Karaikal Port Pvt Ltd, a wholly owned subsidiary of Marg Ltd, is getting ready for the second round of Private Equity funding. It is learnt that while quite a few PEs have evinced interest, Ascent Capital Advisors India Pvt Ltd is at an advanced stage of due diligence.
If a deal is struck, Ascent Capital might invest $50 million (Rs 250 crore) in Karaikal Port, the source, an investment banker, told Business Line on Wednesday.
Huge success
When the GRK Reddy-promoted Marg Ltd bagged the project to put up the Rs 400-crore port, few thought it the port would be a success. But the port, which commenced operations in May 2009, has been successful beyond expectations.
Last year, the port handled 4.75 million tonnes (mt) of cargo, achieved a turnover of Rs 170 crore and a pre-tax profit of Rs 35 crore — though it operates only two berths (three, if you include one meant for offshore supply vessels).
Construction of berths 3 and 4 is on, and is expected to be completed by September. The company has plans to mechanise the berths and also put up tankage for storing edible oil (6,000 kilo litres) and molasses (10,000 kl). Funding is being sought for this. With two more berths, the port's throughput is estimated to reach 10 mt and turnover to Rs 350 crore. (However, the source said, the increase in profit may not be in proportion, because interest charges would treble to Rs 90 crore and depreciation almost treble to Rs 40 crore.)
When a PE invests, it will be the second round of funding for the port company — earlier, IDFC Project Equity invested Rs 150 crore.
A corporate presentation of Marg Ltd (Karaikal Port's parent company) says that the company plans to invest Rs 1,569 crore in Phase 2A, which would raise the capacity to 21 mt, and Rs 1,390 crore in Phase 2B, taking the capacity further up to 47 mt.
Quoting Crisil, the presentation notes that the efficiency levels of Karaikal Port are the highest among the ports in Tamil Nadu.
The share price of Karaikal Port Pvt Ltd's parent company, Marg Ltd, has been rising in the last few days.
On Thursday, it closed at Rs 93.95 on the NSE, Rs 1.95 higher than the previous close.