Adani Ports and Special Economic Zone Limited (‘Adani Ports’ or ‘the Amalgamated Company’ or ‘the Transferor Company’) is a company incorporated under the Companies Act, 1956, in the state of Ahmedabad on May 26, 1998 vide corporate identification number as L63090GJ1998PLC034182 having its registered office situated at Adani Corporate House, Shantigram, Near Vaishno Devi Circle, S. G. Highway, Khodiyar, Ahmedabad 382421. Adani Ports is India’s largest multi-port operator and developer with presence in various parts of India. It is a developer of a multi-product Special Economic Zone at Mundra, Gujarat. It possesses 2 business undertakings, viz. (i) Mundra Rail Business Undertaking; (ii) the Other Business Undertaking. The equity shares of Adani Ports are listed on the Indian stock exchange(s) viz. The National Stock Exchange of India Limited and the Bombay Stock Exchange. Further the secured non-convertible debentures and commercial papers issued by Adani Ports are listed on the Wholesale Debt Market segment of BSE Limited. Further, unsecured senior notes issued by Adani Ports are listed on the Singapore Exchange Securities Trading Limited. Also, some of the unsecured senior notes issued by Adani Ports are listed on the India International Exchange (IFSC) Limited. Adani Ports is India’s largest multi-port operator and developer with presence in various parts of India. It is also a developer of multi product Special Economic Zone at Mundra, Gujarat.
Gangavaram Port Limited (‘GPL’ or ‘the Amalgamating Company’), was incorporated on September 27, 2001 as Visual Infrastructure Projects Limited, a public limited company, with the RoC (as defined hereinafter), Andhra Pradesh, under the provisions of the Companies Act, 1956 and now deemed to be incorporated under the Act. Its name was changed to Gangavaram Port Limited on March 25, 2003. Presently, GPL is engaged in the Business of developing, building, owning, operating and maintaining the Port, including but not limited to construction, provisions of facilities such as navigation channels, harbor basins, breakwaters, aids to navigation, docks, berths, storage (both covered and open), tank farms, internal roads, rails, conveyor system, cargo handling facilities and system, utilities such as water supply, power supply, bunkering facilities, sewage system, etc., communication facilities, ship repair facilities and all other engineering structural facilities etc. and its associated infrastructure facilities for the development of the Port; (as defined hereinafter). GPL owns 100% share capital of Gangavaram Port Services (India) Private Limited. As on September 22, 2021, Adani Ports holds 41.89% of the paid-up share capital of GPL.
Adani Gangavaram Port Private Limited (‘AGPPL’ or ‘the Transferee Company), was incorporated on July 14, 2021 as Adani Gangavaram Port Private Limited, a private limited company, with the RoC, Gujarat, under the provisions of the Act. AGPPL has been incorporated with an object to carry on the business of port and port related activities. The entire paid-up equity share capital of AGPPL is held by Adani Ports. Thus, AGPPL is a wholly owned subsidiary of Adani Ports.
Current structure of the Adani Group is as under:
Management of the Adani Group along with its group Companies has decided to restructure business and shareholding of the group as under:
Transaction 1: Amalgamation of GPL with and into Adani Ports;
Transaction 2: Transfer of Divestment Business Undertaking of Adani Ports and vesting into AGPPL as a going concern on a slump sale basis for lumpsum consideration.
