Faced with severe financial crunch, the Y S Jagan Mohan Reddy government has finally approved sale of its 10.39 per cent stake in Gangavaram Port Limted (GPL) to industrial major Adani Group to raise Rs 644.78 crore.
Adani Ports and Special Economic Zone (APSEZ) of Adani group informed the stock exchange that the Andhra Pradesh government had approved the proposal for sale of its 10.39 percent stake in the Gangavaram Port (GPL) to the company. The transaction is expected to be completed within 1 month.
“The company has received letter/order from Andhra Pradesh Maritime Board dated 23rd August, 2021, received on 24th August, 2021 intimating the approval of proposal of acquisition of 10.4% stake of GPL by the company from Government of Andhra Pradesh," Adani Ports said in its exchange filing.
The acquisition is subject to approvals under applicable laws, including approval of the Competition Commission of India (CCI). The consideration is Rs 644.78 crore subject to closing adjustment, if any.
Gangavaram Port, incorporated in September 2001, is engaged in the business of handling various types of dry bulk and break bulk cargo. It is a multi-cargo facility and handled 32.81 MMT of cargo in FY21. It has a capacity of 64 MMT. The operational revenue for the financial year 2020-21 was Rs 1,057 crore.
The APSEZ already has 89.61 per cent stake in the Gangavaram port, after it acquired controlling stake of 58.1 per cent equity from its original promoter D V S Raju and his family on March 23 this year for Rs 3.604 crore. Earlier in the same month, it acquired 31.5 per cent stake from Warburg Pincus.
If the Andhra Pradesh government offloads its stake of 10.39 per cent, the Adani Group would be holding 100 per cent equity in the Gangavaram port, which came into operation in July, 2009.
In fact, the state government’s stake in the Gangavaram port is in the form of 1400 acres, which it had acquired from Visakhapatnam Steel Plant, which is the biggest customer of the port.
According to sources, the value of the land held by the state government would fetch 10 times more than what the Adani Group had offered.
“If the state government does a better bargain or sells its stake in open market, it would have got a higher price,” a source said.