The Indian government earlier this week (Mar 10) allowed Dubai-based port operator DP World to create an Indian holding company by change in shareholding in the Container Terminal Projects at major ports provided the net worth of the latter is higher than USD 80 million.
"The Union Cabinet chaired by Prime Minister Narendra Modi has given its approval for grant of 'no objection' to the proposed change in shareholding in the Container Terminal Projects of Dubai Port World (DPW) Limited in major Ports," the Ministry of Shipping said in a statement.
"The government has agreed to the proposal for restructuring by DPW subject to the condition that the net worth of the holding company Hindustan Ports Private Limited (HPPL) after acquisition of the shares of the project SPVs shall be higher than USD 80 million," it said.
Image: DP World
The move allows for the creation of an Indian holding company of global operator DPW with unique asset portfolio to operate and manage the terminal operations at the existing major ports subject to certain safeguards.
DPW Ltd is contemplating restructuring of its assets in India with the objective of consolidating the ownership of its port infrastructure in India into a single holding company HPPL.
The new company will take over all liabilities of the existing subsidiaries of DP World in relation to the concession agreements.
"There would not be any change of ultimate beneficiary and the ultimate legal and beneficial ownership which will continue to remain with DP World," it said adding it is noteworthy that FIPB has given its clearance to DP World.
The proposal of DPW is intended to help them to expand the capital base and enable fresh investments in ports and logistics infrastructure in India, the statement said.
This will enable efficient access of finance and introduce latest technology in port operation.
Also, the restructuring of assets of DPW in India will help in better coordination and control as the port authorities have to deal with a single company registered in India.
The approval of consolidation proposal of DPW will also facilitate promoting foreign direct investment in the country and signal the investor friendly ambience in the port sector, the government said.
It added that this may also lead to greater transparency and better compliance to Indian laws and regulations.