The story so far: The move by Adani Ports and Special Economic Zone Limited (APSEZ) to divest its 49% stake in Adani Vizhinjam Port Private Limited (AVPPL) – the concessionaire and operating company for the Vizhinjam International Seaport in Kerala – to Switzerland-based Mediterranean Shipping Company (MSC) Group has courted controversy, with the Kerala government officially conveying its displeasure to APSEZ on being kept in the dark about the development.
An empowered committee headed by the State Chief Secretary is now reviewing the proposal.
Did the Adani Group not follow the procedure in the proposed move to sell its stake to a foreign entity?
The Vizhinjam International Transhipment Deepwater Multipurpose Seaport has been developed by the Kerala government under the landlord port model with a Public-Private Partnership (PPP) component on a Design, Build, Finance, Operate and Transfer (DBFOT) basis in partnership with a private partner, the concessionaire AVPPL. A concession agreement was signed in August 2015 for the construction of the port.
As per the clauses in the concession agreement, Adani Ports must retain a shareholding of at least 51% during the construction period and the first year of commercial operations. Beyond the first year, it has to maintain a minimum shareholding of 26%. Further, the agreement makes it clear that the transfer of shares requires the State government’s prior approval.
According to the Adani Group, the Vizhinjam port is now in its second year of operations, allowing it to dilute up to 74% of its stake. The proposed dilution is only to the extent of 49%, and the process is expected to take three to six months to complete.
However, the agreement also stipulates that any change in ownership can be made only with the prior permission of the State government. This provision was not honoured when the preliminary understanding was reached between Adani and MSC, according to the State government and the Opposition.
Does the proposed share transfer raise any other concerns?
First of all, prior approval of the State government is required for any transfer of more than 25% of the shares. The latest move could create a monopoly for a single shipping company at the port, forcing exporters to rely primarily on that company’s vessels and the freight rates it determines. Although competitiveness is the cornerstone of any market, this could be undermined by the proposed stake transfer, the Opposition Leader Pinarayi Vijayan contended. Further, national security interests must also be taken into account when the ownership of the Vizhinjam port, a highly critical piece of infrastructure, is subjected to a change.
What does Adani have to say about this?
AVPPL is a listed company, and the proposed deal is subject to customary approvals, including regulatory clearances. The company is first required to comply with the stock exchange disclosure requirements under the Securities and Exchange Board of India (SEBI) Listing Regulations. As a listed company, it must disclose the proposed transaction to the stock exchanges under SEBI regulations. This is followed by a public announcement, including media disclosures, which typically takes place immediately after the stock exchange disclosure to ensure transparency.
Subsequently, contractual approvals have to be obtained. Since the company operates under a concession agreement with the State government, the State government’s approval is required. Once the State government’s approval is obtained, the company has to approach the Government of India for foreign direct investment (FDI) approval. In addition, approval from the Competition Commission of India is required. Once all the conditions are fulfilled, the transaction can be completed and the shares transferred. This process is expected to take three to six months.
The SEBI disclosure and public announcement, including media disclosures, have been made. However, the company did not communicate the preliminary understanding reached between Adani and MSC to the Chief Minister of Kerala, although it claims to have informed the Kerala Ports Secretary and the Managing Director of Vizhinjam International Seaport Limited (VISL), the State government agency constituted to oversee the implementation of the Vizhinjam port project.
What is the current position of the Kerala government on the issue?
Conveying the State government’s dissatisfaction to APSEZ, Chief Minister V.D. Satheesan said the shareholding structure of the concessionaire can be changed only with the government’s permission. The government will take a decision on the matter only after a detailed examination of the proposal submitted by the Adani Group, in accordance with the provisions, contractual obligations and instructions contained in the concession agreement along with protecting the interests of the State. The government’s objective, he said, is to “fully protect Kerala’s interests” and realise the full potential of the Vizhinjam port as a globally competitive transshipment hub.
The proposal hurredily submitted by Adani after the controversy has now been forwarded to the Law Department for vetting. After legal scrutiny, it will be examined by an Empowered Committee headed by the Chief Secretary. Based on the committee’s recommendations, the Kerala Cabinet will decide whether to approve the stake sale.
Will this 49% share transfer for $1.397 billion (around ₹13,220 crore) bring more development to the port?
The State government has spent around ₹4,000 crore on the development of the port and ancillary infrastructure, including for the road and rail connectivity, while its total financial commitment stands at around ₹5,600 crore in the first phase. Similarly, the Adani Group has invested around ₹2,454 crore in the first phase as per the agreement and has committed another ₹16,000 crore for the second phase, which is currently underway and targeted for completion by 2028.
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The stake sale will enable AVPPL to raise ₹13,220 crore for its planned expansion. Under the concession agreement, AVPPL can operate the port for 40 years, until 2060. The company is also eligible for a further 20-year extension, subject to the State government’s approval, provided the subsequent phases of development are completed on schedule.
Published – July 03, 2026 10:26 am IST
