Adani Ports acquisition of Krishnapatnam Port for ₹13,675 crore, sparks fresh debate over competition

Adani Ports and Special Economic Zone Ltd (APSEZ) acquired an initial 75% stake in Krishnapatnam Port in October 2020. On April 5, 2021, the company announced the acquisition of the remaining 25% stake from Vishwa Samudra Holdings for ₹2,800 crore, taking its ownership to 100%. According to the company's official announcement, the transaction valued the port at an enterprise value of ₹13,675 crore, based on an EV-to-FY21 EBITDA multiple of 10.3 times. The Competition Commission of India subsequently approved the acquisition of the additional stake in May 2021.

The takeover has drawn attention to Adani Ports' expanding presence along the eastern coastline. Apart from Krishnapatnam, the group operates Gangavaram Port in Andhra Pradesh, Kattupalli Port in Tamil Nadu and has a presence at Ennore through its terminal operations. Its wider portfolio also includes Dhamra Port in Odisha and Karaikal Port in Puducherry.

Critics argue that the concentration of several strategically located ports and port-related facilities under one corporate group could have implications for competition, particularly when these facilities serve overlapping industrial and shipping corridors. They contend that exporters and importers could face reduced bargaining power if alternative port operators and logistics options become limited. Questions have also been raised about the long-term implications for regional businesses and the state's ability to maintain a competitive maritime ecosystem.

However, another perspective is that the consolidation should be viewed in the context of the enormous financial and operational challenges involved in running ports. Port infrastructure requires deep financial resources, specialised maritime expertise, continuous investment in equipment and dredging, efficient cargo-handling systems, and strong road and rail connectivity. Supporters of the acquisition argue that the ability to mobilise capital and build integrated logistics networks is critical to the long-term success of port operations. They contend that the difficulties faced by previous operators cannot automatically be attributed to the entry of Adani, as financial constraints, operational efficiency and logistical expertise also determine a port's competitiveness.

The acquisition has also brought the role of the then Y.S. Jagan Mohan Reddy government in Andhra Pradesh under political scrutiny. The initial 75% acquisition took place in October 2020, during Jagan's tenure, while the purchase of the remaining 25% was announced in April 2021. Critics have questioned the circumstances surrounding the change in ownership from the Navayuga-linked promoter group to Adani and whether the state's interests in preserving competition were adequately protected. However, the documented corporate transactions and regulatory approvals do not, by themselves, establish any wrongdoing by the previous government.

The larger question for Andhra Pradesh is how to attract major private investment and build efficient maritime infrastructure while ensuring that competition remains healthy. With ports playing a crucial role in exports, industrial development and employment, the availability of alternative operators, transparent tariffs, competitive logistics services and adequate choices for exporters and importers will remain important.

The Krishnapatnam takeover is therefore more than a change in corporate ownership. It has brought into focus the need to balance private investment and operational efficiency with competition, regional economic interests and the long-term strategic importance of Andhra Pradesh's coastline.