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The Adani Group is expected to seal the Dhamra Port deal with its existing owners, Tata Steel and Larsen & Toubro, by mid-2014, making the private port major enter the eastern coast of India, along the Bay of Bengal, in a big way.
Earlier, the companies were expected to finalise the deal by March 2014 but uncertainties in the market and existing political situation forced them to wait and watch for a few more months, market sources close to the development told Business Line on Monday on condition of anonymity.
“The Adanis have evinced positive interest in the proposed deal,” said the sources, adding its port operating arm, Adani Port and SEZ Ltd (APSEZL), is already working closely with them as a “management consultant”.
The delay was also due to the fact that the existing partners are awaiting environmental and other clearances from the Central and Odisha Governments for the port’s proposed expansion plans, as sought by the Adanis, before the deal is finalised.
The deal between the two existing partners and Adani Port and SEZ Ltd, port arm of the Group, is expected to be worth about Rs 7,000 crore. However, exact valuation would be based on existing and potential business and future expansion. Dharma Port’s current capacity is to handle 25 million tonnes per annum (mtpa) of cargo, which it plans to expand to 80 mtpa.
This port, situated in Bhadrak district of Odisha, is a 50:50 joint venture of the Tatas and L&T, that became operational in 2010. To run the port, they had formed the Dhamra Port Company Ltd (DPCL). However, within two years, the partners decided to discontinue its running and to put it on the block, apparently realising that port operation was not their “core business.”
As a result, they commenced looking for a port operator company to buy out Dhamra port and to ensure that their interests in Odisha and neighbouring regions were protected, such as bulk movement of iron ore and coal in the case of Tata Steel. They found the Adanis the “best suitors” for the deal.
The importance of Dhamra Port could be gauged by the fact that it would serve the proposed $12 billion Posco Steel Plant of South Korea and for exporting iron ore from a nearly mineral belt. Besides, Odisha also plans to develop a shipbuilding yard, a gas-based manufacturing hub and a petro-chemical complex, besides a Special Investment Region.
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