Adani Ports will also buy an additional 10% investment in IOT Utkal Energy Services Ltd, a 71.57 percent subsidiary of IOTL, as part of the arrangement.
According to a press release from Adani Ports and Special Economic Zone (APSEZ), this makes it the largest third-party liquid tank storage company in India.
With this acquisition, APSEZ’s oil storage capacity has jumped by 200 per cent to 3.6 million kiloliters, making it the largest third-party liquid storage company in India. This ties in well with our ambition to become the largest transportation facility globally, said Karan Adani, CEO and full time manager of APSEZ.
This share purchase also aligns well with our strategy to diversify the merchandise mix with an emphasis on products and services that have higher perception and margins. This transaction will strengthen our strategic partnership with IOCL, a major shareholder and the largest refiner in India and a customer of oil tanks.”
With the country’s increasing need for petroleum products, IOTL is experiencing rapid expansion. Recently, the company and Numaligarh Refinery Ltd signed a 25-year BOOT agreement which will see the company build, operate and maintain 0.6 million kiloliter crude oil storage tanks at Paradip Port. In addition, the company is negotiating with and/or bidding for several other significant projects, both at existing facilities and at new locations.
Primary power units and major oil companies have contracted the majority of IOTL’s tank capacity. With more than 80% of the IOTL capacity covered by the “take or pay” contract, the company’s upcoming cash flows are well understood. Revenue and EBITDA for IOTL in the financial year were Rs.22,526 crore and Rs.357 crore respectively. The 8x EV/EBITDA multiplier is included in the FY22 data through the acquisition price of Rs.1,050.
To store crude and finished petroleum products, IOTL has developed a network of six stations spread across five states with a total capacity of 2.4 million kL. The owned facilities consist of Goa Port, Raipur Station in Chhattisgarh and Navgarh Station in Maharashtra.