APSEZ receives NCLT approval for amalgamation of Sarguja Rail Corridor

File photo (APSEZ)

APSEZ receives NCLT approval for amalgamation of Sarguja Rail Corridor

Ahmedabad, January 30, 2022

The Ahmedabad Bench of the National Company Law Tribunal (NCLT) has approved the composite scheme of arrangement of Adani Ports and Special Economic Zone Ltd (APSEZ) to acquire Sarguja Rail Corridor Pvt Ltd (SRCPL).

The scheme envisaged that APSEZ, holding a rail portfolio of 620 kms, would acquire 70 kms of Sarguja Rail from another Adani Group company.

It will be effective from the appointed date of April 1, 2021, a press release from the company said here today.

The release said APSEZ would now consolidate all rail assets under a single business entity – Adani Tracks Management Services Pvt Ltd – creating considerable value for all stakeholders from day one, as it aligns with APSEZ’s vision of being a leader in the Transport Utility space.

"This consolidation allows APSEZ, which is targeting 2000 km of track length by 2025, to participate in Indian Railways PPP projects without having to compete with similar businesses in the Adani portfolio, a position that is in full alignment with the equity interests of minority shareholders," it said.

Karan Adani, CEO and Whole Time Director of APSEZ said, “As per the National Rail Plan 2020, Indian Railways will invest more than INR 3 lakh crore over the next 10 years to construct new rail lines. Further, the government’s shift in focus from road to rail as the preferred mode of transport, an obvious choice both economically and environmentally, will require significant participation of the private sector. Therefore, this acquisition creates significant business value for APSEZ as a transport utility.”

“The process adopted by APSEZ to acquire SRCPL from another entity within the Adani Group,” added Adani, “reflects our continuous commitment to enhancing our corporate governance practices. The strongest endorsement of the process lies in the overwhelming support it received from our minority shareholders, reaffirming their confidence in APSEZ’s management.”

According to the release, the acquisition being a related party transaction, APSEZ adopted a fully transparent approach with minority shareholders and creditors for approval.

Some of the key steps in the approval process included:

• Proposal evaluation by an Executive Committee (EC) of three independent board directors

• Independent asset valuation (by Deutsche Bank and BDO Valuers) and ‘fairness opinion’ from JP Morgan and JM Financial on the valuation

• Post NOC from the stock exchanges, an application was filed for an NCLT-convened meeting of APSEZ’s equity shareholders and secured and unsecured creditors, to vote on the proposal

• Over 92% of minority shareholders and close to 100% of debtors voted in favour of the proposal

• NCLT, after reviewing the outcome, has approved the composite scheme

• The other Conditions Precedent are to be completed and the Scheme shall become effective on the completion of all the conditions set out in the Scheme

The company said the acquisition of Surguja Rail will create value for all stakeholders from day one, as it is EPS accretive.Significant growth opportunity is available as the business is yet to mature, including in non-Adani mine areas with annual potential of up to 40 MMTPA.

"Critical and environment-friendly transport infrastructure will help decarbonize the mineral transport sector," it said.

The release said secured long-term contract with sovereign equivalent counterparty would provide annuity like returns.

APSEZ, a part of the globally diversified Adani Group, has evolved from a port company to a Ports & Logistics Platform. It is the largest port developer and operator in India with 12 strategically located ports and terminals — Mundra, Dahej, Tuna and Hazira in Gujarat, Dhamra in Odisha, Mormugao in Goa, Gangavaram, Visakhapatnam and Krishnapatnam in Andhra Pradesh, Dighi in Maharashtra and Kattupalli and Ennore in Chennai — representing 24% of the country's total port capacity, handling vast amounts of cargo from both coastal areas and the hinterland. The company is also developing a transshipment port at Vizhinjam, Kerala.

NNN

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