India's growing port sector is expected to witness some big ticket M&As in 2014 as more and more investors start viewing the space as a high-return venture. But CNBC-TV18's Aastha Maheshwari reports it's not all smooth sailing when it comes to investing in India’s many ports.
Despite 40 road assets and more than 10 power projects being on the block for over several months now, many cash-rich players have shifted their focus to the ports sector, which, according to them, will give them higher returns. CNBC-TV18 learns the first half of 2014 itself is expected to witness multiple deals in the port sector worth over Rs 8,000 crore.
According to sources,
- To begin with, Adani Ports and Special Economic Zone Ltd (APSEZ) is finally set to acquire Dhamra port, which is a JV between L&T and Tata Steel in Odisha for about Rs 5000 crore, making this deal one of the largest port deals in a long time.
- TPG Capital India is also eyeing a majority stake in the Rs 4000 crore Puducherry Karaikal port for over Rs 1000 crore
- The Krishnapatnam port is also in talks with PE players to sell 6-10 percent stake for Rs 1200 crore.
- Even some new projects are in the news. For instance, the Indian unit of Japanese auto maker Nissan Motor – Nissan Motor India – has inked an agreement to export at least 60,000 cars every year from the Ennore port.
But then again it's not all smooth sailing. Although the port sector is considered a less risky investment with fewer regulatory hurdles, tariff uncertainty continues to remain a big challenge.
Vishwas Udgirkar, Senior Director, Deloitte India says: “Ports in major ports segment are more affected by tariff regulation and TAMP. While TAMP is coming out with more relaxation there are constraints with respect to uncertain upsides which is always capped by TAMP.”
And experts say unless issues like Adhoc tariff and irregular traffic is resolved to the satisfaction of the bidders, the investment process might be a long drawn affair.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
