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Wednesday, Mar 12, 2003

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Rs 290-cr deal with Adani — P&O clears FIPB hurdle for Mundra terminal stake

Ambarish Mukherjee
P. Manoj

NEW DELHI, March 11

P&O Ports is close to acquiring 100 per cent stake in Adani Container (Mundra) Terminal Ltd (ACTL) from Adani Group in a deal worth Rs 292 crore ($60 million).

The deal was granted approval by the Foreign Investment Promotion Board (FIPB) recently after a long wait, a senior Government official said.

The acquisition will make ACTL a 100-per cent subsidiary of P&O Ports, which will bring in further foreign funds to develop the minor port of Mundra.

Besides, the deal will cement P&O Ports' presence in India's port sector after investments in Nhava Sheva International Container Terminal (NSICT) at the Jawaharlal Nehru port (JNP) and Chennai Container Terminal Ltd (CCTL) in the Chennai port.

"The involvement of P&O Ports will help rev up traffic at the Mundra port given its locational and technical advantages such as deeper draft and better proximity to the Northern hinterland,'' Mr Gautam Adani, Chairman, Adani Group, told Business Line.

Mundra port will emerge as a major hub port on the West Coast of the country soon, Mr Adani said.

The FIPB approval is, however, subject to certain specific conditions recommended by the Shipping Ministry for operating the port. The Ministry had suggested that the acquisition could be modified keeping in view National defence and security considerations.

Besides, P&O Ports will not be allowed to sell or otherwise transfer their equity holdings in ACTL without prior written consent of the Government.

The involvement of P&O Ports in ACTL should also be consistent with the terms and conditions of the concession agreement signed between the Gujarat Maritime Board and Gujarat Adani Port Ltd for the development of the Mundra port.

The FIPB has also directed P&O Ports to seek specific approvals from the Gujarat Government on the concession and sub-lease agreement and all other approvals related to port operations in Mundra.

Commenting on the FIPB approval, Mr Jimmy H. Sarbh, Director, P&O Ports, said: ``With this acquisition, P&O Ports is on its way to create a truly hub port on the North-Western shores of India".

P&O Ports has set up a subsidiary in Mauritius `P&O Ports (Mundra) Pvt Ltd, Mauritius' to acquire ACTL, a company promoted by the Adani Group for providing port infrastructure facilities for handling container cargo at the Mundra port.

The FIPB approval was delayed by close to five months due to the alleged role of Adani Exports (which holds 26 per cent stake in ACTL) in the stock market scam. According to the procedure, all the FIPB proposals are to be screened and disposed of within a period of six weeks.

The Department of Company Affairs (DCA) is pursuing criminal prosecution proceedings against 13 companies including Adani Exports in the stock scam.

While considering the proposal, the FIPB had sought to know whether an approval should be put on hold till the DCA completed the proceedings.

But, the DCA later clarified that Adani Exports and ACTL were two different entities and the FIPB approval need not wait for conclusion of the prosecution proceedings initiated against Adani Exports.

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