Adani Group is surely in expansion mode. Last Wednesday, the Adani Group company acquired a 49.38 per cent equity stake in Indian Oiltanking Ltd (IOTL), which is a developer and operator of liquid storage facilities. The acquisition was for Rs 1,050 crore. A day later, the shares of Adani Ports and Special Economic Zone Ltd (APSEZ) fell over 1 per cent.
APSEZ had also acquired an additional 10 per cent stake in IOT Utkal. IOT Utkal is a subsidiary of IOTL. This has made APSEZ India’s largest third-party liquid tank storage player. APSEZ’s oil storage capacity rose 200 per cent to 3.6 Mn KL following the acquisition. Oiltanking is one of the world’s largest independent tank storage providers for gas, chemicals, and petroleum products.
The purchase also goes along with APSEZ’s strategy of diversifying the cargo mix. APSEZ finds IOTL as an opportunity for growth as there is a great demand for oil products in India. About 80 per cent of IOTL’s capacity is under the ‘Take-or-Pay’ contract. That ensures a good cash flow for the company in the future. Moreover, IOTL is planning expansion. It recently signed a BOOT contract with Numaligarh Refinery Ltd to construct, operate, and maintain 0.6 Mn KL crude storage tanks at the Paradip Port. The firm is considering other large-scale projects, too.
