VITAL INDUSTRY UPDATES – 15/07/2015

July 15, 2015 2:46 pm Published by

Adani in talks to acquire Gangavaram Port for $2.1b

Adani Ports & Special Economic Zone has entered into exclusive talks to acquire Gangavaram Port near Vishakhapatnam in Andhra Pradesh for $2.1 billion, a deal which could make the company a dominant player on the country’s eastern seaboard to capture the freight traffic in Bay of Bengal, people directly familiar with the matter said.

This could be the biggest acquisition for Adani Group, spearheaded by 53-year-old Gautam Adani, pipping its $2-billion Abbot Point Coal Terminal buy in Australia four years ago. Adani’s acquisition offer, through a fully leveraged route, comes more than a year after its $1-billion Dhamra port acquisition on the east coast in Odisha. The $10-billion conglomerate with primary interests in ports, power and natural resources was initially planning to clinch the deal after its planned $2.5-billion dollar bond issuance, which now has been postponed due to the Greece crisis. 

Adani is expected to move ahead with deal making in the coming weeks after securing financing support from a clutch of banks, the sources cited earlier said. Adani has been on the prowl for acquisitions and has had preliminary talks to acquire Kattupalli shipyard and port complex, near Ennore in Tamil Nadu, owned by L&T Shipbuilding, sources added.

 

An Adani Group spokesperson declined to comment on what it termed market speculation, while Gangavaram Port management denied any such transaction, calling the news as false and baseless rumours.

India’s deepest port, Gangavaram is promoted by the D V S Raju family and has private equity major Warburg Pincus as a shareholder. The Raju family owns 58% stake, while Warburg Pincus has 31%. The government of Andhra Pradesh holds about 11% in the port company. Last week, a media report suggested that Adani was in preliminary talks to buy Warburg’s minority stake.

Warburg, which invested about $40 million seven years ago, is poised to post windfall gains, mopping up almost $650 million from the potential transaction. This could be one of Warburg’s heftiest gains from India after its blockbuster exit from Bharti Airtel a decade ago. Warburg had netted $1.83 billion selling the telco shares after investing $290 million. A spokesperson for Warburg Pincus did not respond to an emailed query at the time of going to press.

“Going by the history of Adani Group, it has always acquired 100% interest and has never picked up partial stakes in ports business. Adani is an operator and not an investor,” sources said.

 

 

 

Coal mine auctions: 12 out of 28 winners wait for clearances to start mining

Three months after the conclusion of the first two rounds of coal block auctions, 12 out of 28 awarded blocks are awaiting green clearances and State-level approvals to begin mining.

State-level problems relating to environment and forest clearances in some cases and handing over of the entire land in other cases have led to delays in mining activities.

Delays also occurred as prior approvals of the previous block owners needed to be transferred to the winning bidders. While this has been expedited by the Ministry for Environment and Forests through an amendment to the environment clearance norms, it has delayed projects such as Essar Power’s Tokisud North in Jharkhand.

Essar Power had won the coal block at ₹1,110 a tonne, the highest for a power sector block in the two rounds of auctions.

Of the remaining winners which are waiting for all clearances, seven are from the power sector.

Coal Ministry officials are confident that the remaining issues will resolved soon.

“We have worked at a quick pace and resolved a lot of the pending issues for 16 block winners. For example, Sial Ghogri and Mandla North’s problems were resolved recently. In the next couple of months we are confident that the remaining winners will also be able to begin mining,” a senior Coal Ministry official said.

“Also, most of the larger blocks with the highest bids are already close to mining. While we are aware of the delay in other cases and are working to resolve it expeditiously, it is not a major worry,” the official added.

According to the official, mining has already begun in about 5-6 blocks. The Nominated Authority will hold a meeting on July 17 to review the status of production at the 16 blocks where vesting order has been issued to the successful bidder.

Since the delay is not on the part of the companies, there is no threat to the performance bank guarantee. However, once all approvals and clearances are provided to the block winners and the mining plan is approved, any delay will result in a part of the bank guarantee being seized.

