This classic case of a fight between a multinational company and its Indian partner taking an ugly turn. Almost two years after DP World took over Mundra International Container Terminal (MICT) from P&O Ports as part of a $6-billion global takeover, the Adani-owned Mundra Port and Special Economic Zone (MPSEZ), which owns and operates the Gujarat port, has terminated the contract for the container terminal at Mundra. MPSEZ has also asked the Dubai-based international port operator to facilitate the transfer of assets in three weeks. DP World has been operating the terminal since early 2006. The takeover, allegedly without the permission of the Gujarat Maritime Board (GMB), had created some confusion over the deal. While GMB had earlier issued a show-cause notice to DP World and went on with hearings, MICT moved Ahmedabad HC seeking justice from the Adani group. The fresh salvo was fired by the Adani group after the state government informed MPSEZ in a letter dated November 2, that the takeover by DP World is a violation, since it had not sought GMB's permission. When contacted by ET, Rajeeva Sinha, director (corporate strategy and business development) of MPSEZ, confirmed that they had terminated the contract. Another senior MPSEZ official said the FIPB had cleared the takeover with a condition that "no transfer of equity or interest will take place without prior written approval of GMB." Since DP World didn’t have prior approval of GMB, there is a clear default, he added. The state government has also objected to the condition in the sub-concession agreement between the Adani group company and P&O Ports regarding new terminals. The condition had stipulated that no further container terminals would be allowed in Mundra for 12 years or the first terminal - both phases put together - achieves a throughput of 2.5 million containers, whichever is earlier. The government objected to this condition, claiming that such "restrictive practices" would kill competition. Ganesh Raj, DP World's senior V-P and MD sub-con
tinent, told ET that the notice sent by MPSEZ is not valid. "There are no provisions for terminating the contract, unless and until there is a specific breach. MICT is still owned by P&O Ports, and there is no change in ownership. P&O Ports had paid $295 million to the Adani group in 2003 when it took over the terminal along with the right for developing second phase and a non-compete agreement. It is, in fact, the Adani group that breached some of the provisions of the agreement and we were forced to move court. The matter is already subjudice," said Mr Raj.
Recently, DP World had approached Sebi against MPSEZ as the latter was raising funds from the primary market. It alleged that the draft red-herring prospectus (DRHP) had failed to make "adequate disclosures" to potential investors, and forced the lead managers of the IPO to append the prospectus with a few additional risk factors. The IPO concluded on November 7. The shares are likely to be listed on stock exchanges shortly. DP World officials point out that a related concession agreement signed in January 2003 had prohibited the Adanis from operating a new container terminal facility at Mundra port until container volumes reach 1.5 million containers a year at the first phase of the terminal. Also, the Adanis were also required to hand over a 618 metre quay wall and 19.6 ha of unpaved back-up area for container storage to DP World for constructing second phase of the terminal after the volumes at the terminal reached 700,000 containers or on completing eight years of operations, whichever was earlier.
|
