Adani Reaps Maritime Riches

ZHEN HUA 15, a cargo ship with Hong Kong flag, started from Shanghai in August-end with plans to berth at Vizhinjam international seaport near Thiruvananthapuram in early October. The first ship to berth at the ₹7,525 crore deep-water international seaport and container transshipment terminal at Vizhinjam, under construction since 2015, carries one quay crane and two yard cranes fabricated in China that will be installed at the port. Once commercial operations begin next year, the port, with over 20 metres of draft to berth huge mother vessels, will become a global transshipment hub and transform India’s maritime network. Being developed by Adani Ports and Special Economic Zone Ltd (APSEZ), it is just 10 nautical miles from international sea route and will compete as a transshipment hub with Colombo, Singapore and Dubai ports. Estimates say Indian ports lose nearly $220 million revenue due to lack of a transshipment port near the international route. In July last year, a consortium of APSEZ and Israel’s Gadot Group had acquired Haifa Port, the second-largest in Israel, for $1.14 billion. “That will transform APSEZ into a global transport utility that will include logistics and warehousing,” says Karan Adani, wholetime director & CEO of APSEZ.

With father Gautam Adani, chairman of Adani Group, setting tough deadlines, Karan is working towards his goal to make APSEZ the world’s largest port operator (and carbon neutral) by 2030. Immediate aim is to clock 500 MMT of cargo by 2025. For that, APSEZ invested ₹27,000 crore in FY23 for six acquisitions — Haifa Port, Gangavaram Port (₹6,200 crore), Karaikal Port (₹1,485 crore), container depot ICD Tumb at Vapi (₹835 crore), India’s largest marine services company Ocean Sparkle for enterprise value of ₹1,700 crore and 49.38% stake in Indian Oil Tanking for ₹1,050 crore. It spent ₹18,000 crore on acquisitions. Capex was another ₹9,000 crore. ICICI Direct Research analysts estimate that APSEZ’s consolidated revenues will grow at 19% CAGR from ₹20,852 crore in FY23 to ₹24,930 crore next year and ₹29,586 crore in FY25. Venturas expect net revenues to grow at 23.4% CAGR over FY22-25.

APSEZ is India’s largest port operator with its 14 facilities across the country (with 602 MMT capacity) having 26% market share. In FY23, net sales were ₹20,852 crore — about 70% came from port operations and rest from harbour (11%), logistics (7%) and other operations. Profit after tax (PAT) grew 9% from `4,953 crore to `5,310 crore.

The company is planning ₹4,000-4,500 crore capex during the year. It doubled the capacity of its latest acquisitions, Haifa Port and Karaikal Port, which now handle monthly volume of about one MMT.

The company now wants to become an integrated logistics provider with focus on transport utility model and a flexible and agile logistics and supply chain network. There has been a sharp ramp-up of APSEZ infrastructure over past three years — rail rakes from 540 km to 6,290 km, trains from 58 to 93, grain silos from 0.88 MMT to 1.1 MMT, warehousing from 0.4 million sq. ft to 1.6 million sq. ft. and marine flotilla from 26 to 110. The target is to have 200 trains, 2,000 km rail network and 60 million sq. ft. warehousing by 2026. “Continuous operational focus using technology, process improvement, automation, digital-savvy talent and transition to a ‘transport utility’ model is under way,” says Karan Adani.

The 36-year-old Karan Adani had joined APSEZ in 2009 after graduating from Purdue University with a bachelor’s degree in economics. Its revenue was ₹1,135 crore and net profit ₹461 crore. He was elevated as CEO in 2016 when APSEZ grew to a ₹7,941 crore company with net profit of ₹2,867 crore, handling 152 MMT of cargo, with 10 ports and 42 berths. The company would bet on continuation of the dream run in the coming years.