Adani Ports continues its acquisition spree on the east coast

Karaikal Port is an expensive catch for Adani in many ways, including location; infrastructure and land base. It is the only major port between Chennai and Tuticorin and its strategic location allows the port easy access to the industrially rich hinterland of central Tamil Nadu.

Milestone Acquisition

The all-weather deep water 11 to 14 meter deep harbor has five operational berths; three railway sidings, a total area of ​​over 600 hectares; an onboard handling capacity of 21.5 million tonnes and the upcoming 9 million tonnes per year for the Chennai Petroleum Corporation Ltd (CPCL) refinery.

Karan Adani, CEO and full-time director of APSEZ, said the acquisition of Karaikal Port is another milestone in solidifying its position as India’s largest transport company. APSEZ will spend an additional ₹850 crore to upgrade infrastructure facilities to reduce logistics costs for customers. There are plans to double the port’s capacity over the next five years and also add a container terminal to make it a multi-purpose port, he said in a press release.

Jagannarayan Padmanabhan, Global Head, Transport Logistics and Mobility at CRISIL Ltd said Karaikkal is the only port between Chennai and Tuticorin and both are major ports that have turned to landowner development mode. “It’s great for trade as Karaikkal has always struggled to survive. As such, the necessary focus on building connectivity or aggressively self-promoting has not been adequately placed. With a strong developer as new owner, we could see some shifts in calls from shipping companies and also the hinterland can develop faster,” he said.

G Raghu Shankar, a shipping expert with over four decades of experience, says the port of Karaikal has faced challenges, including financial constraints. The port has been financially strained for many years and will be improved by the acquisition of Adani.

The Adanis are known for the effective and efficient handling of bulk cargo and Karaikal Port fits in well with their established brand. If they are allowed to continue the concession agreement after the takeover, which the state government is considering revisiting, the Adanis will develop and take the port to a new level, he said.

An industry expert said Adani’s takeover of Karaikal Port will lead to fierce competition between the state’s major ports and Adani ports in the region. However, trade members fear that in the absence of another major player in the sector, Adani Ports will establish a monopoly.

“Can be a game changer”

Shankar goes on to say that it would not be bad for trade if the Adanis could turn Karaikal from an underperforming port into an efficient facility. This takes into account the fact that there are industries in and around the port that depend on and are served by Karaikal Port. How serious Adanis is about developing the port will be a game changer.

Do Adani ports create a monopoly? Shankar said creating a monopoly, particularly in the private sector, is commonplace as few have the expertise and can afford large investments, particularly in infrastructure projects with long development times. Adani has eight ports/terminals in the south/east, which tips the balance in their favour. As long as the monopoly isn’t abused or abused, the industry will have to live with it, even if it may not be entirely to its advantage, he added.

Padmanabhan disagrees, saying, “We cannot say that a monopoly will be created given the presence of other multinational players such as DP World and PSA in Chennai Port and JM Baxi in Tuticorin.”

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