 

 

Steel imports in Q1 shoot up by 53.1 pc to 2.545 mt

 Imports of finished steel rose sharply by 53.1 per cent to 2.545 million tonnes (mt) in the first quarter of the current fiscal as compared to the same period’s shipment of the previous year.

According to data provided by the Joint Plant Committee under the Steel Ministry, India’s steel demand went up by 7.1 per cent to 20.10 mt during April-June of 2015-16 due to fall in domestic production and cheap imports from China, Japan and Korea.

However, imports this June declined by 4.7 per cent to 0.873 mt from May’s imports, the data showed.

Krishnapatnam Port wins ‘Golden Peacock Environment Management Award’

 Krishnapatnam Port, recognised as one of India’s largest ports and ranked amongst the finest ports connecting the eastern and western parts of the world, has been bestowed with the Golden Peacock Environment Management Award. The prestigious award, in recognition of its initiatives and achievements in the field of environment protection and management, was presented by the Union Minister of State for Environment, Mr Prakash Javadekar, to Mr C. Sasidhar, Managing Director and Mr Anil Yendluri, Director and CEO, Krishnapatnam Port, on July 11, 2015 at the 17th World Congress on Environment Management and Presentation of Golden Peacock Awards function held in New Delhi.

The Golden Peacock Awards, instituted by the Institute of Directors, are presented annually under various categories. The winners of the awards for 2015 were finalised by a grand jury headed by Justice P. N. Bhagwati, former Chief Justice of India and Chairman Emeritus of Golden Peacock Awards, Justice (Dr) Arijit Pasayat, former Judge of the Supreme Court, former Chairman of Competition Appellate Tribunal and Authority for Advance Ruling (Customs, Central Excise and Service Tax) and Chairman of Golden Peacock Awards. The Golden Peacock Environment Management Award is the coveted and prestigious recognition given to organisations which have attained significant achievements in the field of environment management.

Environment protection is at the heart of Krishnapatnam Port’s corporate governance and philosophy. Some of the green initiatives taken by the port include—plantation of over 20 lakhs trees within the port and more than 50,000 trees in the surrounding villages; installation of solar lights in the port and solar water heaters in the employee colony; establishing gas connections for villagers so as to discourage them from cutting mangroves; adoption of Nellore town traffic islands and public buildings for maintaining greenery around the areas, etc. The port has adopted an Environment Health and Security programme that encourages continuous improvement in environment protection and includes waste management, pollution control, resource conservation, use of renewable resources, etc.

Within the port area, Krishnapatnam Port has an electrified railway line network from all storage yards as part of its sustainable strategy, thus leading to a reduction in carbon dioxide to the extent of 24,935 tonnes and also reduction in diesel consumption of railway engines and GHG emissions. Currently, the port is in the process of electrifying all its cranes so as to reduce diesel consumption, and moving towards solar and wind energy to reduce fossil fuel usage. The 4 R’s strategy of the port helps in reducing water requirements by adopting new technology called atomisers that has shown astonishing results—Reuse of water collected from guard ponds after wetting the yards, recycling methods wherein 300 KL of domestic sewage is treated and recycled for green belt development, 400 KL of truck wash water treated and recycled for dust suppression, and recharge by developing 12 rain water harvesting ponds having total catchment area of about 5.26 lakh sq. m, harvesting and recharging ground water of about 1.54 lakh M3 per year.

 

Commented Mr Sasidhar: “We are honoured to receive this prestigious award. We strongly believe that the progress and welfare of society is not merely the responsibility of governments alone; rather every organisation should contribute and be part of social welfare. We have created a socio-economic atmosphere in Krishnapatnam that immensely benefited the surrounding inhabitants fostering sustainable growth.

“Going forward, our goal is to achieve sustainable development and maximise the positive impact by creating value for the society. We will continue to invest in education, skill promotion, job creation, health and safety programmes, and environment management that leads to overall economic development in the region.”

Over the years, Krishnapatnam Port has taken considerable steps to maintain and safeguard the environment not just around its own premises but also by reaching out to the communities and nearby industrial region. Setting an example, the port has encouraged the surrounding areas and societies to adopt environment-friendly and sustainable operations, thus achieving a healthy balance between environment protection and development of the region.

 

 

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This post was written by Atlantic Admin