Ports and shipping in India

Adani acquires India's largest marine services company Ocean Sparkle​

Adani group has acquired India's largest marine services company, Ocean Sparkle Ltd. Adani Ports and Special Economic Zone Ltd (APSEZ) through its subsidiary, the Adani Harbour Services Ltd, has entered into a definitive agreement for the acquisition of a 100 per cent stake in Ocean Sparkle Ltd.

Ocean Sparkle Ltd (OSL) ranks first in India and 11th globally in providing end-to-end marine services.

"Given the synergies of OSL and Adani Harbour Services, the consolidated business is likely to double in five years with improved margins, thereby creating significant value for APSEZ’s shareholders," said Karan Adani, CEO and whole-time Director, APSEZ.

"This acquisition not only provides APSEZ a significant share of India’s marine services market but also provides us a platform for building presence in other countries, thereby facilitating APSEZ’s journey towards becoming the largest port operator globally by 2030 and largest integrated transport utility in India," Adani said.

ADANI-OCEAN SPARKLE DEAL

  • Key activities carried out by the company include towage, pilotage, and dredging. With an asset base of 94 owned vessels and 13 third-party owned vessels, OSL is a market leader.
  • OSL is valued at an enterprise value of Rs 1,700 crore with Rs 300 crore of free cash in the company.
  • The company was established in 1995 by a group of marine technocrats with P Jairaj Kumar as the Chairman and MD, who will continue as the Chairman of the OSL board.
  • OSL has long-standing relationships with its existing clients, with contracts ranging from 5 to 20 years (average length of contracts is ~7 years).
  • Further, the contracts are on Take or Pay (TOPA) basis, thereby providing robustness to OSL’s business model. The Company has a presence in all the major ports, 15 minor ports and all the 3 LNG terminals in India.

  • Over the years, OSL has built and deployed a team of 1,800 personnel across India. The Company has significant experience in global maritime servicing through its operations in Oman, Saudi Arabia, Sri Lanka, Qatar, Yemen and Africa.

OCEAN SPARKLE

OSL’s attractive capital structure, quality operations and sustainable cash flows are reflected in its attractive credit rating (AA- by ICRA).

The Company is expected to have revenue of Rs ~600 crore, EBITDA of Rs 310 crore and PAT of Rs 135 crore in FY22. Around 92 per cent of OSL’s total revenue was contributed by marine services (Towage & Pilotage), and the remaining 8 per cent is from dredging and other offshore services combined.

On the back of operational and financial synergies, the consolidated revenue and EBITDA of Adani Harbour Services is expected to jump ~100 per cent and reach around Rs 5,000 crore and Rs 4,000 crore respectively by FY27.
 

Shipping Corporation of India: Govt to invite financial bids for sale by September​

Privatisation of SCI is likely to be completed in the current fiscal.​

The government is likely to invite financial bids for Shipping Corporation of India by September after the process of demerger of non-core assets is completed, an official said.

As part of the strategic-sale process, the government is hiving off Shipping House and the training institute and some other non-core assets of Shipping Corporation of India (SCI).

"The process of the demerger is time-consuming. We would be ready to invite financial bids in 3-4 months," the official said. The board of Shipping Corp met last week and approved an updated demerger scheme for hiving off the non-core assets of SCI to Shipping Corporation of India Land and Assets Ltd (SCILAL) including Shipping House, Mumbai and MTI (Maritime Training Institute), Powai to complete the process of de-merging all the non-core assets to the new company SCILAL.

As per the balance sheet of SCI, the value of non-core assets held for demerger as of March 31, 2022, stood at ₹2,392 crore.

The SCI board in August last year, had approved a demerger scheme for hiving off the identified non-core assets and incorporated SCILAL in November 2021, for holding such assets of the company, which is under the Ministry of Ports Shipping and Waterways. The Ministry in April 2022, had directed SCI to expedite the process of demerger of non-core assets of SCI to SCILAL and also requested the Board of SCI to review the demerger scheme for hiving off the non-core assets, including Shipping House, Mumbai and MTI, Powai.

"Such modifications do not have any impact on carrying value of non-core assets in the financial statements. The implementation of the Scheme including the modified scheme is in process and considering the reiteration by MoPSW and DIPAM to expedite the demerger process, there is a certainty of completion of the process in the near future," as per the SCI independent auditor's report presented to the Board.

In March last year the government had received multiple bids for privatisation of Shipping Corporation of India.

The Department of Investment and Public Asset Management (DIPAM) in December 2020, had invited expressions of interest (EoI) for strategic disinvestment of its entire stake of 63.75 per cent in Shipping Corp of India, along with the transfer of management.

The Cabinet in November 2020, had given in-principle approval for the strategic divestment of Shipping Corp. The privatisation of SCI is likely to be completed in the current fiscal. The government has budgeted to garner ₹65,000 crore from CPSE disinvestment in the ongoing 2022-23 fiscal.

While the government has already raised ₹3,000 crore from a minority share sale in ONGC, another ₹21,000 crore would come in from the ongoing IPO of Life Insurance Corporation this month and ₹211.14 crore after the handover of Pawan Hans management control to Star9 Mobility Pvt Ltd, a consortium of Big Charter Pvt Ltd, Maharaja Aviation Pvt Ltd and Almas Global Opportunity Fund SPC, by June.
 

Shri Sarbananda Sonowal asks all Ports to prepare master plan in order to become Mega Ports by 2047​

The three day Chintan Baithak of Ministry of Ports, Shipping and Waterways chaired by Shri Sarbananda Sonowal, Union Minister for Ports, Shipping and Waterways concluded today with some of the remarkable decisions. The baithak was organized with an aim to discuss and deliberate ideas and innovations that can propel India’s blue economy.

