‘Port projects are the most difficult ones, but worth going for’

Interview with Mr Rajeeva Sinha

 “If there is a commitment, dedication and desire to stick on and persist, port business is worth going for,” Rajeeva Sinha, Whole-time Director, Adani Port and Special Economic Zone Ltd, says candidly on the creation of greenfield ports. The former IAS officer with over 35 years of work experience in ports and shipping sectors has been facing challenges head-on to make the risky ports business tick and thrive. He takes us on a virtual tour of the port while dwelling on what it takes to build something out of nowhere and making it par excellence. Excerpts from an interview with Radhika Rani G.   

The Adani philosophy

Adani Port started commercial operations in the year 2001. Since then, our philosophy has been to create world-class infrastructure ahead of business so that business gets attracted to Adani Port. Keeping that in view, we not only constructed our own railway line of 69 km linking Adani to Kandla / Adipur and constructed berths with state-of-the-art equipment, we also constructed roads and other infrastructure so that doing business in Adani is easy, simple and a pleasure. This has attracted our clients to use Adani Port and remain with us.

Adani's big picture in the ports sector

Well, we are very clear about our ambition and vision. We want to be the number one port in the country in respect of revenue and also throughput. As far as revenue is concerned, we have already reached the spot of No. 1. We are also the first port company listed on the stock exchanges. We already have two firsts to our credit. Obviously, we want to replicate our experience across the country.

Out of Gujarat, we are developing coal terminal in Goa Port, and recently we have tendered to develop a coal import terminal in Visakhapatnam Port. So, in a way we have now got pan-India presence but our aim is to develop comprehensive ports across the country, say in Orissa, Andhra Pradesh, Tamil Nadu, Karnataka and Kerala, and we are looking at opportunities in all these places.

Foray into shipping

In our business philosophy and business linkages, we like to capitalise on the strengths which can be generated on backward and forward linkages. Since we have coal mines, power plants and ports, we also want to have our control on shipping the coal and reaching it to the destination and so we have also made foray into shipping. We have already acquired four Capesize ships (150,000 tonne and more) so that we would be able to control our own logistics and thereby hedge the business from unnecessary market fluctuations and risks. This is the way we look at it: Help all our businesses to help other businesses of the group. This is the reason why you find logic in coal mines, ports, power plants and shipping.

Adani as a green port

The port is in semi-arid conditions – the climate is not very conducive to greening of the port, in the sense that water is scarce, land is saline, plants do not easily grow and summer is very hot. But despite these challenges, we have gone ahead and done considerable plantation in Adani and today you can see that the path to Adani from the highway, from the airport and around the port, is green. Not a drop of water is wasted. It is recycled and used through drip irrigation to irrigate plants and as a result the mortality rate is low and the survival rate high. Also, we like to plant trees that are 3-4 years old so that they can withstand the long harsh weather. Apart from this, we have also taken huge plantations of mangroves in and around Adani and there is visible growth over 3-4 years time of increasingly thickening mangroves. While we have developed the port, we have been conscious of environment protection and preservation. Another important point is that, in an international seminar of green ports, Adani was declared among the 30 greenest ports in the world, which indeed is an achievement.

Integrating logistics network with port projects coming up all around

A port is as good as the land connectivity. No port can do good business and satisfy clients if the rail and road connectivity are not sound. Appreciating this fact, from day one, we have tried to develop, with the support of the government, rail and road transport and I’m glad to say that Adani was the first port in the country to construct a private railway line (69 km) to link with the nearest Indian railway system way back in 2003 and this line is getting doubled now. 

Similarly, on the road connecting the highway, we have, with the support of the state government, developed the state roads, and with ample funds from our side, could raise the standards up to the national highway and thereby have strong connectivity of the port. We believe that without strong connectivity, the logistics problem of our clients and customers will not get solved. With all these efforts, we have succeeded to a great extent though much remains to be done, and our clients are a happier lot with better logistics available to reach Adani and get cargo out of the port.

