Acquiring Container Corporation of India Ltd (Concor) from the government will be a breeze for Adani Ports and Special Economic Zone Ltd (APSEZ), Chief Executive Officer Karan Adani has said, noting that the money would be for “time value” to fast-track strategy despite the chance to create an alternate.
“In our view, Concor is a strategic acquisition and we believe that by fund raising without stretching the balance sheet, we should easily be able to execute the acquisition,” Karan Adani said during an earnings’ call on August 3.
Concor’s market capitalisation is about ₹39,900 crore and the sale of 30.8% of the government’s 54.8% stake followed by the mandatory open offer is expected to cost about ₹20,000 core to the buyer.
Karan Adani is unfazed by the potential deal size, the largest ever by APSEZ if it manages to pull off the transaction.
“Today, our net debt to EBITDA is around three and the way we are looking at growth and looking to hit our target, we do believe that our balance sheet would remain at a net debt to EBITDA of three. So that gives us a head room of almost one turn on net debt to EBITDA minimum, without hampering our investment grade ratings to do the acquisition,” he said.
Logistics assets
APSEZ has been investing heavily into logistic assets to build a business rivalling Concor, with an eye on creating an alternate to the State-run company on its own. Against this backdrop, a potential acquisition of Concor defies rationale, says industry sources.
“It is possible to create an alternate to Concor, but it takes 10 years’ time to create that alternate. You are paying basically time value to fast track your strategy,” Karan added.
The firm is looking to raise revenue from logistics business by 25% to nearly₹1,200 crore in FY22.
In the April-June quarter, logistics revenue rose 34% to ₹268 crore from ₹200 crore last year. EBITDA rose 42% to ₹62 crore from ₹43 crore a year ago.
In the first quarter of FY22, Adani Logistics Ltd, the wholly-owned unit of APSEZ, handled rail volumes of 84,717 twenty foot equivalent units (TEUs), a growth of 10% over the 76,925 TEUs booked last year.
The growth came despite the closure of the multi-modal logistics park at Kilaraipur in Ludhiana due to blockade by framers protesting the controversial farm laws.
Adani Logistics is constructing two new logistics parks at Nagpur and Virochan Nagar in Ahmedabad and has received approval for building an inland container depot (ICD) at Panipat for which construction will begin this year.
The firm has also won eight strategic logistics assets for building ICDs over three years on the western and eastern dedicated freight corridors that were put to tender by the Dedicated Freight Corridor Corporation of India Ltd (DFCCIL).
Adani Logistics will spend about ₹50 crores per station to develop the ICDs. According to the tender terms, the developer will have the freedom to decide the capacity of the ICDs based on market scenario.
Source : The hindu Businessline
