"Madhya Pradesh Government to Revise Pawarkheda Logistics Hub Agreement for DP World-Kesar Multimodal Deal"

Madhya Pradesh State Agricultural Marketing Board, commonly known as the Mandi Board, is preparing to seek approval from the cabinet to amend a concession agreement it previously signed with Kesar Multimodal Logistics Ltd. This amendment is intended to facilitate a deal involving Dubai-based DP World Ltd's unit acquiring the facility. The deal, announced in September of the previous year, has been stalled pending necessary approvals.

The proposed changes include removing a requirement for Kesar Terminals & Infrastructure Ltd to maintain a 26 percent stake in Kesar Multimodal Logistics throughout the license period. Additionally, the Mandi Board aims to extend the time allotted for the public-private partnership operator to develop the entire facility, as outlined in the original concession agreement from October 2011.

Kesar Multimodal Logistics Ltd, established as a special purpose vehicle by Kesar Terminals & Infrastructure Ltd and Kesar Enterprises Ltd, is tasked with constructing a 'Composite Logistics Hub' at Pawarkheda near Itarsi on a public-private partnership basis. The hub is strategically located at the intersection of major railway corridors and adjacent to National Highway 69.

However, the hub's competitive advantage has been challenged by the presence of Container Corporation of India Ltd at Mandideep, approximately 50-60 kilometers away. Additionally, competition from Indian Railways' goods shed at Itarsi and reliance on expensive third-party trucking services have further complicated matters.

Despite these challenges, Kesar Multimodal Logistics commenced operations in FY2017 after completing Phase I of the project, which included warehouses, cold storages, an inland container depot, railway sidings, and processing areas.

On September 11, 2023, Kesar Terminals & Infrastructure Ltd announced a deal to sell up to 100 percent equity stake in Kesar Multimodal Logistics to DP World Multimodal Logistics Pvt Ltd, subject to regulatory approvals. However, the deal has been delayed due to the lack of a no objection certificate (NOC) from the Mandi Board.

To facilitate the deal, the Mandi Board is proposing amendments to the concession agreement, including removing the requirement for Kesar Terminals & Infrastructure to maintain a 26 percent stake. The board aims to obtain cabinet approval for these changes, which were drafted after the PPP operator cleared outstanding dues.

The proposal, delayed by the imposition of the model code of conduct for Lok Sabha polls, is now awaiting consideration by the cabinet. Once approved, the NOC from the Mandi Board will enable the completion of the deal.

However, Kesar Multimodal Logistics has faced financial challenges, with its net worth eroded by continuous losses. Lenders initiated insolvency proceedings under the Insolvency and Bankruptcy Code against Kesar Terminals & Infrastructure due to defaults in loan repayment. Although insolvency proceedings were withdrawn after agreeing to a one-time settlement, challenges remain regarding repayment of dues.

As the situation unfolds, Kesar Multimodal Logistics is seeking more time from lenders for repayment of one-time settlement dues amidst ongoing legal proceedings.

ET