Eredene Capital of the UK has written down by as much as 70% of its joint venture investment in India, set up in collaboration with Apeejay Group consisting of two port-based logistics parks in West Bengal and Odisha.
Apeejay Infra-Logistic, an equal-stake joint venture with Apeejay Surrendra Group, the Kolkata-based tea and shipping conglomerate, runs two logistic parks -- at Haldia and Kalinganagar -- providing integrated services for multi-modal logistics through warehousing, container logistics and transportation, and both have customs bonded facilities.
The fair value of Eredene's investment in the project has now come down to £0.8 million against its total investment of £2.9 million till date since 2008, the investment fund domiciled in UK has disclosed to its shareholders.
The diminution in the value of Eredene's investment in the container freight station is symptomatic of poor prospects of Haldia port than due to the fate of infrastructure and logistics sector in the country.
The investments till 2013 were looking prospective in Haldia with new contracts been signed with shipping lines like Maersk, Hanjin, Tata NYK, and CSAV Norasial among others.
The facility, situated on a 90-acre site close to the Haldia port with a bonded warehouse of 54,000 square feet, three domestic warehouses totalling 86,000 square feet and a container yard of 300,000 square feet was offering services to the shipping companies.
The value of the investments even touched £4.1 million as on fiscal 2013-end.
But trouble started when Haldia Port Authorities, in a desperate bid to arrest fall in container volumes put restrictions on containers being handled by external container freight stations, according to Apeejay Infra's disclosures.
"This severely affected the business performance of the company and unless the port infrastructure improves, which shall lead to a revival of container volumes at the port, and the embargo on cargo is uplifted in the near future, the business growth will remain limited," Eredene said.
Its other logistics park at Kalinganagar close to local steel plants, has a domestic warehouse of 65,000 square feet, a bonded warehouse of 19,000 square feet and a container yard of 185,000 square feet.
The domestic warehouse and a part of open yard have been leased out to Tata TKM.
Apeejay Infra appears to be an aberration as Eredene has recently exited its investment of 23% stake in Sattva CFS & Logistics, a container logistics in Chennai for £1.9 million in cash, a return of 4.6 times since 2007.