Adani Group looking to buy port in India
The Adani group, one of India's largest infrastructure conglomerates, is looking to buy a private port on India's eastern coast for around US$1 billion, chairman Gautam Adani said, reported The Wall Street Journal.
The group expects to complete the acquisition by the end of the current financial year through March, he said in a recent interview. Adani didn't name the target port.
The Adani group, with annual revenue of US$7.5 billion and based in the western Indian city of Ahmedabad, is bullish on the ports sector because it expects the country's merchandise trade to grow.
The group is a major player in the power and ports sectors, and owns coal mines in Australia and Indonesia. Three of its companies – Adani Enterprises, Adani Ports & Special Economic Zones and Adani Power – are listed on the Bombay Stock Exchange and the National Stock Exchange.
The group runs one of India's largest ports, at Mundra in western India. It is also developing ports in Dahej, Hazira, Goa and Visakhapatnam.
Adani, ranked India's 16th richest by the Forbes magazine, said the group has bid for developing a container terminal at a state-run port in the southern Indian city of Chennai, a project which if it wins would involve an investment of around $1 billion.
On its Australian plans, Adani said the group would invest $4.5 billion in the first phase of developing the Carmichael coal mine in Queensland. It plans to begin investing at Carmichael by July or August, and aims to start coal shipments from there by December 2015.
In the first phase, the mine is expected to produce 45 million metric tonnes of raw coal a year. Adani acquired it in 2010, and in 2011 also bought the coal-handling terminal at Australia's Abott Point port.
Adani said the group plans to invest $1.1 billion by 2015-16 to expand the port terminal's capacity and another $1.25 billion to $2.5 billion in building a rail line between the mine and the port.
Despite the large funding requirement, Adani said the company has no immediate plans to sell equity in the Australian project. Instead, it would raise funds through bank loans, bonds and internal accruals.
On the group's plans for India's power sector, he said it is on track to expanding generation capacity to 10,000 megawatts by March 31 this year, from 4,620 MW at present. It invested $10 billion in capacity expansion between 2007 and 2012, he added.
However, the company will hold back on its plan to expand capacity further by 6,500 MW until the power ministry draws up guidelines for contracts between state-run utilities and private generation companies on how to deal with shortages in locally produced coal.
Indian power plants have been unable to operate at their full capacities due to short-supplies of coal, the fuel used by more than half of the country's power stations. Some companies import coal – which is more expensive –but still need to supply power to distribution companies under long-term contracts at prices set on expectations that they would get the fuel locally.
India has the world's fourth-largest coal deposits at about 285 billion tonnes. But, the sector is facing sluggish growth, and the demand-supply gap this fiscal year is expected to be 192 million tonnes.
Strict environmental regulations and difficulties in getting land for mining projects are among the main factors hurting growth in India's coal production, Adani said.
"My personal belief is India's import of coal will continue to increase and the gap between demand and supply will also keep rising," Adani said.