Sea King Infrastructure Ltd, developers of three of India's largest private sector infrastructure projects, Gujarat Pipavav Port, Gujarat Pipavav LNG Ltd and Pipavav Railway Corporation Ltd, is all set to take up another challenging infrastructure project, Dronagri Special Economic Zone - India's first special economic zone. The company is also planning a similar zone in Mumbai, Maha Mumbai Special Economic Zone.
Dronagiri and Sea King's proposed Maha Mumbi SEZs are very close to each other. Will this lead to a duplication of infrastructure in the state?
No. The two proposed zones are promoted by Sea King Infrastructure and our consortium partners - Videocon, the Hiranandani group and the Avinash Bhosle group. We are in the process of finalising plans to merge the two zones. The merger will take care of the duplication of infrastructure.
For instance, both the zones had planned to set up a captive power plant, residential complexes, a chemical zone, etc. However, by merging the two zones, we can avoid the duplication of these facilities. Yet, the total investment for the project will remain almost the same, ie around Rs 4,800 crore.
What will be the total area of the merged SEZ and what will be CIDCO's equity holding after the merger?
The size of the new SEZ will be more than 700 acres. The City and Industrial Development Corporation (CIDCO) has already completed the land acquisition process and we will also complete it soon. At this stage, it is difficult to say what will be the equity structure of the merged zones.
However, we are trying to follow CIDCO's equity structure pattern where the corporation will get a 26 per cent stake. In doing this, the holding of other equity holder will either come down or go up, All these issues are under discussion and may take few months to finalise.
But, will the new zone be as large as a Positra SEZ which you had proposed building in Gujarat. ?
Yes, Positra SEZ had 17,000 acres of land that can increase to 65,000 acres as it is developed. However, the government delayed the allocation of the land for the project. At the same time. The Maharasthra government had sent some positive signals to encourage us to shift the project from Gujarat to Maharshtra.
The Maharshtra government 's approval came within 44 days of our filing the application for the project. Our aim was to set up the largest SEZ project in the country. And, as far as the zone is concerned, the size of the project matters, otherwise it will remain as a large industrial unit.
How do you react to the criticism of allowing foreign companies to grab majority holding in the projects by selling your stake as soon as the project is complete?
That is our business strategy. We would like to take up new challenging projects, get a strategic partner for it and leave once the project becomes commercially operational. There is a high risk in this process, but there is a thrill as well. We have innovated in business models in the Indian port sector and were also the first to start a joint venture with the Indian Railways.
Can you describe this joint venture with Indian Railways?
Last year we commissioned a 275-km railway line linking the port to the railhead through a joint venture with the Indian Railways. This was Indian Railways' first joint venture, with a corporate house. This JV between the Ministry of Railways and the Gujarat Pipavav Port, called the Gujarat Pipavav Railway Corporation Ltd, is funded equally by both the entities. Both have a 50:50 shareholding and have contributed around Rs 100 crore each as equity. The rest was mobilised through debt.. This JV company has converted a 275-km metre gauge to broad gauge.
Maersk Sealines has been trying to increase its holding in Gujarat Pipavav Port Ltd. Is there any development in this front?
Maersk has already decided to pick up an additional 16 per cent stake, taking its total tally to 30 per cent . The Infrastructure Development Finance Corporation-promoted India Development Fund will invest around Rs 125 crores, while insurance major, New York Life, will put in around Rs 50 crore and pick up minority stakes in GPPL. 30 per cent of GPPL's equity will be held by Maersk, 20 per cent by Port of Singapore Authority and the remaining 50 per cent by a financial institutions and equity funds such as IDF and New York Life.
What are your future plans for for GPPL?
GPPL is raising an additional Rs 600-crore debt funds from the market for the port's expansion into bulk container-handling facilities. Currently, GPPL does not have a dedicated terminal for handling containers, though the port has been handling small volumes of box traffic of 20,000-30,000 twenty-foot equivalent units (TEUs) annually.
But the container volumes are expected to increase to 150,000 TEUs next year and by 2006-07, the port should be able to handle 400,000 TEUs. The port will be equipped with three post Panamax cranes by the middle of next year to augment its cargo handling capacity. The proposed container terminal with a freight .