Challenges for entrepreneurs entering the port sector

We have learnt the hard way. Let me say that among all the infrastructure projects, port projects are the most difficult ones. First, getting concessions from the government, either state or central, is a long-drawn process. Then comes the question of environment and CRZ clearance. They are none too easy – from government to government, the views keep changing, and goalposts get shifted. Having cleared these hurdles, detailed engineering and design in marine conditions have to be completed and then the construction has to begin.

Given the fact that all the ports come up in remote areas – in isolated localities – getting technical manpower to work there is a problem. After all this, there is also the availability of finances. It is not easy to get finances because ports are long-drawn, they require huge investments and the gestation period is long. Therefore, the risk of investment in ports is more as compared to say roads, highways or power plants. Then, developers and investors need to be committed and stay in power to stick on with the project. Construction itself takes 4-5 years and business another 4-5 years. So, the first 10 years is a trying time, particularly for greenfield projects and a decade is not a small period for any business. You have to work in marine conditions, fight with the sea, waves, wind, and then attract customers who have the choice of going to any port. Interestingly, with highways and power, there is no choice. But with ports, the main clients, the shipowners, have choice or alternatives – where to go or where to call. All this makes ports risky. Having said that, I must say that if there is a commitment, dedication and desire to stick on and persist, it is a business worth going for.

People and projects in Adani

Well, it is a question of vision and ambition combined, frankly, and the commitment displayed by the promoters and developers. In the case of Adani or the Adani Group in particular, the promoters have shown their willingness to persist, persevere and stick with the project with a clear vision. Because of that, they have developed infrastructure to attract and retain people; they have developed townships, clubs, transport facilities and schools to attract and retain people.

And we believe that in order to get the project going, we have to get the best of manpower. And for quality manpower in our company, we are prepared to spend the money and go a distance to get such people to work in our company. So matching people with the ambition and the vision of the company, creating a proper infrastructure to attract and retain those people and the clarity from the developers and promoters in articulating the vision, I think are the main reasons behind the success story of Adani Port.

Adani Infrastructure Management Institute

That again fits very well with the whole gamut of our activities. We are a big player in infrastructure – power, ports, logistics, oil & gas, mining and we thought that there is no institute in India which focusses on infrastructure development and we find that it requires additional set of competencies in the managers in driving the projects. With that ambition in mind and looking to the shortage of manpower in the infrastructure field, we decided to start the Adani Institute of Infrastructure and the first batch of graduates has passed out and got 100 per cent employment. So, in a way we are happy that we are making a small contribution in providing competent and qualified managers for manning infrastructure projects.

Adani at the turn of the decade 2020

Our ambition in the year 2012-13 is to reach 100 million tonnes of cargo and thereby become the No. 1 port in the country. We are on track. In the 2011 financial year, we have crossed 50 million tonnes. Our capacity in Adani is 110 million tonnes which will get a further addition of 30 million tonnes in two years time. So in the year 2020, we expect to double to 200 million tonnes and by far be the No. 1 port. Our plans are in place and we should expect to reach both the milestones in 2013 and 2020.

Port regulation of government

Any consultative process between the stakeholders is useful; for a business to be successful all the stakeholders must participate happily, must feel happy and contribute in such as manner that it helps other stakeholders in running their businesses successfully. This kind of a consultative process is a welcome development and it certainly helps the industry in understanding each other and finding better solutions in the interest of all stakeholders. It is too early to say how far it will succeed because it has not come about but it has the potential of assisting, helping and facilitating stakeholders in achieving their overall objectives.

Government plan to have Indian Maritime Development Council

It is a good idea to bring all the stakeholders on to a platform but all the grievances raised at such forums have to be addressed at the government level. The government, being the owner of ports, has to find solutions so that port development and business both become easier and simple. It is also essential that the government is open to consider the points/conclusions arrived at in the consultative process, to attend and sort them out in a reasonable time frame.

Being part of the growth story

It is wonderful to be a part of the growth story. The journey of seeing growth, development and changes is tremendously satisfying. It is difficult to develop a port, attract business and run it successfully, so obviously when it happens, not only me but my whole team in Adani Port and the Special Economic Zone feel tremendously happy of having achieved something. The journey has been satisfying with good lessons and we have improved ourselves. It is a continuous process.