and east coasts of India. Krishnapatnam Port is on track to handle double the traffic by 2025 and will deliver high growth through a multi-product and cargo enhancement strategy while enhancing return on capital employed," said Karan Adani, Chief Executive Officer and Whole Time Director of Adani Ports.

"We are confident that we will be able to double throughput and triple EBITDA at Krishnapatnam Port by 2025. We are committed to making Krishnapatnam Port the gateway port for South Andhra Pradesh and Karnataka. With its large industrial land backed with the port we will transform Krishnapatnam into a manufacturing and industrial hub," Adani added.

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In October 2020, Adani Ports had  acquired a 75 percent stake in Krishnapatnam Port Co Ltd for an enterprise value of Rs 12,000 crore. The new acquisition is also in line with the company's ambitious plan to handle throughput volumes of 400 million tonnes by 2024-2025.

In the past six months, the company has carried out three big acquisitions at a combined value of Rs 18,000 crore. Last month the company, announced it would acquire 58.1 percent stake in Gangavaram Port Ltd from D.V.S. Raju and family for Rs 3,604 crore.

In February, Adani Ports said it had completed the acquisition of Dighi Port for Rs 705 crore and also committed to spend Rs 10,000 crore to develop it as an alternate gateway to the Jawaharlal Nehru Port Trust.

Krishnapatnam Port is located on the east coast of India in Nellore district of Andhra Pradesh close to the border between Andhra Pradesh and Tamil Nadu. It is an all-weather, deep water port and has a multi-cargo facility with a current capacity of 64 MMTPA. With a waterfront of 20 km and 6,800 acres of land, Krishnapatnam Port has a master plan capacity of 300 MMTPA and a 50-year concession.

The port is expected to have volumes of 38 MMT, revenues of Rs 1,840 crore and EBITDA of Rs 1,325 in 2020-21 (Apr-Mar). Since the acquisition, Krishnapatnam Port has focused on business process re-engineering which has resulted in EBITDA margins improving from 57 percent in 2019-20 (Apr-Mar) to 72 per cent in 2020-21 (Apr-Mar).