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Bollore Africa Logistics SAS, a unit of Paris Stock Exchange-listed Bollore Group, will have to wait at least till 2021 to raise its stake in an Indian logistics company to comply with the terms of the contract the local firm’s subsidiary was awarded to run a container terminal at VO Chidambaranar Port Trust (VOCPT) in Tamil Nadu’s Tuticorin district.
On October 10, the Department of Economic Affairs (DEA) said it has approved a proposal from Bollore Africa Logistics to raise its stake in India Ports and Logistics Pvt Ltd up to 70.40 per cent from 49 per cent at an investment of ₹75.35 crore.
In 2013, Bollore Africa Logistics had invested ₹48.64 crore to buy a 49 per cent stake in India Ports and Logistics.
DEA is vested with the task of vetting foreign investment proposals in India, which was earlier looked after by the Foreign Investment Promotion Board (FIPB).
Dakshin Bharat Gateway Terminal Private Ltd (DBGT) is a special purpose vehicle (SPV) formed by India Ports and Logistics (formerly ABG Container Handling Pvt Ltd) to run a container terminal at VOCPT.
India Ports and Logistics is 51 per cent owned by Star Ports Ltd, a unit of Mumbai-listed Starlog Enterprises Ltd (earlier known as ABG Infralogistics Ltd), with Bollore Africa Logistics holding the balance stake.
The container terminal run by DBGT, the second at VOCPT, has a capacity to load 600,000 twenty-foot containers a year.
Foreign investor Bollore Africa Logistics, Africa’s biggest transport and logistics operator, is one of the few foreign investors in recent times to put faith in the Indian ports sector. “Bollore’s plan to increase stake in India Ports and Logistics has received clearance from the DEA. But the stake hike will have to be approved by VOCPT,” a Shipping Ministry official said.
“Under the terms of the concession agreement signed between VOCPT and Dakshin Bharat Gateway Terminal, change in management control – direct or indirect – cannot be permitted until three years from the commercial operations date (CoD) of the terminal,” the official said.
VOCPT is yet to notify the CoD for the terminal and this is expected sometime in March 2018. “DBGT is still in the construction phase during which it is allowed to handle containers according to the terms of the concession agreement,” he added.
When Bollore Africa Logistics bought a 49 per cent stake in India Ports and Logistics in 2013, it did not result in a change in management control of the company. But if its stake goes beyond 51 per cent, there will be an indirect change in the management of Dakshin Bharat Gateway Terminal and, hence, requires VOCPT’s approval.
“The concession agreement says that the no change in management control –either direct or indirect – can be allowed without the prior, written permission of VOCPT,” he said.
That is not the concern of the DEA, which merely clears foreign investment proposals. “If DBGT violates the concession agreement, that is between DBGT and VOCPT,” the ministry official said.
“As on date, there is no change in ownership or management control of the two companies. Star Ports continue to hold 51 per cent and Bollore Africa Logistics 49 per cent in India Ports and Logistics. And India Ports and Logistics continue to hold 100 per cent stake in DBGT,” a spokesman for Starlog Enterprises said.
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