Cabinet clears restructuring of Dubai Port’s container terminal projects in India
11 Mar 2016
The union cabinet on Thursday gave 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 Indian ports.
The NOC allows for the creation of an Indian holding company of DPW with unique asset portfolio to operate and manage the terminal operations at the existing major ports subject to certain safeguards.
The decision will promote foreign direct investment and private sector participation in the port sector, a shipping ministry release stated.
DPW Limited 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, namely, Hindustan Ports Private Limited (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, however, be any change of ultimate beneficiary and the ultimate legal and beneficial ownership, which will continue to remain with DP World.
The Foreign Investment Promotion Board (FIPB) has given its clearance to DP World. The proposal is intended to help DPW expand capital base and enable fresh investments in ports and logistics infrastructure in India. This, according to the company, will enable efficient access of finance and introduce latest technology in port operation.
The government has agreed to the proposal for restructuring by DPW subject to the condition that the net worth of the holding company HPPL after acquisition of the shares of the project SPVs shall be higher than $80 million.
The restructuring of its 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. This may also lead to greater transparency and better compliance to Indian laws and regulations.