CHENNAI: Department of Investment and Public Asset Management (DIPAM) of Union Finance Ministry has commenced the process of strategic disinvestment of Kamarajar Port Limited (KPL). Bids have been invited to appoint a legal adviser.
The Cabinet Committee on Economic Affairs (CCEA), chaired by Prime Minister Narendra Modi, on February 28 had given 'in principle' approval for strategic disinvestment of 100 per cent equity shares of Government of India in KPL to Chennai Port Trust in a single stage process, by following 'Arm's length' principles. Presently, the Government of India and Chennai Port Trust hold 67 per cent and 33 per cent of shares respectively in KPL.
As per Request for Proposal, DIPAM intends to appoint Engagement of Transaction Advisor for Strategic Disinvestment of KPL and bids from reputed domestic law firms with minimum experience of five years and expertise in mergers and acquisitions/takeovers/ strategic disinvestment are invited to act as legal adviser and assist government in the process.
The proposals are to be submitted in sealed envelopes before 3 pm on April 29 and "the government would reserve the sole right to accept or reject any or all proposals thus received without assigning any reasons thereof," the document says. Sources said this would be one of the biggest strategic disinvestment deals and in line with mega Rs 36,915 crore ONGC-HPCL deal of 2018 and the more recent Dredging Corporation of India (DCI) 73.44 per cent share sell-off to a consortium of four State-owned ports, comprising Visakhapatnam Port Trust, Paradeep Port Trust, Jawaharlal Nehru Port Trust and Deendayal Port Trust - for Rs 1,050 crore. Official records show that as on March 31, 2019, the government has realised Rs 85,314.17 crore as disinvestment proceeds.
The CCEA said KPL-Chennai Port Trust deal would help to avoid duplication of capacity creation in the ports. "Better human resource management in between the two ports will increase the efficiency of both ports," the committee said. The approval was in the backdrop that Chennai Port and KPL will be able to evolve a clear policy on focus areas by devising optimum business strategy and defining dedicated cargo profile.
KPL is the only corporatised major port and is registered as a company. It follows the 'landlord port model', wherein cargo handling facilities are developed with private funds, while the port authority invests in common infrastructure such as channel deepening/dredging, break water and rail/road connectivity, while Chennai Port operates as a trust, wherein it acts both as the landlord and provider of commercial services.
‘One of the biggest strategic disinvestment deals’
Sources said this would be one of the biggest strategic disinvestment deals and in line with mega Rs 36,915 crore ONGC-HPCL deal of 2018 and the more recent Dredging Corporation of India 73.44 pc share sell-off
Facts in brief