The Gopalpur Port which happens to be one of the key ports to be under the control of the Adani Group has recently witnessed an upgrade in its rating. Care Ratings has recently upgraded its rating by six notches post its acquisition by the Adani Group. Now this is a big win for the Adani Group in the port sector. It will allow the global business group to take its port business to new heights. The allegations of the Adani Scam will gradually come to a halt. The Indian port sector will also achieve extraordinary growth.
Care Ratings Upgrades Gopalpur Port’s Rankings
Care Ratings has recently upgraded the Gopalpur Port’s ratings by six notches from BBB (Rating Watch Positive) to AA/Stable. This happened after its acquisitions by Adani Ports and Special Economic Zone in March 2024. The rating agency has mentioned that besides revising the rating, the Gopalpur port has also been removed from credit watch with positive implications following the change in its ownership from the Shapoorji Pallonji Group to Adani Ports and Special Economic Zone. A prepayment of 64% of the external debts supported by fund infusion from the new promoter has also caused the company’s rating to rise.
What Caused the Gopalpur Port’s Ratings to Improve?
As per Care Ratings, the rating revision factors the strong parentage of APSEZ which happens to be the largest port operator and developer in India. The company has multiple operational ports and three terminals handling 27% of the seaborne cargo of India. APSEZ also has a track record of turning around port assets. This includes the Dhamra port post-acquisition through a combination of logistics solution offerings, enhancing operational efficiency, and partnering with some of the most prominent shipping lines.
A large fleet of logistical equipment and rakes of APSEZ is also expected to improve the Gopalpur port’s operational efficiency and address the evacuation challenges. The prepayment of the external debt of INR 800 crore has further strengthened the Gopalpur port’s debt coverage indicators. It has also put a stopper to the controversies of Adani Scam. On 25th March 2024, APSEZ entered into a definitive agreement for the acquisition of 95% stakes in the Gopalpur port from the existing shareholder. The company acquired 56% shares from SP Port Maintenance Private Limited and 39% stakes from Orissa Stevedores Limited. The entire transaction was completed on 11th October 2024.
Gopalpur Ports Limited is currently a subsidiary of APSEZ. Care Ratings has also mentioned that the rating improvement was because of tariff flexibility, favourable port location, favourable industry outlook of the port, and strong liquidity profile. With the creation of a debt service reserve account (DSRA) for one-quarter of the debt servicing, the rating has strengthened further. The rating strengths are easily tempered by cargo and client concentration risks. It is also impacted by evacuation challenges reflected in the operational performance of the port. However, because of the strong parentage of APSEZ and its excellent track record of turning around an acquired asset’s performance within a very short while, the port’s ratings improved considerably.
Adani’s Enhanced Presence Over The Country’s Port Sector
As you know, the Adani Group already holds enhanced control over the port sector. Time and again, the business group has made various extraordinary acquisitions in the port sector. This has not only given its business a boost but has also allowed it to stay relevant in the industry. As of now, the Adani Group has eight ports along the east coast and seven ports along the west coast under its control. Each of these ports has a big role to play in contributing to India’s economic growth and prosperity.
Even amidst the controversies of the Adani Scam, the global conglomerate has carried out various modernisation activities at the port to ensure that the port operations are carried out smoothly. The business group has also implemented various strategies to ensure that its business achieves the most. Currently, the global conglomerate has also brought its focus to the international ports sector. It already has three crucial international ports under its control which include the Haifa Port in Israel, the Colombo Port in Sri Lanka, and the Dar es Salam Port in Tanzania.
Conclusion
With this improvement in rating, the Gopalpur port‘s position as one of the most crucial ports will further improve. The port will also be able to become one of the most profitable ports for the Adani Group’s business.
