Minor ports are outsmarting major ones by notching up a higher growth rate. And the Adani group, which runs the Mundra Port, is leading the race

Ahmedabad: Ports and port-based activities have always been a major area of activity in Gujarat, the western Indian state with the country's largest coastline. And it is minor ports that have notched up a higher growth rate rather than the major ones.

And as of now, Mundra Port, owned by the Rs 4,600 crore city-based Adani group, is being termed the fastest-growing port in the country. "In fact, Mundra has been hailed as a frontline port in the handling of bulk dry and liquid cargo and container handling," says Gautam Adani, chairman, Adani group.

Mundra is now poised for crude handling for Indian Oil and Hindustan Petroleum in two-to-three years' time. Initially, almost 80 per cent of the trade executed by the flagship company of the Adanis, Adani Exports Ltd (AEL), was through the Kandla and Mumbai ports.

Says Adani: "These ports were plagued by congestion and berthing delays, resulting in heavy demurrage expenses and additional storage and handling charges. Removing these infrastructure bottlenecks was a necessity." With this objective, the group promoted Adani Port Ltd (APL) in mid-1993, which is Mundra Port's terminal operator company.

Besides APL, Gujarat Maritime Board [GMB] and Gujarat Industrial Investment Corporation [GIIC] have also floated Gujarat Adani Port Ltd [GAPL], which is the developer of off-shore structures and infrastructure facilities, while APL is the owner of all the dry and liquid cargo storage facilities on the site, in addition to any storage facility that may come up at Mundra.

The success of the port has led the Adanis to shift their focus to asset-heavy activities as against asset-light ones. Says Sanjay Gupta, the high-profile ex-managing director of Gujarat State Petroleum Corporation (GSPC), and now CEO, infrastructure division, Adani group: "While the trading activity remains an important area, we are now seeking to make infrastructural activities our core strength. Accordingly, further development of the Mundra Port and allied sectors is of prime significance. Infrastructure development will be the prime driver of turnover and profits in the years to come."

The Adani group, in the meantime, has fixed a target to become a Rs 10,000 crore conglomerate by 2008-09. And Gupta has the details of the roadmap: "We have projects worth Rs 750-1000 crore lined up. Our new areas of activity are going to be gas distribution for commercial and domestic use, for which we have recently received clearances; coal mining, for which we are awaiting formulation of central government policies; and development of Mundra as an SEZ.

"Besides, projects which will occupy our immediate attention relate to further development of the Mundra Port, where we are putting up four berths, and development of the Dahej Port, to which we are committed in view of our joint venture with Petronet LNG Ltd [PLL]."  The resource allocation will include Rs 300 crore for the Dahej Port, Rs 350 crore for the Mundra Port and anything between Rs 300-350 crore for the gas distribution project.

But it is the gas distribution project which has the Adanis most excited. "Natural gas, because of its numerous advantages, has become the most preferred fuel for consumers and we have recently been granted the rights to set up a natural gas distribution network in Ahmedabad and Vadodara. We have formed a separate company, Gujarat Adani Energy Ltd, to implement the project, which aims to service the natural gas demand of industrial, commercial, domestic and transport sector in these two cities," says Gupta. According to state government figures, Ahmedabad and Vadodara have a combined population of more than 75 lakh.

The estimated project cost is Rs 350 crore and the construction of the network and investment will be phased out over six to seven years. According to initial estimates, 150 industrial units, 2,000 commercial establishments, 2.5 lakh households and 40,000 vehicles will be supplied natural gas through the network. "We expect to commission a part of the network in Vadodara by December 2003 and Ahmedabad by March 2004," says Adani. The Adani group is also involved in the development of the Dahej Port for which it is shelling out Rs 500 crore.

According to industry experts, the Adanis' involvement with the Dahej Port has come about in view of its success with the Mundra Port project. "The Mundra site was originally identified as a captive port to handle AEL's tonnage. But it quickly became apparent that its locational and hydrological advantages equipped it to serve far more than a single company's needs. This realisation led to the development of Mundra and the immediate hinterland as a full-fledged port," says Nayan Parikh, an Ahmedabad-based infrastructure consultant and also advisor, infrastructure development, Government of Chhattisgarh and Government of Madhya Pradesh.

Analysts also concede that Mundra is on par with ports like Hong Kong and Singapore as far as customer service, port management and port planning and cyber connectivity is concerned.

"The ship turnaround time at Mundra is only five days, compared to nine days and more at JNPT or Kandla. Obviously, this means less expense for shippers. Moreover, the structures of the Mundra Port have been designed to withstand earthquakes. During the devastating quake of 2001, while the Kandla Port suffered extensive damage, nothing happened to Mundra, except that port cranes shifted a little," points out Parikh.

Furthermore, the Mundra Port has just established the longest non-government railway line, put up at a cost of Rs 160 crore, between Adipur and Mundra in Kutch, totalling a distance of 57 km. The line is capable of handling at least six rakes a day. While it is a single-line section as of now, there is a provision for doubling and expansion at a later stage. The agreement is a new model of operation and maintenance, wherein the Mundra Port owns land, railway track and other assets and maintains the same, while the Western Railways operates the link by providing locomotives, wagons and essential technical staff.

As regards the new area of activity - coal mining - the Adanis are quite reticent. "According to the Indian government's current mining policy, private entities cannot enter the mining segment, except for captive use. We have a joint venture with Gujarat State Electricity Board and we are looking at the possibility of mining coal from outside India," is all Gupta will say.

But market sources say the group has inked a broad-based agreement with Shanxi of China as per which the Adanis will buy coal from the latter on a firm basis for a five-year period. "Till now, the Adanis have bought around 5,00,000-7,50,000 tonnes of coal from Shanxi on a spot basis. They are also in talks with Indonesia for importing coal. In fact, with production of domestic coal stagnant and the issue of environment gaining prominence, imported coal business has a very good potential," says a market source.

Apart from these ventures, the group also has a nodding acquaintance with retail operations through its subsidiary, B2C India Ltd, which runs 12 retail outlets under the brand name Adani's Supermarket, and also with call centre operations through yet another venture called i-Call India Ltd.

Industry observers point out that the group will concentrate wholeheartedly on infrastructural activities. "That, indeed, is the idea," sums up Gupta.