Adani gets green light for expansion of Mundra SEZ
Jul 16 2014 , Mumbai
Long-pending clearances come within 52 days of Modi govt
The grant of environmental and coastal regulator zone (CRZ) clearances has resolved all pending issues till now, and it will lead to construction of a desalination plant and an effluent treatment plant in the SEZ, the company said in a statement.
Companies that had been restricted by the Gujarat High Court from operating inside the SEZ are now expected to return. Shares of Adani Port & SEZ rose 6.82 per cent to Rs 281.10 on the Bombay Stock Exchange on Wednesday.
“The clearances will encourage investment in the SEZ, and the development will be at a much faster pace now,” Adani Group chairman Gautam Adani said in a statement. The SEZ provides seamless connectivity through sea, rail and road.
The clearances came one-and-a-half months after the Narendra Modi government assumed power at the Centre. The Gujarat-based Adanis have been considered close to prime minister Narendra Modi and it had become a campaign issue during the Lok Sabha election. In fact, following BJP’s massive electoral victory, Modi flew down to Delhi from Ahemdabad in a jetliner owned by Adani.
AK Prabhakar, adviser at Anand Rathi Securities, said the move was expected since the Modi government had come to power. “Shares of the company had already moved upward. In fact the shares have outperformed and the valuations look stretched today. Technically, we can see an 8-10 per cent rise over the next three months. But I would suggest investors to hold the stock,” Prabhakar said.
Operationally, the company is not going to derive any immediate benefit. The clearances will kickstart the long held-up projects, like the desalination and effluent treatment plants, which would help businesses to start operations in the SEZ.
In January, the Gujarat high court had ordered all 12 companies in the SEZ to stop operations until the final clearance.
The SEZ also includes the Mundra port, which handles 100 million tonnes of cargo per annum. The company spokesperson said there was no impact on port activity due to stoppage of work in the SEZ. The SEZ contributes only a marginal share of the company’s total revenues as of now. However, now the SEZ will host several industries that will generate additional cargo volumes for the port.
SEZs or special economic zones have been set up to attract FDI and promote exports-led growth in the economy. Industrial units inside an SEZ enjoy complete waiver of import duty, excise duty and service tax for capital goods or raw material procured.
Adani SEZ is located close to the major towns of Bhuj and Gandhidham in Gujarat. The group owns and operates five ports — Mundra, Dahej, Hazira, Goa and Visakhapatnam. It recently acquired the Dhamra Port in Odisha and plans to set up four more in Tuna Tekra, Mormugao, Kandla and Ennore.