Adani's port deal with L&T brings cheer, some worry

Adani will run container terminals at Ennore & Kattupalli, near Chennai

On Thursday, Adani Ports and Special Economic Zone Ltd (APSEZ) entered into a non-binding agreement with L&T Shipbuilding for evaluating the operations of the latter's port at Kattupalli, Tamil Nadu.

A major section of the trade believes this would push efficiency, faster turnaround  and options on facilities. Long term, though, they are worried whether Adani's increasing presence on the east coast would create a dominance.

"The definitive agreements would be entered into later. While all non-operating revenues and expenses will be to L&T s account, Adani shall be responsible for Ebitda (operating earnings) gains and losses from the port operation for this period, The shipyard will continue to be managed and operated by L&T," had said APSEZ on Thursday.

The positives, say observers, could be faster turnaround  and options to Chennai port. Congestion on the approach roads has been plaguing the latter for a long while. The worry, as mentioned earlier, is due to Adani's keen interest in ports on the coast, beyond the  purview of any regulator on rates.

Adani is developing a new container terminal at Ennore port, nine km before Kattupalli. The terminal is expected to be ready by March, almost 10 months before the time it has agreed with the port authorities.  The company is investing Rs 1,270 crore. The two terminals would together be able to handle 1.8 million TUEs in a year.

Those at Chennai Port are handling about 1.6 million TUEs. Observers believe  30-40 per cent of the traffic handled by Chennai will move to the new terminals, since Adani has bargaining power with shipping lines, also using Adani's Mundra (in Gujarat) terminal.

The new sites would have road connectivity and no restrictions on lorry flows. Beside, with Ponneri becoming an industrial hub and the Chennai-Bengalaru industrial corridor coming up, both close to the Ennore and L&T ports the terminals run by Adani will have good prospects, said sources.