The Adani group's buyout of Kattupalli port near here from Larsen and Toubro Ltd (L&T) is likely to boost trade in this part of the region, experts said.
"With this buy the Adani group gets a major presence in the Eastern Coast catering to the southern market. This may be another Mundra Port for the group but on the Eastern Coast," Ashish Nainan, analyst in Care Ratings, a credit rating agency, told IANS.
"Under the Adani group, Kattupalli Port will give a big run for its money to the Chennai Port for container cargo," industry watchers told IANS.
The Gujarat-based Adani group, through its Adani Ports and Special Economic Zone Ltd (APSEZ), is a major private player in the sector with presence on the western coast (Mundra Port, Dahej Port, Hazira Port, Vizhinjam Port and terminals in Tuna, Murmugao) and eastern coast (Dhamra Port, Kattupalli Port and terminals in Kamarajar Port and Visakhapatnam Port).
In totality, the Adani group has a presence in 10 locations along the Indian coast.
On June 29, L&T, in a regulatory filing with the Bombay Stock Exchange said it has executed a Share Purchase Agreement between Marine Infrastructure Developer Private Limited (MIDPL), L&T Shipbuilding Limited and Adani Kattupalli Port Private Limited to acquire 97 per cent shares of MIDPL. MIDPL is the developer and operator of Kattupalli Port.
The total purchase price is Rs 1,950 crore -- enterprise value -- of which Rs 388 crore is the consideration for sale of shares and remaining Rs 1,562 crore is towards settlement of MIDPL's liabilities.
Kattupalli Port is one of the most modern ports in India emerging as Chennai's new gateway for export-import trade in the Chennai/Bengaluru region and provides a whole new dimension of services with speed and sophistication.
Amongst its many advantages is its unique location -- 30 km north of Chennai and with connectivity to the hinterland of North Tamil Nadu, Chennai and Bengaluru regions, as also locations in south Andhra Pradesh that are highly industrialised, the Adani group said.
It is these regions that the Chennai and Kamarajar ports cater to.
"We are going to start construction to diversify the cargo of the port and will be adding 40 MMT of new capacity in next three years. We are confident that with our superior infrastructure and efficient handling of cargo we will be able to reduce the logistics cost of industries in the region and be one of the engines of growth," APSEZ CEO Karan Adani said.
The APSEZ plans to transform Kattupalli port into a multi-commodity facility to handle cargo-like containers, automobiles, break bulk, general cargo, liquid cargo and project cargo.
Presently the Chennai and Kamarajar ports handles these cargoes.
According to an industry expert, Kattupalli Port, being the private sector, will have the flexibility and speed in decision-making when it comes to customer acquisition, which may not be so in the case of the Chennai and Kamarajar ports.
"With a string of ports along the western and eastern coasts, the Adani group can command good business from its clientele," he added.
Kattupalli Port presently has two berths with a quay length of 710 meters, six quay cranes, 15 rubber-tyred gantry cranes and 5,120 ground slots capable of handling 1.2 million TEUs (twenty-foot equivalent containers) per annum.
With a backup area of 322 acres, Kattupalli provides ample space for future expansion of port to facilitate trade requirements.
"The efficiency level at the Mundra Port is great. Similarly, Kattupalli Port will also be heavily mechanised and the efficiency will be high in terms of turnaround time," Nainan of Care Ratings opined.
"Owing a full port and operating a terminal in a port are entirely different things. Owing a port has several advantages like offering storage capacity," Nainan added.