Restructuring of the group can be depicted as under:
Key features of the above transactions:
Key features | Transaction 1: Amalgamation | Transaction 2: Slump sale |
Appointed Date | April 1, 2021 | April 2, 2021 |
Effective Date | Date of filling of certified copy of approving authority being NCLT with ROC | Date of filling of certified copy of approving authority being NCLT with ROC, immediately after effectiveness of Transaction 1 |
Jurisdictional Authority(ies) | Securities and Exchange Board of India; BSE Limited; National Stock Exchange of India Limited; National Company Law Tribunal, Hyderabad and Ahmedabad Bench; Registrar of Companies, Gujarat and Andhra Pradesh; Regional Director, Gujarat and Andhra Pradesh | Securities and Exchange Board of India; BSE Limited; National Stock Exchange of India Limited; National Company Law Tribunal, Ahmedabad Bench; Registrar of Companies, Gujarat; Regional Director, Gujarat |
Consideration | Adani Ports to issue 159 shares to the shareholders of GPL for every 1000 shares held in GPL | Lump sum consideration of INR 5,826.887 Crores to be payable by AGPPL to Adani Ports |
Accounting Treatment | In the books of the Adani Ports – · Recording net assets of GPL on fair value under ‘Acquisition Method’. | In the books of AGPPL Rail and Adani Ports – Pooling of interest method |
Taxation | Tax neutral transaction | As per Note 1. |
Stamp Duty | Stamp duty would be payable in the state of Ahmedabad as well as in the state of Andhra Pradesh as in case of transactions involving 2 different states, stamp duty needs to be payable in the both the respective states. | Separate stamp duty would be payable on the transaction of slump sale in the state of Ahmedabad on the value of consideration. |
Note 1: Considering slump sale is made in AGPPL, being a wholly owned subsidiary of Adani Ports, transfer of divestment business undertaking of Adani Ports into AGPPL can be claimed as an exempt transaction from the levy of capital gains tax under section 47(iv) of the Income Tax Act, 1961. However, However, one can argue that divestment business undertaking is not akin to capital asset. In such a scenario, as per section 50B of the Income Tax Act, 1961, excess of consideration over and above tax net-worth of the divestment business undertaking would be taxable in the hands of Adani Ports as capital gains.
Pre and Post shareholding patterns of the group companies, pursuant to effectiveness of the Scheme:
Name of the Company | Pre-Scheme Shareholding | Post-Scheme Shareholding | ||
% Promoter Shareholding | % Public Shareholding | % Promoter Shareholding | % Public Shareholding | |
Promoter Holding Companies | ||||
Adani Ports and Special Economic Zone Limited | 63.83% | 36.17% | 62.37% | 37.63% |
Gangavaram Port Limited | 58.11% | 41.69% (held by Adani Ports) | NA, since amalgamated | |
Adani Gangavaram Port Private Limited | 100% | – | 100% | – |
Resultant structure post approval of the Scheme is as under:
Purpose of group restructuring:
- GPL is operating an all-weather, deep-water, multi-purpose port located at Gangavaram, Andhra Pradesh, under a 30 year (extendable for a period of another 20 years in 2 blocks of 10 years each) Build-Own-Operate-Transfer concession from GoAP (as defined hereinafter);
- The Scheme will result in catering to a large hinterland forming part of Visakhapatnam and Gangavaram Ports in the State of Andhra The State of Andhra Pradesh is progressive, and growth focused with investor friendly policies. It has great potential of industrial development which in turn would require new ports and facilities. With this Scheme, Adani Ports would be able to expand its presence in the State of Andhra Pradesh and contribute to the progress of the state’s economy by upgrading and further developing the state’s marine infrastructure through its wholly owned subsidiary company, viz. AGPPL;
- The Scheme will help in creating synergies and would benefit from the combined resources, experience and expertise in developing and operating ports in India. This would lead to reduction in logistic costs for the customers and trade as a whole as a part of the same Adani Ports group. Additionally, development of Gangavaram port would also create value for Adani Ports and its shareholders;
- The Scheme will result increase in strength of Adani Ports group. The Scheme will help in garnering new clients and extended geography in the State of Andhra;
- Cost savings are expected to flow from more focused operational efforts, rationalization, standardization and simplification of business processes as both Adani Ports and AGPPL are part of the same;
- Adani Ports will use its enhanced information technology management system and infrastructural facilities to improve the efficiencies which will lead to business process transformation of Gangavaram This will eventually lead to reduction in time and consequently costs for the consumers.
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