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Adani Group’s dominant position worries trade members

The ports of Dhamra, Vizag, Krishnapatnam, Kattupalli and Kamarajar on the East Coast may be located in different states but have something in common ― the Adani Group.

Trade members worried Adani group’s dominant position to create monopoly type of a situation 

The latest acquisition of the privately-run Krishnapatnam Port Company Ltd (KPCL) in Andhra Pradesh for 13,500 crore, announced on January 4, by Adani Ports and Special Economic Zone Ltd (APSEZ), is a perfect strategic fit for the Gujarat-based conglomerate. However, trade members (port users) are worried that the Adani group will have a dominant position on the East Coast, and this could possibly create a monopoly type of a situation in the long run. 

APSEZ has increased its market share

Their worry is understandable considering that APSEZ, India’s largest private port operator, had increased its market share considerably in the last two decades. Today, it has nearly 27 per cent market share of the country’s total port traffic of over 1,200 million tonnes, up from 22 per cent before the KPCL acquisition.

Private ports taking cargo from government ports; APSEZ target of handling 400mt of cargo by 2025, Karan Adani confident of achieving it

While the 12 major ports are operating under different entities and competing with each other, the private ports are consolidating their positions and taking cargo from government ports, said an industry source.

Karan Adani, CEO, APSEZ, in a statement, said that the KPCL acquisition will accelerate the company’s fiscal 2025 vision of handling 400 mt of cargo. With the experience of successfully turning around acquisitions of Dhamra and Kattupalli ports, the company is confident of harnessing the potential of KPCL, he added.

The company now can tap the coastal cargo market such as shipping of coal from Dhamra to Krishnapatnam says Fitch Ratings

Fitch Ratings said that acquisition of KPCL complements APSEZ’s existing port portfolio by diversifying its concentration away from the west coast of India. The company management says that the ratio of cargo volume in the western and eastern coasts will shift from the current 80:20 to a more balanced 55:45 following the acquisition. The transaction will also enable the company to tap the coastal cargo market such as shipping of coal from Dhamra to Krishnapatnam.

The addition of KPCL to APSEZ will increase the latter’s market share and its diversity, both geographically as well as its cargo composition. With this, APSEZ will cater to a new economic hinterland of Andhra Pradesh that is currently not served by its existing ports. This acquisition is also in line with APSEZ’s target of throughput volumes of 400 mt by fiscal 2025, Moody’s Investors Service said in a report.

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