APSEZ continues to make significant investments in logistical assets.
Adani Ports and Special Economic Zone Ltd (APSEZ) will have no trouble acquiring Container Corporation of India Ltd (Concor) from the government, according to Chief Executive Officer Karan Adani, who added that the money would be for “time value” to expedite the strategy despite the possibility of creating an alternative.
“In our view, Concor is a strategic acquisition and we believe that by fundraising 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 has a market capitalization of around Rs 39,900 crore, and the sale of 30.8% of the government’s 54.8% interest, followed by an obligatory open offer, is likely to cost the buyer around Rs 20,000 core.
Karan Adani is unconcerned about the prospective deal size, which, if completed, would be the largest ever for Adani Ports and Special Economic Zone Ltd.
“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 headroom of almost one turn on net debt to EBITDA minimum, without hampering our investment-grade ratings to do the acquisition,” he said.
Adani Ports and Special Economic Zone Ltd has been aggressively investing in logistic assets in order to develop a business that can compete with Concor on its own, with the goal of becoming a viable alternative to the state-run firm. According to industry sources, a potential acquisition of Concor defies logic in this context.
“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. In FY22, the company wants to increase income from the logistics division by 25% to roughly 1,200 crores.
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Logistics revenue increased 34% to 268 crores in the April-June quarter from 200 crores the previous year. EBITDA increased by 42% to 62 crores from 43 crores a year ago.
Adani Logistics Ltd, An Adani Ports, and Special Economic Zone Ltd.’s wholly-owned subsidiary handled 84,717 twenty-foot equivalent units (TEUs) in the first quarter of FY22, up 10% from the 76,925 TEUs handled the previous year.
Despite the shutdown of the multi-modal logistics park at Kilaraipur, Ludhiana, due to a blockade by framers protesting the controversial farm laws, the growth continued.
Adani Logistics is creating two new logistics parks in Ahmedabad’s Virochan Nagar and has gained authority to establish an inland container depot (ICD) in Panipat, which will begin construction this year.
The company has received eight important logistics assets from the Dedicated Freight Corridor Corporation of India Ltd for the construction of ICDs on the western and eastern dedicated freight corridors over a three-year period (DFCCIL).
The ICDs would be developed at a cost of roughly 50 crores per station by Adani Logistics. The developer will have the freedom to choose the capacity of the ICDs based on market conditions, according to the tender requirements.
