India’s biggest container gateway, the Jawaharlal Nehru Port Trust (JNPT), and the country’s biggest private port developer, Adani Ports and Special Economic Zone Ltd (APSEZ), are competing for the first time to acquire a port project — the debt laden Dighi Port Ltd — which has been put up for sale under the bankruptcy law.

JNPT and APSEZ have submitted separate resolution plans for Dighi Port Ltd, the entity that runs a greenfield port located on the banks of Rajpuri creek in Maharashtra’s Raigad district.

The third contender

The duo has a third contender to deal with — a consortium of Veritas (India) Ltd, Veritas Infra & Logistic Pvt Ltd and Veritas Polychem Pvt Ltd, which had also filed a resolution plan when the deadline ended on Thursday, according to multiple officials briefed on the bids. They declined to discuss the resolution plans submitted by the three groups.

The bid submitted by Veritas could create a potential conflict of interest because of a lease agreement it had signed with Dighi Port to set up some facilities, they said.

Both JNPT and APSEZ have their own separate strategies to buy Dighi, which owes ₹2,601.73 crore to a clutch of 16 banks led by Bank of India.

Maharashtra and West Bengal are the only two States were the Gautam Adani-promoted APSEZ does not have a presence.

For JNPT, the stakes are even higher given the constraints to expand further. Dighi is located in the same district as JNPT, which is just a few kilometres away.

It is the first instance of a port (JNPT) owned by the Centre looking to acquire a private port under the Insolvency and Bankruptcy Code (IBC).

That aside, Dighi fits into its strategy of developing a new hub-and-spoke model with JNPT at the centre, say Shipping Ministry officials.

“In India, it’s not easy to set up a port. It takes its own time. Dighi is a readymade port, plus it’s a stressed asset. So, we are trying to get it at a reasonable price; that’s the game,” the ministry official said.

JNPT’s revenues are steady. So, if the port is making a ₹3,000-crore net profit every year, it needs to create a larger asset base by taking advantage of depreciation. “If it keeps on building assets and pays less taxes, it will be able to earn more,” the official pointed out.

The future of JNPT, he said, is in having a hub-and-spoke model on the waterside; keep JNPT in the centre, create 3-4 smaller ports nearby and start bringing cargo from those places through waterways.

“Dighi will be a satellite port but dealing with specialised cargo like the cargo which Mumbai Port Trust is not handling now, it will be shift to Dighi. It’s ready business available. South Korean steel-maker Posco is already having business there, coal market is already there. There is ready cargo rest you build up,” the official said.

“They are asking for too much money,” said an executive with one of the bidding groups that pulled out without submitting a resolution plan.

The entity winning the bid, according to him, will have to deposit more than ₹2,100 crore. “Dighi is only worth around ₹800 crore, nothing more than that,” he said.

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