India's RIL plans to sell 15% stake in Rewas Ports
India’s biggest company by market value, Reliance Industries Ltd (RIL), is looking to sell a stake of as much as 15% in the country’s most ambitious port project that it is building at Rewas in Maharashtra, according to two persons briefed on the matter.
Reliance needs to sell the stake both to fund the project as well as to bring in specialists because it does not have expertise in handling cargo such as containers.
Reliance Logistics (Pvt.) Ltd, a unit of the Mukesh Ambani-run RIL, holds a 55% stake in Rewas Ports Ltd, the company formed to develop and operate an all-weather, deep-water port at Rewas, just 10km south of the Union government-owned Jawaharlal Nehru Port, the country’s busiest container port that handles about 60% of all of India’s container cargo. “Reliance is looking to offload at least 15% stake in the port company to a strategic investor,” said one of the two persons mentioned earlier, adding that the parent company had initiated talks with three-four entities. He and the other person did not want to be named because the discussions are confidential and not yet final. The value of the proposed stake sale could not be ascertained by Mint.
A spokesman for Reliance declined to comment when contacted by phone.
Other stakeholders in Rewas port include Jai Corp. Ltd, which owns a 10% share, and Amma Lines Ltd, the original licence holder for developing the port, which has a 24% share. The balance 11% is held by the Maharashtra Maritime Board, the local regulator tasked with developing ports in the state.
Jai Corp., which makes steel and plastics, is run by chairman Anand Jain, a close confidant of Ambani, but he does not hold any official position in RIL. The company is also developing special economic zones, with Ambani.
India, Asia’s third biggest economy and the world’s second fastest growing major economy, plans to raise cargo handling capacity at its ports to 1,590 million tonnes (mt) a year by 2012 from 757 mt now, with an investment of Rs91,334 crore. Of this, Rs65,532 crore would be invested by private companies such as Reliance.
Rewas port, when fully operational by 2040, will have 70 berths with a capacity to handle 457 mt of cargo. In comparison, the country’s 12 major ports, owned by the Union government, currently have a combined capacity to handle 567 mt of cargo a year. The cargo handling facilities at Rewas includes a container terminal with a capacity to handle 2.6 million twenty-foot equivalent units (TEUs) a year. A TEU is the standard size of a container and is a common measure of capacity in the container business. The port will also cater to dry bulk, liquid bulk and general cargo and automobiles. The first phase of the Rewas port project, costing about Rs6,000 crore and involving 10 cargo handling berths with a capacity to handle 55 mt of cargo a year, was to start operations on a 50-year contract, beginning October 2010. The project has received environmental clearance from the Union government but the project has now been pushed back by at least two years mainly due to the non-availability of land. That hurdle may be sorted out soon. Reliance has sought the transfer of about 1,000ha of land currently owned by the Maharashtra Maritime Board and other state government agencies. The second person briefed on the matter said the Maharashtra government had agreed on the value of the land to be handed over to Reliance. “Those (valuation) things have been agreed upon. It (the transfer of land) could click any time.” Mint could not independently verify the value at which the state government would transfer the land to the port project. A spokesman for the Maharashtra Maritime Board declined to comment. Once Reliance has the land in its possession, it plans to award a contract, potentially the country’s biggest yet, for dredging the port’s channel to create a depth of 14.5m for the first phase of the project. The dredging project is estimated to cost about Rs2,000 crore. In order to accommodate bigger ships, he water depth at the port would be increased to 21m in a phased manner, according to port development details disclosed earlier by Reliance in a presentation.
Reliance needs to sell the stake both to fund the project as well as to bring in specialists because it does not have expertise in handling cargo such as containers.
Reliance Logistics (Pvt.) Ltd, a unit of the Mukesh Ambani-run RIL, holds a 55% stake in Rewas Ports Ltd, the company formed to develop and operate an all-weather, deep-water port at Rewas, just 10km south of the Union government-owned Jawaharlal Nehru Port, the country’s busiest container port that handles about 60% of all of India’s container cargo. “Reliance is looking to offload at least 15% stake in the port company to a strategic investor,” said one of the two persons mentioned earlier, adding that the parent company had initiated talks with three-four entities. He and the other person did not want to be named because the discussions are confidential and not yet final. The value of the proposed stake sale could not be ascertained by Mint.
A spokesman for Reliance declined to comment when contacted by phone.
Other stakeholders in Rewas port include Jai Corp. Ltd, which owns a 10% share, and Amma Lines Ltd, the original licence holder for developing the port, which has a 24% share. The balance 11% is held by the Maharashtra Maritime Board, the local regulator tasked with developing ports in the state.
Jai Corp., which makes steel and plastics, is run by chairman Anand Jain, a close confidant of Ambani, but he does not hold any official position in RIL. The company is also developing special economic zones, with Ambani.
India, Asia’s third biggest economy and the world’s second fastest growing major economy, plans to raise cargo handling capacity at its ports to 1,590 million tonnes (mt) a year by 2012 from 757 mt now, with an investment of Rs91,334 crore. Of this, Rs65,532 crore would be invested by private companies such as Reliance.
Rewas port, when fully operational by 2040, will have 70 berths with a capacity to handle 457 mt of cargo. In comparison, the country’s 12 major ports, owned by the Union government, currently have a combined capacity to handle 567 mt of cargo a year. The cargo handling facilities at Rewas includes a container terminal with a capacity to handle 2.6 million twenty-foot equivalent units (TEUs) a year. A TEU is the standard size of a container and is a common measure of capacity in the container business. The port will also cater to dry bulk, liquid bulk and general cargo and automobiles. The first phase of the Rewas port project, costing about Rs6,000 crore and involving 10 cargo handling berths with a capacity to handle 55 mt of cargo a year, was to start operations on a 50-year contract, beginning October 2010. The project has received environmental clearance from the Union government but the project has now been pushed back by at least two years mainly due to the non-availability of land. That hurdle may be sorted out soon. Reliance has sought the transfer of about 1,000ha of land currently owned by the Maharashtra Maritime Board and other state government agencies. The second person briefed on the matter said the Maharashtra government had agreed on the value of the land to be handed over to Reliance. “Those (valuation) things have been agreed upon. It (the transfer of land) could click any time.” Mint could not independently verify the value at which the state government would transfer the land to the port project. A spokesman for the Maharashtra Maritime Board declined to comment. Once Reliance has the land in its possession, it plans to award a contract, potentially the country’s biggest yet, for dredging the port’s channel to create a depth of 14.5m for the first phase of the project. The dredging project is estimated to cost about Rs2,000 crore. In order to accommodate bigger ships, he water depth at the port would be increased to 21m in a phased manner, according to port development details disclosed earlier by Reliance in a presentation.
