JSW Infrastructure Ltd has filed a bid to buy Distribution Logistics Infrastructure Pvt Ltd and its group companies (DLI India) from Infrastructure India Plc (IIP), a fund quoted on London’s Alternative Investment Market (AIM), as the port unit of JSW Group led by Sajjan Jindal looks to expand and strengthen the third-party cargo base by offering first-mile, last-mile services, multiple sources said.
“JSW Infrastructure has submitted an offer to acquire financially struggling DLI,” a person with knowledge of the bid said, without divulging the price offered. “The bid is a clear indication that JSW Infrastructure wants to enter and bolster the first-mile, last-mile services to customers,” the person, an industry official, said.
JSW Infrastructure, India’s second biggest private port operator, will vie with Dubai’s DP World Ltd to acquire DLI.
A second industry source, however, said that DP World has put some conditions for buying DLI which have weakened its prospects of a potential deal.
DLI is a supply chain transportation and container infrastructure company headquartered in Bangalore and Gurgaon with presence in central, northern and southern India. DLI provides a range of logistics services including rail freight, trucking, handling, customs clearing and bonded warehousing with terminals located in the strategic locations of Nagpur, Bangalore, Palwal (in the National Capital Region) and Chennai.
DLI owns Integrated Logistics Park (ILP) cum Private Freight Terminals (PFTs) in Nagpur and Bangalore, with one more ILP under construction in Palwal region of NCR. It also owns 120 acres of land in Chennai besides holding a warehouse facility in Hassan, Karnataka.
DLI is also a Category 1 container train operator license holder owning ten rakes currently deployed in its Nagpur facility.
Infrastructure India is looking for a buyer after it scrapped an earlier agreement with Pristine Malwa Logistics Park Pvt Ltd (Pristine Malwa) to sell the rail logistics company.
“Infrastructure India Plc is in discussions with a third party and has received preliminary terms for the sale of DLI,” the AIM quoted infrastructure fund that invests directly into assets in India, said in a April 15 regulatory filing, without naming the “third party”.
These discussions are ongoing, although there can be no guarantee that these will lead to definitive agreements for the sale of DLI, it said.
In the April 15 regulatory filing, IIP said that a loan recall notice was received by Distribution Logistics Infrastructure India Ltd on April 12 from lenders to DLI’s project debt.
Distribution Logistics Infrastructure India, IIP’s largest holding in India, owes some Rs 700 crore to lenders led by Bank of Baroda.
A loan recall notice in India, IIP said, is a precursor for the lenders to DLI to invoke Insolvency and Bankruptcy Code if DLI presents no satisfactory response to the notice within two weeks from the date of issue.
DLI was granted a grace period for debt servicing by its lenders until February 2024 and DLI management has been in discussion with the lenders on settlement of dues.
On February 15, 2024, IIP said in a regulatory filing that it “will not be proceeding with the conditional sale of the Group’s interest in 99.99% of Distribution Logistics Infrastructure Pvt Ltd to Pristine Malwa Logistics Park Private Limited, announced on September 6, 2023”.
Some key areas of the conditional share purchase and shareholders’ agreement were subject to final agreement, which could not be reached in a manner satisfactory to the IIP Board, in the best interests of IIP shareholders, and potentially materially undervalued DLI in the Board’s view, IIP said.
“Consequently, Distribution Logistics Infrastructure Limited (Mauritius), IIP’s wholly owned subsidiary, has issued a termination notice to Pristine Malwa. Neither Pristine Malwa nor DLI had fulfilled all conditions precedent, and the long stop date (31 March 2024) has expired without a mutually agreed extension,” it said.
JSW Infrastructure had previously said it will pursue opportunities in synergistic businesses to increase revenue diversification.
“We intend to pursue synergistic businesses such as development of container terminals, liquid storage terminals, container freight stations (CFS), multi-modal logistics parks (MMLP) and inland container depots (ICD) to enable us to provide end-to-end logistics solutions to our customers,” it said in the prospectus for the initial public offering (IPO) of shares to list the company on the stock exchange.
Last year, JSW Infrastructure ventured into the container train operations business by acquiring the container train operator (CTO) license of Sical Multimodal and Rail Transport Limited from Pristine Logistics & Infraprojects Pvt Ltd.
Sical Multimodal and Rail Transport Ltd, the rail logistics wing of Chennai-based Sical Logistics Ltd, holds a Category I license from the Indian Railways, to ply container trains throughout the Indian Railways network in both the export-import and domestic segments.
The container train operator license of Sical Multimodal and Rail Transport was transferred to Pristine Logistics & Infraprojects Pvt Ltd after it acquired Sical Logistics Ltd under India’s bankruptcy law.
JSW Infrastructure has been pursuing an ambitious expansion plan since going public in October last year.
In February, the port operator won a tender to run a 4.5 million tonne (mt) capacity a year liquid cargo berth at state-owned Jawaharlal Nehru Port located near Mumbai, by placing the highest royalty of Rs252 per ton to the port authority. The liquid cargo berth can handle petroleum, oil, and lubricants (POL), edible oil, chemicals, molasses, and other liquid bulk commodities.
A few days later, it won the rights to mechanise and run a 6.96 mt capacity a year dry bulk cargo handling berth at V O Chidambaranar Port, also state-owned, in Tamil Nadu’s Thoothukudi district, by placing a royalty of Rs 76 per ton.
Prior to that, the Company acquired a majority stake in PNP Maritime Services Pvt Ltd from SP Port Maintenance (a Shapoorji Pallonji Group Company) for Rs 270 crore for 50 per cent of PNP port’s share capital plus an additional one share; won the rights to build and operate a greenfield non-major port at Keni in Karnataka by quoting a royalty of Rs17.25 per metric ton (mt) of cargo handled; bought 100 per cent of JSW Middle East Liquid Terminal Corp (formerly known as Marine Oil Terminal Corp) and purchased a 5 mt a year capacity liquid storage facility at Fujairah Port in UAE.
JSW Infrastructure is also expanding capacity organically by increasing the capacity of its existing ports/terminals. This includes adding 1.6 mt capacity to the 8 mt coal terminal it runs at Kamarajar Port in Tamil Nadu; raising the capacity of Jaigarh Port by building a 2 mt capacity terminal for handling LPG, propane, butane etc; expanding its container terminal capacity at New Mangalore Port; augmenting the capacity of its iron ore terminal at Mormugao Port to 15 mt from 8.5 mt besides constructing a non-major port at Jatadhar in Odisha.
Expanding the third-party customer base is a focus area for the port operator by engaging with third parties through long-term arrangements.
JSW Infrastructure currently has a capacity to handle some 170 mt of cargo across its network of ten operational ports and terminals across India’s coastline.