Explained | Why is Adani buying 100% stake in Ocean Sparkle

Adani Group Chairman Gautam Adani. File image

Adani Ports and Special Economic Zone (APSEZ) on April 22 announced its subsidiary Adani Harbour Services has entered into a definitive agreement to acquire leading marine services provider Ocean Sparkle. Adani Group will pay Rs 1,135.30 crore for the direct acquisition of 75.69 percent stake in OSL, along with Rs 394.87 crore for the indirect acquisition of 24.31 percent stake.

"This acquisition not only provides a significant share of India's marine services market but also a platform for building a presence in other countries," said APSEZ.

Here's a good look at why India's largest private ports and logistics company is going for the marine services provider.

Five factors behind purchase 

- Ocean Sparkle is a leading service provider in the comprehensive port operations and management sector in India. "We give our clients a single point of accountability through seamless integration of all services resulting in effective execution of marine operations," the company said in a video uploaded to its website. Key activities carried out by Ocean Sparkle include towage, pilotage, and dredging.

- It has a presence in all major ports, 15 minor ports and all three LNG terminals in India, the statement said. Ocean Sparkle was established in 1995 by a group of marine technocrats with P Jairaj Kumar as the chairman and managing director.

- Ocean Sparkle has an asset base of 94 owned vessels and 13 third-party-owned vessels. It has an enterprise value of Rs 1,700 crore with Rs 300 crore of free cash.

- Ocean Sparkle has experience in global maritime servicing through its operations in Oman, Saudi Arabia, Sri Lanka, Qatar, Yemen and Africa.

- ICRA has given an AA-credit rating to Ocean Sparkle. “The company is expected to have revenue of Rs 600 crore, EBITDA of Rs Rs 310 crore and profit after tax of Rs Rs 135 crore in FY22. Around 92 percent of total revenue was contributed by marine services (towage & pilotage), and the remaining 8 percent came from dredging and other offshore services combined," said ICRA.