In an exchange filing made after market hours on Wednesday (23 June 2021), Adani Ports and Special Economic Zone (APSEZ) said that it may abandon Myanmar project if it violates U.S. sanctions and will write-down investments in the project in full.
APSEZ has a project to build a container terminal in the city of Yangon on land leased from a Myanmar military-owned conglomerate. Media reports on 22 June 2021 suggested that the Norwegian pension fund KLP was divesting from APSEZ on the grounds the companys links with the Myanmar military breach the funds responsible investment policy.
A military coup in Myanmar on 1 February 2021 and an ensuing crackdown on mass protests in which hundreds have been killed has drawn international condemnation and sanctions on military figures and military-controlled entities.
Offering clarification with respect to the aforementioned media reports, Adani Ports said that the company has zero tolerance policy which ensures that there is no contravention of US and other sanctions.
The company is in discussion with its US based counsels to ensure that the company is in compliance with the OFAC sanctions programs.
In a scenario wherein Myanmar is classified as a sanctioned country under the OFAC or if OFAC opines that we are in violation of the current sanctions, the company has plans to abandon the project and will write-down its investments in the project in full.
The write down will not materially affect the balance sheet as it is equivalent to about 1.3% of the total assets of APSEZ.
KLP Fund held 1.05 lakh equity shares (0.005% of paid-up capital) of APSEZ as on 31 March 2021.
APSEZ, a part of globally diversified Adani Group, has evolved from a port company to ports and logistics platform for India.
On a consolidated basis, APSEZ posted 285% jump in net profit to Rs 1287.80 crore on 21.1% rise in total income to Rs 4072.42 crore in Q4 FY21 over Q4 FY20.
The scrip shed 0.49% to currently trade at Rs 715.15 on the BSE.
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