Sandeep Sahu

It is hard to dismiss it as sheer coincidence. Barely 24 hours after Shapoorji Pallonji acquired majority stake in the Gopalpur Port Limited (GPL), Tata Steel picked up controlling stake in Creative Port Development Private Limited (CPDPL), the company that owns the Subarnarekha Port Private Limited (SPPL) at Chaumukh in Balasore district. Understandably, there is a temptation to link it to the ongoing tug-of-war between the Tata Group and its ousted Chairman Cyrus Mistry (whose family owns Shapoorji Pallonji, which has a substantial stake in Tata Sons, the group’s holding company). But industry watchers say there is no real link between the two developments that came within hours of each other.

“Such things require months – and even years – of planning, preparation and negotiation and cannot be conjured up and executed in a matter of hours,” says someone familiar with the developments. In any case, the Tatas’ decision to acquire majority stake in SPPL makes sound business sense in view of its steel plant at Kalinganagar that is set to increase its capacity to 6 MTPA in the next few years. So, there is no reason to see it as a response to the acquisition of stakes in GPL by Shapoorji Pallonji, he reasons.

If anything, the real interesting bit is how the Naveen Ppatnaik government allowed the sale of stakes in GPL to Shapoorji Pallonji, something it had refused in the case Jindal Steel and Power Limited (JSPL), which had gone to great lengths to acquire controlling interest in the port. Initially, JSPL wanted to acquire 60% stake in GPL and then scaled it down to 49% after the Odisha government refused permission saying it would violate the concession agreement signed with the original promoters. The company even deposited Rs 380 crores towards buying the stake. But even the scaled down proposal was rejected by the state government saying JSPL had no ‘locus standi’ and any such proposal has to come from the original promoters. [Interestingly, the ‘locus standi’ question did not come up in the case of Shapoorji Pallonji even though the proposal for the takeover had not originated from the ‘original promoters’ in this case either!)

Now, contrast this with the ease with which the same state government allowed Shapoorji Pallonji to acquire controlling stake of 51% in the company. Curiously, the concession agreement signed with the original promoters, the ostensible reason for the rejection of the JSPL bid, did not come in the way of allowing Shapoorji Pallonji to pick up majority stake in the company. “Following this, the state government has to sign a fresh pact with the port developers, amending the concession agreement,” an official of the Commerce & Transport department had explained after the decision on Tuesday. The question that is bound to come up is why a similar amendment could not be done in the case of JSPL. Clearly, there is more to it than meets the eye.

It is not clear when Shapoorji Pallonji entered the fray though it is well known that Tata Steel had been in talks with the state government for acquiring a substantial stake in GPL after the Hong Kong based Noble group, one of the three original promoters, backed out in 2010 and Sara International Limited (SIL), another original promoter, fell on bad times, leaving the Mahimananda Mishra owned Odisha Stevedores Limited (OSL) as the lone player. Though it doesn’t make sense to attribute the entry of Shapoorji Pallonji (which, by the way, has a 18% stake in Tata Sons) to the ongoing battle of attrition between the two estranged partners, it is a bit of a mystery why the company owned by the Mistrys would dish out Rs 700 crores (which includes a Rs 350 crore pay-off to JSPL) – and be ready to spend much more to get it going - for a stake in a company that has never really taken off. It would have made sense if the Tatas had acquired the shares because they have an industrial park and an SEZ coming up at Gopalpur. Having been ‘ousted’ from the Dhamra Port Company Limited (DPCL) which it had set up, Tata Steel had every reason to invest in a new port project. Instead, it is Shapoorji Pallonji, a company that has very little stake either in the port industry or in Odisha, that has stepped in. Though it would be Tata Steel that would set up the industrial park and SEZ at Gopalpur, the facility would actually be used by others and hence hurting Tatas cannot be a motive behind the acquisition bid by Shapoorji, points out an industry watcher.

The real point of interest now is what happens to the 49% stakes that OSL still has in GPL. With its owner Mahima Mishra in jail - with little hope of coming out anytime soon given the number of cases that have been resurrected against him, apart from the murder of the Seaways Shipping GM for which he was arrested in the first place – OSL appears set to lose its dominance of the port and stevedoring business in the state.

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