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APSEZ forms new wholly-owned unit to consolidate rail assets

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The platform company will be the vehicle for participating in Railways’ PPP projects

Adani Ports and Special Economic Zone Ltd (APSEZ) has set up a wholly-owned unit Adani Track Management Services Pvt Ltd (ATMSPL), a platform company to consolidate all existing rail assets and for strategic investment in new rail logistics projects.

The unit will consolidate all existing rail track assets, private freight terminals and rail wagons under one platform. It will be the vehicle for participating in all public-private-partnership (PPP) projects bid out by the Indian Railways, according to a presentation prepared by APSEZ.

Indian Railways plans to construct new rail lines over the next 12 years with private investments worth over ₹3 lakh crore.

APSEZ currently runs 620 km of rail tracks (including rail tracks where APSEZ holds minority interests) which will be expanded to over 760 km by 2025.

APSEZ is bringing all rail assets under one entity to avoid “competing business within the group” and to tap growth opportunities by providing related services under the general-purpose wagon investment scheme of Indian Railways.

The GPWIS allows private firms to invest in general purpose rakes for transporting restricted commodities like coal, coke, ore and minerals which till 2018 were completely controlled and regulated by the Indian Railways.

Apart from allowing all commodities, GPWIS safeguard private players’ investment by ensuring that the wagons procured under the policy will not be merged with the Indian Railways pool.

The operating rail assets being transferred to Adani Track Management services include the 74 km long Mundra-Adipur line, the 68.5 km long Dhamra-Bhadrak line, the 113 km long Krishnapatnam- Obulavaripalli line, the 301 km Palanpur –Gandhidham section and the 63 km Bharuch -Dahej line.

The planned 6 km-long Kattupalli-Ennore line, the 34 km Dighi to Roha line and the 36.5 Km Hazira Port to Gothangam line will also be part of the new platform company.

The new platform unit will also include the 70 km-long rail line run by Sarguja Rail Corridor Pvt Ltd (SRCPL), linking the Parsa East and Kanta Basan coal blocks located in Hasdeo Arand Coalfield in Sarguja district of Chhattisgarh, to the nearest Indian Railways line at Surajpur station in Chhattisgarh.

Since the project is the only rail connectivity between the mining site and the main IR line, state-run Rajasthan Rajya Vidyut Utpadan Nigam Ltd (RRVUNL) signed a 30-year track access and usage agreement (TAUA) with SRCPL in July 2015 to use the private siding as a co-user to transport the mined coal from the mines up to the Surajpur Road station for onward transportation of coal up to the thermal power stations of RRVUNL in Rajasthan.

The new entity will be structured by merging SRCPL with APSEZ for which APSEZ will issue fresh equity shares to Adani Rail Infra Pvt Ltd, slump sale of Mundra and Dhamra rail undertakings to ATMSPL and sale of equity holdings by respective APSEZ step down rail subsidiaries to ATMPSL.

The share swap between APSEZ and SRCPL is based on an enterprise value of ₹5,977 crore for SRCPL. The transaction is subject to regulatory approvals, including from the National Company Law Tribunal (NCLT) for the merger scheme.


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