JSW Infra vs Adani Ports: The Battle Of The Ports

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The rivalry between Jindal and Adani is a captivating saga of two industrial titans vying for supremacy in India’s booming port business. This article explores their strategic moves, analyzes the future prospects, and attempts to predict the outcome of this intense competition.

The Backdrop

Picture yourself as a steel manufacturer with a sprawling operation in India’s hinterlands. You’re burdened by frequent trips to the port, paying exorbitant fees for shipping your products overseas. You start contemplating owning the port itself to curtail your expenses. This was precisely the vision of Sajjan Jindal, the head of the JSW Group, back in 2002.

Genesis of JSW Infrastructure

Jindal’s steel production unit in Tornagallu, Karnataka, heavily relied on the Mormugao Port in Goa, approximately 300 kilometers away. This triggered the idea of owning a port to cut down costs and streamline operations. The Group bid for a few berths at the port, kickstarting their voyage into the port business.

Recognizing the immense potential, JSW Infrastructure was carved out as a separate entity in 2006, focusing solely on the port business. A series of expansions followed. They started with the Jaigarh Port in Maharashtra in 2008, followed by Dharamtar in 2012. The east coast beckoned next with the Paradip Port in Odisha. By 2020, they also had their sights set on ports in Mangalore and Ennore in Tamil Nadu, even extending their reach to the UAE.

The Growing Empire

The growth wasn’t impulsive; instead, it was a measured expansion strategy. Today, JSW Infrastructure manages nine ports across the country, emerging as India’s second-largest commercial port operator.

Most of these ports are government-owned, leased out to private companies for a fixed tenure. JSW Infrastructure has an average of 25 years remaining on most of their port deals, ensuring a steady revenue stream for the next few decades barring any unforeseen circumstances.

Reducing Dependence on Parent Group

Interestingly, their largest customer is the JSW Group itself, given its vast steel, cement, and energy operations spread globally. This ensured a consistent revenue inflow for the ports business from the start. To diversify its portfolio, JSW Infrastructure gradually decreased its reliance on the parent group, tapping into third-party companies. Today, third-party companies account for 35% of the cargo volume, up from just 25% in 2021.

The Adani Challenge

However, JSW Infrastructure’s growth journey faces a formidable challenge – the Adani Group. As India’s largest private port operator, Adani’s expansion has been rapid and extensive. From just two ports in FY11, the Group now boasts 14 ports, commanding a 24% volume share compared to JSW Infrastructure’s 6%.

Adani’s diversification strategy extends beyond geographical locations. They’ve focused on growing their container shipping business, which contributes 38% of their revenues in FY23, up from 32% in FY16. Moreover, Adani offers comprehensive logistics solutions, including warehousing and transport services, something JSW Infrastructure currently lacks.

The JSW Advantage

Despite these challenges, JSW Infrastructure has a few aces up its sleeve. Its net profits have soared by 62% annually, while Adani Ports has struggled. The recent ₹2,800 crore IPO proceeds have helped the company reduce its debt, making it debt-free for now, a distinction Adani Ports cannot claim.

The company’s strong financial health has attracted investors, who are willing to pay a premium for its stocks. It’s trading at 50 times its FY23 earnings, compared to 32 times for Adani Ports.

The Future

India’s extensive 7,500 km coastline and strategic global location offer immense potential for the ports business. The government’s Maritime Vision 2030, involving an investment of over ₹1 lakh crore, aims to transform India’s port infrastructure.

The government also plans to increase private sector involvement in port operations, offering a pipeline of 81 public-private partnerships to be awarded by March 2025. This presents a vast opportunity for companies like JSW Infrastructure to expand their footprint.

The battle lines are drawn between Jindal and Adani in the race for India’s port supremacy. The outcome is uncertain, but one thing is sure – the ports business is set to witness exciting times ahead.

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