APSEZ to replicate inorganic strategy for achieving transport utility ambitions

Cont’d from Pg. 4

By 2030, APSEZ aims to become the world’slargestportcompany.

The 12 ports/terminals run by APSEZ currently has the capacity to handle 580 mtofcargoayear.

“At APSEZ, we will extend our inorganic approach for port acquisition to the acquisition of companies and services in the transport utility space,” the company said in its Annual Report for FY23, noting that there will be “sustainedfocusonacquisitionsatadeepdiscountvalue”.

“We have extended from Indian ports to investments in Haifa (Israel) and Colombo (container terminal) with the objective to provide a global transport utility solution,” the company said, adding that it is exploring global opportunitieswithaspecialfocusonAsia,Africa,andother markets.

Karan Adani, Chief Executive Officer, and Whole-Time Director, APSEZ, outlined three “distinctive areas” for deepeningtherobustnessofitsbusinessmodel.

One, APSEZ will develop the industrial hinterland across some of its ports by working closely with the state governments. This will catalyse industrial development and assure port volumes for the company for years to come,hesaid.

APSEZ has created a land bank of more than 12,000 hectarestoattractindustry.

Two, APSEZ will continue to evolve from port intermediation to doorstep delivery with a larger share of a customer’slogisticsspendingleadingtoannuityincomes.

“Our approach is not just ‘If the customer grows, we grow’; our objective is to create a competitive proposition that makes our customers more competitive and grow faster, playing the role of a catalyst and beneficiary,” Karan Adanirevealed.

Three, APSEZ will gradually build port interests outsideIndia.

“We acquired a stake in Haifa Port and are developing a terminal in Colombo Port. Driven by our risk management strategy, the investments outside India are more likely to be in operational ports and with a limited equity exposure in comparison to the overall size of our balance sheet. We will also work with a strong local partner with financial skin in the game. This is the blueprint by which we grow our cargo volumes from about 340 million tonnes in FY23 to 1 billion tonnes by 2030, while aiming to become the world’s largestportcompany,”KaranAdanisaid.

Karan, the elder son of tycoon Gautam Adani, referred tothenextstageofthecompany’sevolution.

“If there is one seminal transformation in our existence that has transpired in the last couple of years, it is that we are making a structural extension in our business model: we are graduating from a ports company into a transport utility that provides logistics infrastructure and services, ensuringservicereliabilityandefficiency,”hesaid.

The Adani scion also expressed his views on ensuring a strong balance sheet, a question that is regularly asked of the company, given the high leverage and its impact on APSEZ’sinvestmentgraderating.

“We are committed to sustainable business growth and returnforourinvestors.Asaresult,whileweweregrowing our topline and profits, we also focused on creating a capital structure aligned with the nature of our business. This has allowed us to comfortably service our debt and investforgrowth,”KaranAdanicontinued.

The company, he said, has now achieved a critical mass ofrelationshipsandrevenues.

“With enhanced internal accruals, our dependence on borrowings to fund our growth capex has declined considerably. This is well reflected in our numbers, with gross debt to net fixed asset ratio having seen a material decline in the last few years. With most of our sizable capital investments now completed, improvement in our liquidity position will continue, further strengthening our balancesheet,”hestated.

APSEZ said its financial structure will revolve around disciplined capital allocation, moderation in capital expenditure, leveraging existing assets, generating higher quantum of free cash flows, and deleveraging the balance sheet. Emphasising its commitment to “moderate the gestation between investment and returns”, APSEZ said it will make “progressively larger investments in growing andwideningbusiness”.

According to its Vision 2030 blueprint, APSEZ will focus on the Return on Capital Employed (RoCE) accretive initiatives and investments, increase the asset-light proportion of revenues (logistics), diversify existing cargo mix, focus on new growth commodities like LPG/LNG, focus on coastal volume growth, develop assets across the logistics supply value chain, strengthen the subcontinental ports ‘necklace’ (organic/inorganic initiatives) andincreasemarketshareofcargogrowth.

Gautam Adani meets Sri Lankan President Ranil Wickremesinghe to discuss about Colombo Port

NEW DELHI : Adani Group Chairman Gautam Adani held a meeting with visiting Sri Lankan President RanilWickremesinghe to discuss multiple projects in the island nation. The discussions included the development of the Colombo Port West Container Terminal (WCT), the industrialist said. Wickremesinghe came on a two-day visittoIndia.

Adani Ports and Special Economic Zones Ltd (APSEZ), a key subsidiary of the diversified Adani Group, in March 2021 received a Letter of Intent (LOI) from Sri Lankan authorities for the development and operations of West ContainerTerminal(WCT)inColombo.

APSEZ will partner with John Keells Holdings PLC, Sri Lanka’s largest diversified conglomerate, and with the Sri Lanka Ports Authority (SLPA) as a part of the consortiumawardedthismandate.

The WCT will be developed on a Build, Operate and Transfer basis for a period of 35 years as a public-privatepartnership.

The project is expected to boost WCT’s container handling capacity and further consolidate Sri Lanka’s locational advantage as one of the world’s top strategic nodes along the busiest global transhipmentroute.

The Colombo Port is already the most preferred regional hub for transhipment of Indian containers and mainline ship operators with 45 per cent of Colombo’s transhipment volumes either originating from or destined toanAdaniportterminalinIndia.

The network impact of this partnership is significant and expected to be mutually benefitted from the string of 7 container terminals across its 12 ports that Adani operates along the Indian coastline handling an annual volume of over6millionTEUs.