Tata Steel, Creative Port ink deal for stake in Odisha port

Bhubaneshwar: Tata Steel has executed a definitive agreement with Chennai-based Creative Port Development (CPDPL) and their promoters for the proposed development of Subarnarekha Port at Chaumukh village in Odisha’s Balasore district.

According to the agreement, Tata Steel will acquire majority equity stake in CPDPL, and the port development is envisaged through a wholly-owned subsidiary, Subarnarekha Port (SPPL). 

The acquisition and development is subject to certain conditions, detailed technical assessments and financial closure. In a regulatory filing with BSE, Tata Steel said it has executed the share purchase agreement to acquire 51 per cent equity shares of CPDPL. 

The cost of acquisition will depend on the capital outlay of the project which is under investigation and will be firmed up after studies are completed. Though the exact cost of acquisition will be known at the completion of the project, the current outlay for the acquisition is estimated at Rs 120 crore.

“As Tata Steel grows in India in the future, securing competitive logistics solution is a key aspect in de-risking our in-bound and out-bound supply chain. The proposed Subarnarekha Port will address the long-term strategic needs of the Company and we look forward to working with various stakeholders to develop this port. Our commitment to the State and people of Odisha will be reinforced with this investment,” said Tata Steel.

CPDPL, promoted by two technical entrepreneurs, Ramani Ramaswamy and Ramaswamy Rangarajan, had entered into a concession agreement with the Odisha government in January 2008 to develop the Subarnarekha Port as an all-weather deep-draft facility. 

A detailed engineering study to arrive at the configuration and the project cost will be undertaken soon.

Koushik Chatterjee, group executive director (finance & corporate), Tata Steel, said: “The investment to develop the Subarnarekha Port will address the strategic needs of Tata Steel in the future. The location of the proposed port makes it attractive to structurally enhance the competitive position of our Indian operations and we look forward to working together with the current promoters to make Subarnarekha a very efficient port in the future. With the growth envisaged in Kalinganagar in the future, our offtake through Dhamra is also slated to increase.”

The port project proposed at Subarnarekha needs 1215.43 acres of land for the port area and 1565.93 acres for the rail corridor. Out of 1215.43 acres of land needed for the port area, 158 acres constitute Gochar land, 193 acres Bhudan land, 138 acres of encroached land and the remaining 724 acres being a free land.

According to the concession agreement signed originally, the port would have an initial capacity of 10 million tonnes per annum (mtpa) which was to be scaled up to 40 mtpa in 10 years. 

According to this agreement, the port developer would share revenue with the state government at the rate of five per cent from first to the fifth year, eight per cent from sixth to 10th year, 10 per cent from 11th to 15th year and 12 per cent for the remaining 15 years.

 

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.