IPO Mundra Port and Special Economic Zone

Company background MPSEZ, part of the Adani group, is a developer and operator of Mundra Port and related facilities for 30 years pursuant to the concession agreement entered on February 17, 2001 with the Gujarat Maritime Board and the state government of Gujarat. Mundra Port is the biggest privately developed and operated port in India, and is fully equipped with the latest infrastructure measuring up to international standards. The port provides port services for bulk cargo, container cargo, crude oil cargo, and other value-added port services, including railway services.

Objects of the issue Mundra Port and Special Economic Zone Ltd (MPSEZ) is making a fresh issue of 4.03 crore equity shares to raise Rs1,610-1,771 crore (depending on the price band of Rs400-440 per share) for the following purposes:

  • Investment in Inland Container Pvt Ltd (ICPL) for construction of inland container depots (ICDs).
  • Construction and development of basic infrastructure in the proposed special economic zone (SEZ) at Mundra;
  • Construction and development of a terminal for coal and other cargo at Mundra Port;
  • Investment in Adani Petronet (Dahej) Port Pvt Ltd (APPPL) for construction of Dahej terminal.

MPSEZ also generates income from its land related and infrastructure activities. It has also received the approval to develop a multi-product SEZ at Mundra and the surrounding areas from the Government of India on April 12, 2006 . The proposed SEZ will be one of the first port- based multi-product SEZs in India . The company is also developing a new terminal for coal and other cargo, which would cater to the requirements of Mundra ultra mega power project (UMPP) and Adani’s 2,640megawatt power project. Further, the company is investing in the development of railway corridor and inland container depot (ICD). Currently, bulk cargo accounts for almost 59% of the total revenues of the company. The company currently has eight cargo berths and one barge berth as well as a dry storage facility of about 800,000 square metre and a liquid storage facility of 342,000 kilo litre. The company now has two container terminals, each equipped to handle 1.25 million twenty-foot equivalent units per year.

Key positives Natural advantage & strategic locations help it score over peers Mundra Port benefits from a number of natural advantages that make it more competitive than the other ports in the vicinity. It has got one of the deepest water depths, ranging from approximately 15 metre to 32 metre, which enables it to handle large-sized vessels. The port also has got a natural protection against the weather by virtue of its location, due to which the port is able to handle cargo throughout the year in all weather conditions.

Located strategically in the Kutch district of Gujarat, the port is well connected to the northern and the western regions of the country. The northern region, particularly the National Capital Region, accounts for almost 55% of the total international trade in commodities and is responsible for about 70% of the containerised international trade. The port’s location also makes it ideal for foreign trade to Middle East , Asia , and Africa among others.

Furthermore, the port is also well connected by rail, road and pipeline. A four-lane approach road connects the port to Mundra, which is linked to national and state highways. A crude pipeline, owned and operated by Indian Oil Corporation Ltd (IOCL), connects Mundra Port directly to IOCL’s refinery in Panipat. There is another pipeline, owned and operated by Hindustan Petroleum Corporation Ltd (HPCL), which is used to transport liquid petroleum products from Mundra Port to inland regions in northern India such as Delhi . Furthermore, MPSEZ has rights to develop the Mundra-Adipur corridor.

Long-term agreements going to support its business model The company has already entered into a few strategic long- term contractual agreements, which provide stability to its business model. It already has long-term arrangements with MICT, as Container Sub-concessionaire, for its container operations at Mundra Port and with IOCL for its crude oil cargo operations. Further, a 4,000-megawatt UMPP being developed by Tata Power is planned near Mundra Port.
MPSEZ has entered into an agreement, whereby it would construct a terminal for coal and other cargo for the project. Under the agreement, it would receive marine charges comprising port dues, pilotage, berth hire and wharfage, plus a fixed annual payment and royalty payment for the coal, which is handled at the port.

The company plans to pursue and increase the number of long-term strategic arrangements for the use of Mundra Port. These long-term agreements provide the company with guaranteed cargo volumes and revenues, strengthening its business model and providing consistency to its cash flows. More value-added services to make Mundra Port a world-class port.

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