Media Report: Chennai Port Authority Board Clears IPO in Wholly Owned Unit Kamarajar Port Ltd
Chennai:
Port Wings News Network:
The board of state-owned Chennai Port Authority (ChPA) has accorded in-principle approval for share sale in its wholly-owned unit – Kamarajar Port Ltd through an Initial Public Offering (IPO) with the quantum of shares to be off-loaded depending on valuation and price band, multiple sources said, according to a news report by ET Infra of The Economic Times.
During a meeting held on 6 March to discuss the issue, the port authority board also decided to direct Kamarajar Port Ltd to issue bonus shares to it from the reserves and surplus estimated at some Rs 3,000 crore ahead of the IPO after setting aside funds for immediate capex requirement.
This, the board said, was necessary to “protect” the interests of Chennai Port Authority, which holds 100 per cent of the shares in Kamarajar Port Ltd, a source briefed on the plan said.
Kamarajar Port Ltd has reserves and surplus of Rs 2,759.95 crore as on 31 March 2025, which is estimated to rise to over Rs 3,000 crore by this fiscal end.
Based on the reserves and surplus position of Kamarajar Port Ltd and fund requirement for capex, the port authority board reckoned that there was no requirement for resource mobilisation by Kamarajar Port to fund growth plans in the near future.
Hence, the port authority was of the view that the reserves and surplus of Kamarajar Port Ltd should be “passed on” to it through issue of bonus shares by virtue of holding 100 per cent stake in India’s only state-owned port that is run as a company.
The issue of bonus shares will necessitate increasing the port company’s authorised share capital to the extent required, including considering the growth plans of Kamarajar Port Ltd, ahead of the planned IPO.
Kamarajar Port Ltd has an authorised capital of Rs 500 crore (50 crores shares of Rs 10 each) and subscribed and paid-up capital of Rs 300 crore (30 crore shares of Rs 10 each), which is fully held by Chennai Port Authority and the balance 20 crore shares are available for future issue.
The proceeds from the IPO will be used to repay the outstanding loan of Rs 843 crore taken by Chennai Port Authority from State Bank of India (SBI) to acquire the government’s 67 per cent stake in Kamarajar Port Ltd for Rs 2,383 crore in 2020 under a government-to-government disinvestment deal.
The IPO funds will also be utilised to meet the deficit in the pension fund corpus of Chennai Port Authority, currently estimated at Rs 2,582 crore.
The IPO size would be decided based on valuation and price band but limited to the extent of meeting the unpaid dues to SBI of Rs 843 crore and the deficit in the pension fund corpus of Rs 2,582 crore.
Kamarajar Port Ltd, the port authority board said, could go for follow-on public offers later as and when it needs money for growth plans after taking approval of its board and from the shareholder (Chennai Port Authority).
On 3 February this year, the Ministry of Ports, Shipping and Waterways granted in-principle approval for the IPO in Kamarajar Port Ltd after the proposal was signed off by Sarbananda Sonowal, Union Minister of Ports, Shipping and Waterways.
Following this, the board of Kamarajar Port Ltd accorded in-principle approval for the IPO during a meeting held on 11 February this year and forwarded it to Chennai Port Authority, its only shareholder, for ratification.
On 17 January, ET Infra first reported the government’s plan to sell shares in Kamarajar Port Ltd through an IPO, making it the first state-owned port to be listed. Kamarajar Port Ltd is India’s only state-owned port set up under the Companies Act; the other 11 major ports (those owned by the Union government) operate as authorities under the Major Port Authorities Act 2021, which replaced the erstwhile Major Port Trusts Act, 1963 for governing these ports.
It was originally conceived mainly to handle the so-called dirty cargo (thermal coal) for Tamil Nadu Electricity Board (TNEB) and reduce pollution in Chennai city. The scope of the port– which has some 2,000 acres of land — was expanded to cater to the growing needs of the trade.
Kamarajar Port’s master plan involves 20 berths for handling a variety of bulk, liquid, automobile and container cargo. India has only three listed port companies: Adani Ports and Special Economic Zone Ltd (APSEZ), the country’s biggest private port operator; JSW Infrastructure Ltd; and Gujarat Pipavav Port Ltd, 43.01 per cent owned by A P M Terminals Management B V, the port operating unit of Danish integrated logistics giant AP Moller-Maersk A/S.
About The Author