The Chintan Baithak was co-chaired by Shri Shripad Yesso Naik and Shri Shantanu Thakur, Ministers of State for Ports, Shipping and Waterways and attended by Chairpersons of all major ports, and Senior Officials of MoPSW, for brainstorming on promoting India’s marine economy.

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Speaking at the occasion Shri Sonowal reiterated Prime Minister Narendra Modi’s vision to develop and promote India’s blue economy. He further suggested that all ports should prepare master plan in order to become Mega Ports by 2047.


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The Chintan Baithak witnessed deliberation on various innovative projects undertaken by them such as Buffer Parking Yard for Container Trailers, Smart Vessel Traffic Management System, 5G Network Pilot Project, Supervisory Control and Data Acquisition (SCADA) System for Oil Pipeline Operations, Automated Vehicle Scanning, RFID Scanning Of Personnel, Drone Surveillance, Green Warehousing System, Rejuvenation of Waterbodies, etc.

Entire three day Baithak was divided into various sessions with exclusive themes focusing on various aspects and prospects of the shipping industry along with role to be played by the MoPSW towards nations development. The session on ‘Implementation of New Tariff Guidelines for existing projects and Ongoing Projects’ pondered on the issue of tariff fixation of existing BOT operators. While, the session on ‘Ensuring level playing field amongst New and Existing Concessionaires in Context of New MCA’ discussed the challenges brought by New MCA 2021 bringing in tariff dynamism based on market rates thereby resulting in non-level playing field for old players.


The session on ‘Integration of IWT, Coastal and Exim Transport’ charted out the potential benefits of improving Port Cargo via Coastal and Inland Waterways Transport in terms of cost savings and emission reduction. Through concerted effort by Central and state govt, Coastal and IWT can become complementing modes with Rail and Road Transport.

The Chintan Baithak also focused on ‘New Generation Automated Technologies’ wherein application of various cutting-edge technologies such as drone surveillance, Internet of things, Artificial Intelligence, etc, can significantly improve operations at Indian Ports. A presentation on Steps to be taken to compete with private/non-major ports talked about increasing competitiveness in the port sector and the positioning of major ports versus the non-major ports in India.

Shri Sonowal suggested the major ports to draft land policy guidelines, explore potential of satellite presence out of port limits. In order to make SPVs more efficient and effective, the Minister directed the officials to repurpose the SPVs so as to make them lean and agile towards achieving the desired objectives.

He also insisted on enhancing operational performance of Dredging Corporation of India and importance of multimodal connectivity.

Also to increase the port performance, Shri Sonowal suggested all the ports to develop independent feedback mechanism to identify gaps and resolve them in consultation with all the stakeholders. It also proposed 100% financial assistance for developing dedicated coastal berths at ports through Sagarmala programme and to offer more berths on PPP mode.

It was suggested by the Minister that all ports must explore way of adopting the intervention of VHF technology at their ports. The Green Ports Policy was also discussed, which will be applicable for all the major and non-major ports of India. The draft policy also suggested port authorities to explore the option of project financing through multi-lateral development banks/other financial institutions/any green financing agencies.

Shri Sonowal concluded that the reflections from the ‘Chintan Baithak’ will help create the roadmap to put India as one of the world’s maritime leaders.
 

@Ankit Kumar @RISING SUN
Price is always important. They paid more because they knew something which most probably others didn't.

There will be an opportunity for Adani to reap economic benefits from it very soon
 
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Govt notifies five ports for imports of pulses from Myanmar, Mozambique & Malawi​

All imports consignments to carry certificate of origin
Under the bilateral agreement signed last year, India has committed to import 0.25 MT urad and 0.1 MT annually from Myanmar between 2021-22 and 2025-26.
Under the bilateral agreement signed last year, India has committed to import 0.25 MT urad and 0.1 MT annually from Myanmar between 2021-22 and 2025-26.​


To meet domestic shortfall, the government has notified imports of 0.6 million tonne (MT) of tur and urad annually under bilateral agreements with Myanmar, Mozambique and Malawi, through five ports.

According to a notification issued by the Directorate General Foreign Trade, import of pulses will be allowed through five ports – Mumbai, Tuticorin, Chennai, Kolkata and Hazira. However, all the imports consignments need to have ‘certificate of origin’ issued by respective countries.

Under the bilateral agreement signed last year, India has committed to import 0.25 MT urad and 0.1 MT annually from Myanmar between 2021-22 and 2025-26.

India signed an MoU with Mozambique for import of 0.2 million tonne of tur annually for five years when the retail prices of tur skyrocketed to Rs 200 a kg in 2016. This MoU was extended for another five years in September 2021.


In 2021, India entered into a MoU with Malawi for the import of 0.05 MT tur per annum, till 2025.

Imports from all the three least developed countries are exempted from import duties. According to estimates, India imports around 15% of annual pulses consumption. Around 2 MT of pulses were imported in FY22.

India also imports lentils (masur) from Canada and Australia for augmenting domestic supplies.

According to the third advance estimates of foodgrains production, the country’s pulses production rose by close to 9% to 27.75 MT in 2021-22
crop year (July-June) compared to previous year.

India is largely self-sufficient in chana production which has a share of 50% of the total pulses production.

The government in March had extended the ‘free-import’ policy for two varieties — tur and urad — by a year to the end of FY23. Under the regime, introduced in May last year, specified pulses can be imported without any quantitative restrictions.

To ensure adequate domestic availability of pulses, the government is currently drawing up a comprehensive long-term policy, which will focus on increasing production, improving processing technologies for cutting down on post-harvest losses and ensuring farm gate procurement by processors.

The policy would also aim at bringing stability in the import tariff regime so that frequent changes in tariff structure does not impact the domestic production while ensuring that landed cost of imported pulses are around the minimum support price (MSP) announced by the government.