Shapoorji Pallonji ‘in talks to sell majority stake’ in Gopalpur Ports
Financially-stressed company looking for an exit from Gopalpur Ports
Financially-stressed Shapoorji Pallonji Group is said to have initiated moves to sell its majority holding in Gopalpur Ports Ltd.
Adani Ports and Special Economic Zone Ltd (APSEZ), India’s biggest private port operator and AM/NS India, the joint venture between steel makers ArcelorMittal and Nippon Steel have been sounded out for a potential deal, with multiple sources saying that “initial talks” have already been held on the stake sale.
Shapoorji Pallonji said it had ‘no comments’ in response to a query, while APSEZ said there was ‘no discussion’ on buying Gopalpur port. AM/NS did not respond to an email seeking comment.
Financial stress
Shapoorji Pallonji is looking for an exit from Gopalpur Ports in the wake of financial stress facing the Group, a source with knowledge of the development said, asking not to be identified.
In 2017, Shapoorji Pallonji Port Maintenance Pvt Ltd (SPPMPL), a wholly-owned subsidiary of SP Imperial Star Pvt Ltd, acquired a 60 per cent stake in Gopalpur Ports from original promoters Sara International Ltd and Orissa Stevedores Limited (OSL).
AM/NS is eyeing port assets to support its huge capacity expansion plans in Odisha. On March 4, AM/NS signed a memorandum of understanding with Odisha government to set up a 12 million tonne integrated steel plant in Kendrapara district with a potential investment of ₹50,000 crore.
The steel maker will soon complete doubling the capacity of its pellet plant in Paradip to 12 mt spending ₹2,000 crore. It is also increasing beneficiation facility at Dabuna to 16 mt from 5 mt.
The company has also won permits for two iron ore mines in Odisha of which mining has started at Thakurani while the one at Sagasahi is close to commissioning.
For APSEZ, acquiring Gopalpur would fit into its overall strategy of expanding port market share beyond 30 per cent and become a large integrated logistics company.
While Centre-owned Paradip Port Trust is the biggest in the region and cheapest in rates compared to Dhamra (owned by APSEZ) and Gopalpur, it is handicapped by depth restrictions for bigger dry bulk carriers to call.
The concession agreement for Gopalpur port was signed in September 2006 for 30 years, which can be extended by 20 years. The port developer pays an annual revenue share of 7.5 per cent to the Odisha Government.
Location perspective
From a location perspective, Gopalpur scores high in terms of deep-water closer to the coast that allows bigger dry bulk ships to dock as well as good rail and road connectivity for evacuation of cargo, says Ramesh Singhal, Director at i-maritime Consultancy Pvt Ltd.
Gopalpur port is located along the Bay of Bengal about 90 nautical miles south of Paradip Port and 110 nautical miles north of Vishakhapatnam Port. The port is connected to the golden quadrilateral (NH-5) through NH-516 which is 6 km from the port. It also has two railway sidings which are connected to the Howrah-Chennai-Visakhapatnam trunk line accessible to both the east and south of India.
Being a private port, Gopalpur is free to charge competitive market rates. This allows flexibility to the port in providing and pricing additional value- added services.
The port currently runs three berths with a capacity to handle 15 mt of cargo and in the nine months of the current fiscal, it handled 7.79 mt of cargo. A fourth berth is under construction to expand capacity.
The port, spread over 400 acres, handles illuminate coal, calcined petroleum coke, steel products, industrial salt, granite blocks, cement, iron ore fines and pellets, blast furnace slag and fertilizers.