At the turn of the century, when commodity traders ventured into building ports, India’s maritime sector was dominated by the 12 ports owned by the Indian government.
India’s exporters and importers had no choice but to ship their cargo through one of these ports, grudgingly bearing the poor service quality and the “we don’t care attitude” shown by officials at these maritime gateways.
The Adani Group braved many challenges to develop Mundra port in Gujarat, which crossed the 100 million tonnes (mt) mark in cargo handling in a year—a first among India’s ports—in fiscal 2014. Mundra is now India’s biggest port by cargo handled across all formats—state-owned or private.
It is also one of the two Indian ports to be listed on BSE—the other being Pipavav port, also in Gujarat. Mundra handles cargo such as dry bulk, liquid bulk, containers and automobiles. It is also India’s highest revenue earning port.
Mundra has the fastest turnaround time for ships among Indian ports of 18-20 hours and, hence, vessels don’t need to wait for a berth. In comparison, the average turnaround time for ships at state-owned ports is as high as five days, including a waiting period of two days to get a berth to dock. The port also boasts the world’s biggest coal import terminal with a capacity to handle 60 mt of the commodity a year.
All these were achieved in a span of 13 years, which makes Mundra’s performance exceptional.
The ports owned by the Indian government, many of them operating for more than 50 years, have come nowhere near Mundra. Kandla port, located 60km from Mundra, came closest by handling 87 mt of cargo in fiscal 2014.
In fact, Ennore, the newest of the ports owned by the Indian government that also started operations in 2001 as Mundra, handles a paltry 27.33 mt of cargo in a year.
The Adani Group has invested close to Rs.3,000 crore to build Mundra port on the country’s western coast.
Mundra’s biggest unique selling propositions are its deep draft (depth), proximity to the north-west hinterland (a port’s cargo generating and destination area), good rail-road connectivity, and its ability to provide all cargo-handling services under one roof.
These elements are a key attraction for port customers. Its proximity to the northern hinterland market saves inland logistics costs for exporters and importers vis-à-vis Jawaharlal Nehru port and Mumbai port (both Indian government-owned)—also on the western coast.
As a port, Mundra is one of the deepest in the country with a water depth of 18 metres. At this depth, it can easily handle capesize ships, the biggest of the dry bulk carriers that can carry commodities such as coal, iron ore, steel and grains.
Mundra also handles oil supertankers, container vessels and roll on-roll off vessels. It can accommodate container ships with a capacity to carry 14,000 standard containers, compared with other Indian ports that can dock ships with a capacity to load only 9,000 standard containers. Using larger vessels reduces ocean transportation costs for exporters and importers through economies of scale. Mundra’s strategic location helps it serve a big population of the landlocked north and north-west regions of India that generate significant port traffic.
About 70% of India’s trade in commodities such as crude oil, coal, fertilizers, foodgrain and container cargo is accounted for by cargo centres in north and north-west India, including the national capital region of Delhi and the states of Gujarat, Rajasthan, Haryana, Punjab and western Uttar Pradesh.
Mundra’s location near the entrance of the Gulf of Kutch on the north-west coast of India places it near major maritime trade routes to serve as a hub port for foreign trade to and from the Middle East, Asia, Africa and other global destinations.
The Adani Group also utilized land judiciously to set up a port-based special economic zone (SEZ) which, in turn, created demand for cargo from the manufacturing units operating therein.
Globally, land owned by the ports is leveraged for optimizing cargo volumes and increasing revenue of ports. It is an established practice globally for ports to allot land for carrying out economic activity including establishing industry to ensure captive cargo to the port, thereby enhancing the sustainability of that port. Port lands have also been used to set up SEZs aimed at encouraging industrial development in and around the port. Being a port outside the control of the Union government, Mundra is free to set its own tariffs whereas tariffs at Indian government ports are set by the tariff regulator, the Tariff Authority for Major Ports (TAMP).
Mundra’s rise, though, was not without its share of controversies including charges of violating environmental and coastal regulation zone approvals for which it was asked to pay a fine of Rs.200 crore last year by India’s environment ministry as well as a court directive to close 12 manufacturing units operating in the SEZ for the same reasons.
Since it is a port owned by the Gujarat government but given to a private firm for development and operations, the Adani Group did not face any legacy issues, particularly relating to labour, while building Mundra.
At the beginning, the Adani Group faced connectivity issues for bringing cargo to the port and for evacuating the cargo landing there. But it turned this weakness into a strength by investing money to build a 64km-long broad-gauge railway track linking Mundra with Adipur on the Indian Railways network.
Double stack container trains now ply regularly from and to Mundra, saving inland freight costs to exporters and importers.
The building of the Mundra port was also not without its share of human resource challenges. It faced difficulties in getting competent people to work at the port because it was located in a remote part of Gujarat.
Mundra went public in 2007, putting Gautam Adani, founder of the Adani Group, in the elite list of India’s billionaire businessmen that includes the Ambani brothers, Sunil Mittal, Kumara Mangalam Birla, and Azim Premji.livemintamong others.
India’s 12 Union government ports have since opened marketing departments to sell their ports to exporters and importers, something that was non-existent in these monopolies until new private ports such as Mundra came along. For Gautam Adani, Mundra became a launch pad, not just to take up cargo-handling projects in other Indian ports, including state-owned, but also overseas such as the Abbot Point coal terminal in Queensland, Australia.
