Adani logs in at KPL; Serious challenge to DP World, PSA International

Source:http://www.sagarsandesh.com/news/adani-to-develop-container-terminal-at-kamarajar-port/

With the arrival of Adani Ports and SEZ Ltd (APSEZ), India’s largest private port operator, into South India’s container handling market, the existing established players like DP World and PSA International, who operate at Chennai Port, has a serious challenge in their hands.

After selecting Adani Port’s bid for its proposed container terminal, on March 1, the management of Kamarajar Port Limited (KPL), Ennore, signed a concession agreement with them to develop a state-of-the-art container terminal at an estimated cost of Rs. 1, 270 crores.

For smooth execution of the project, the company has floated a special purpose vehicle named Adani Ennore Container Terminal Pvt. Ltd. and the entire project will be funded through debt and internal accruals.

According to official sources, Adani will have the flexibility to build the 730m berth in stages, starting with a berth length of 400m in 27 months that can handle eight lakh TEUs a year costing Rs. 750 crores and scaling it up to 730m to load 14 lakh TEUs over a period of 45 months.

It may be worth recalling here that KPL, ever since its inception way back in 2001 as a satellite port for Chennai Port, successfully developed itself as an alternate facility for breakbulk and RoRO cargo in the region.
Though the KPL (then Ennore Port) the management had signed a similar Concession Agreement with Bay of Bengal Gateway Terminals, a consortium headed by Spain’s leading port operator, Grup Marítim TCB SL, international construction group Obrascón Huarte Lain SA, India’s leading construction, power and engineering conglomerates, Lanco Infratech Ltd. and Eredene in August 2010, it failed to see light of the day after the bidder ran into problem with timely financial closure.

Given the importance of having a container handling facility (besides other cargoes like coal, cars and petroleum)  for sustained revenue in the longer run, the port management seriously pursued the bidding process and finally clinched the deal with Adani Port a few weeks ago. Adani offered a revenue share of 37 per cent, against the 27 per cent offered by DP World.

Though Adani Ports tried to enter South Indian container market about two years ago with a bid for Rs. 3,700-crore mega container terminal project at Chennai Port, its offer of 5 per cent revenue share was rejected by the port management then and eventually stopped its foray to the region.

Speaking to reporters after the signing ceremony, Mr. Vasant R Murthy, CEO, Container Ports and Logistics, Adani Ports, said: “Having established as a major player in the West, we want to be a pan-India player (with the foray in South).”

To a question about its tactics to remain a main player among the already established container terminals run by well-known firms like DP World, PSA International and the latest entrant to the block – L & T’s Kattupalli International Container Terminal, he replied: “We will bring efficiency, quality and customer centric approach to the East too, which has made us a dominant player in the West over the years.”

It may be noted here that Adani’s container terminal would be a reality only in 2016 and by the time it begins commercial operations, three container terminals in Chennai and Kattupalli ports as well as another such facility in Krishnapatnam Port, located hardly 150 km from Kamarajar Port, would have a sustained throughput of TEUs.
About the existing scenario in South India and available chances of survival for Adani’s container terminal project, Mr. Murthy added: “Things may be slow now, but need not be the same in the future. We believe Tamil Nadu has got a healthy industrial base. With the right pricing and infrastructure, we can attract customers.”