MUMBAI: Adani Group is planning to take control of Gangavaram Port in Andhra Pradesh as it looks to strengthen its position as the country’s largest port operator.
Adani Ports has inked an agreement to acquire a 31.5% stake in Gangavaram from private equity firm Warburg Pincus and is in discussions with its promoter to purchase their 58.1% interest.
Adani will buy Warburg’s stake for Rs 1,954 crore. Based on this valuation, Gangavaram promoter D V S Raju’s stake will be worth Rs 3,662 crore. The Andhra Pradesh government owns the balance 10.4% stake in Gangavaram, which is the second-largest non-major port in the state with a 64-million-MT capacity.
The acquisition expands Adani’s market share to 30% across 12 locations in India, it said in a statement. Owned by business tycoon Gautam Adani, the $13-billion enterprise controls Mundra Port, the country’s largest, in its home state of Gujarat.
The Gangavaram deal follows Adani’s purchase of Dighi Port in Maharashtra last month. Gangavaram, which handles both dry and bulk commodities including coal, iron ore, sugar, steel, generated a profit of Rs 516 crore on a revenue of Rs 1,082 crore in FY20.
The port’s operating profit margin was 59% in the same period. Gangavaram, according to Adani, is debt-free with cash balance of over Rs 500 crore. “This acquisition is a part of our continued strategy to build out a port and logistics network,” said Adani Ports and Special Economic Zones CEO and Gautam Adani’s older son Karan Adani.
Last year, the enterprise bought a controlling stake in Krishnapatnam Port, also located in Andhra Pradesh (AP), for Rs 12,000 crore. It is also developing a transshipment port at Vizhinjam, Kerala.
“The location of Gangavaram in the north of AP is a strategic complement to our recent acquisition of Port of Krishnapatnam that serves the south of AP,” the younger Adani said. From one port, with a capacity of 10 million-metric-tonne (MMT) in fiscal 2006, Adani has evolved into an operator of 12 ports, with a capacity of 498 MMT.