Adani Ports and Special Economic Zone Ltd (APSEZ) said on Monday it has completed the acquisition of a 75 per cent stake in Krishnapatnam Port Company Ltd (KPCL) from the CVR Group for an enterprise value of Rs 12,000 crore.
The enterprise value of Rs 12,000 crore is lower than the Rs 13,572 crore indicated at the time of announcing the deal on January 3.
KPCL runs a private deep-water port at Krishnapatnam in Andhra Pradesh’s Nellore district.
The deal was announced on January 3 and was cleared by the Andhra Pradesh cabinet on September 3. It has also received approval from the Competition Commission of India.
In FY21, the port is expected to generate an EBITDA of approximately Rs 1,200 crore, resulting in an acquisition EV/ EBITDA multiple of 10x.
This acquisition will accelerate APSEZ’s stride towards achieving 500 million tonnes (mt) by 2025 and is another step in implementing its strategy of cargo parity between the west and east coasts of India.
Karan Adani, Chief Executive Officer and Whole Time Director of APSEZ said: “The second largest private port in India has now become part of the APSEZ portfolio. This transformational acquisition enables us to roll out world class customer service to an increased customer base and provide pan-India solutions to them”.
"Our experience of turning around acquisitions like Dhamra and Kattupalli ports will enable us in harnessing the potential of KPCL. We will target to enhance throughput at KPCL to 100 MMT by FY25 and double its EBIDTA by FY23. With a vast waterfront and land availability of over 6,700 acres, KPCL is capable of replicating Mundra and would be future ready to handle 500 mt," Adani said.
“We will replicate our operations and maintenance philosophy at KPCL, continue to focus on environment, reduce emission levels and have zero tolerance for fatalities and thus improve returns to stakeholders,” he added.
Access ti large waterfront
The deal is APSEZ’s biggest acquisition yet in India’s port sector in terms of value and size and helps it build scale in an industry that is dominated by the 12 state-owned ports.
The acquisition will give APSEZ, India’s biggest private port operator, access to the country’s largest waterfront area (for a port) of 12.5 km and a transit storage area of 6,790 acres, of which 4,621 acres is in possession of the port operating company.
Krishnapatnam, a port owned by the Andhra Pradesh government, was given to the Hyderabad-based CVR Group for development and operations on a 30-year contract beginning March 2009. The port contract can be automatically extended in two blocks of 10 years each.
Currently, the port has a draft of 18.5 metres, a depth that can accommodate fully-loaded Capesize vessels of 200,000-tonne capacity.
The port, located 180 km north of Chennai, currently has a capacity to handle 64 million tonnes (mt) of cargo from 13 berths. The cargo handling capacity can be scaled up to 250 mt a year, according to the master plan.