Adani Ports gets rating upgrade, with better outlook

Global ratings agency S&P revised outlook on Adani Ports from a negative to stable. Will it be a boost for India port infrastructure ?   

Around 90% of world trade, carried by the international shipping industry and global seaborne trade, has reached the mind-boggling figure of almost 10 billion tons annually; India was a bigger slice of the pie. The Indian administration is trying its hardest to create, maintain and streamline new and existing ports. India’s Sagar Mala project, was started in 2015 with the aim of modernizing India’s 12 major and around 200 non-major ports in addition to sanctioning the construction of six mega-ports; the Indian government has provided a budget of $120 billion for the project. There has also been special focus on encouraging more private players to open their facilities rather than simply indulging in PPP (public-private partnership) type deals with the government, as was the norm. Mundra Port projects, being carried out by Adani Ports & SEZ Limited is a good example of the increasing influence of private players in what was earlier a government playground. 

Mundra port is a private port and also a special economic zone, built in the Gulf of Kutch region in Gujarat and owned by Adani Ports and Special Economic Zone Ltd (APSEZ). As of now, Indian ports are hugely congested, with infrastructure that is inadequate compared with the traffic they have to deal with; ports like the Nhava Sheva port off Mumbai are grateful to cede some ground to other ports for this reason. In fact, even though APSEZ owns and operates 10 ports across the Indian coastline, Mundra accounted for around 58% of revenue and 62% of cash operating profits in 2016-2017 and was the largest port in India, by cargo volume handled. APSEZ has raised almost half a billion dollars by selling bonds to global investors for renewed capital expenditure in upcoming and ongoing projects. Furthermore, APSEZ has also signed a $300 million MOU with the Chinese East Hope Group to develop manufacturing units at the flagship Mundra port.

As per TechSci Research report “India Port Infrastructure Market By Type, By Cargo, Forecast & Opportunities, 2011 - 2025”, aforementioned factors such as rising number of Public Private Partnerships and 100% FDI under automatic route for development of ports are some major factors that will drive the port construction and infrastructure projects in India. Furthermore, the report also goes on to link sustainable technologies with the Sagar Mala project, saying that the thrust is on providing environmentally friendly ports that will also cater to a burgeoning quantity of ships in the future. TechSci Research experts have also pointed to the quantum of major FDI into port infrastructure projects to highlight the growing global interest in India’s system of ports. With global demand set to pick up over the next few years as the world shakes off the last vestiges of the 2008 financial crisis, it is incumbent for both public and private players to refocus on port infrastructure enhancement to deal with a sustained period of seaborne trade.

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