“Along India’s 5,422-kilometre coastline, Adani has a presence every 500 km on an average, from just a blip on the country’s far western end 10 years ago,” it said.
Three top officials, including a former competition regulator, have flagged risks of market concentration in the ports industry, highlighting Adani’s phenomenal expansion in the last 10 years.
In 10 years, the total cargo handled by Adani ports jumped nearly fourfold to 337 million tonnes in FY23. Its volumes grew at a compounded annual growth rate of 14% against the industry’s 4%. If Adani’s share is removed, the latter figure falls to barely 2.7%, the newspaper said in its investigation.
The group’s market share in total cargo handled has nearly tripled from around 9% in 2013 to about 24% in 2023; that of Central government-controlled ports dropped to around 54.5% from 58.5% in 2013.
Amongst ports that are not under the Union government, Adani’s market share has crossed the 50% mark, the daily reported.
Therefore, Adani Ports and Special Economic Zone Ltd (APSEZ)’s coastal network competes with the Union government’s over 12 ports.
“In fact, part of the rise in Adani Group’s market share in the ports sector – from 9% to 24% in 10 years – has come at the cost of the Union government-controlled ports (called ‘major ports’ in industry parlance) whose cargo share has fallen,” the newspaper said.
“This is a concern,” a top economic ministry official told The Indian Express.
These section of government officials and regulators pointed out that this growth has been through the inorganic route.
“Cargo handling data analysed by The Indian Express shows that the ports acquired over the last decade by the Adani Group account for more than a third of the total cargo volumes (123.7 million tonnes of 337 million tonnes, or 37%) handled by the company.”
“Such a growth model compounds the concerns about the growing concentration risk,” the same official told the daily.
The growing dominance of a single player along the entire coastline, from west to east, could potentially lead to a gradual weakening of the negotiating leverage held by shipping companies, particularly in certain geographic regions, the report noted.
Three top officials flag concerns
A senior official with the shipping ministry flagged these concerns, highlighting risks of low competition, high entry barriers for newer and smaller players, high dependencies on dominant players, and higher chances of abuse of dominant position.
A senior official from an economic ministry, who also requested anonymity, further expressed that what has heightened concerns regarding this market consolidation in a critical industry like shipping is the context of allegations related to accounting fraud and stock manipulation concerning the Adani Group.
These allegations were made by the US-based short-seller Hindenburg Research in January this year and have more recently surfaced in reports based on documents obtained by the Organised Crime and Corruption Reporting Project, which were then shared with The Guardian and the Financial Times.
A former chairperson of Competition Commission of India (CCI) told IE that while ports may be considered natural monopolies at a broad level, there are issues with this. “Its (APSEZ’s) share has been continuously growing in a creeping fashion. It is definitely a concern if there is a creeping acquisition of capacity by one player while the others fall or languish. It may not be too glaring now but down the line, say in five to 10 years, it could be a problem. The government and the CCI should keep an eye,” the former CCI head told IE on the condition of anonymity.
The Indian Express reported that a decade ago, in FY13, Adani Group’s ports business had cargo volumes of around 91 million tonnes, accounting for just 10% of the cumulative cargo volumes handled by all ports. Over 23% of the cargo volumes were handled by all minor ports.
It noted that a port is a minor port if it is not government controlled. The nomenclature has nothing to do with the size of the port or cargo volumes handled.
It said that the Adani-owned Mundra Port – which is a minor port – handled the most cargo at 155 million tonnes in FY23, more than any of the 12 Union government-owned ports.
In FY23, the minor ports handled close to 650 million tonnes in cargo. APSEZ handled around 337 million tonnes in volume, crossing the 505 mark, as mentioned earlier. These cargoes primarily came from its eight operational minor ports in India, the report noted.
Over these 10 years, APSEZ’s cargo volumes were higher than the volumes handled by major ports and minor ports in most years, it said.
“Even in FY21, when India’s overall port volumes, and volumes at major and minor ports contracted by over 4% year-on-year due to the pandemic, APSEZ’s volumes were up nearly 11% over the previous year,” it said.
“Fuelling the ASPEZ expansion was a series of acquisitions: Dhamra in Odisha; Kattupalli in Tamil Nadu; Krishnapatnam and Gangavaram in Andhra Pradesh; and Dighi in Maharashtra. In FY23, APSEZ’s non-Mundra volumes accounted for 54% of its overall port cargo, having grown at a CAGR of around 36% since FY13,” it added.
Interestingly, the Adani Group’s has seen rapid growth across a few other sectors as well. It is the largest private sector airport operator in India. It oversees eight airports.
Furthermore, it has also become the largest cement manufacturer and private sector thermal power producer in the country.