Adani-MSC Vizhinjam port deal controversy | Explained

The story so far: Adani Ports and Special Economic Zone Limited (APSEZ)’s transfer of its 49% stake in Adani Vizhinjam Port Private Limited (AVPPL), the concessionaire and operating company of Vizhinjam International Port in Kerala, to Switzerland-based Mediterranean Shipping Company (MSC) Group has sparked controversy; The Kerala government has officially conveyed its displeasure to APSEZ at being kept in the dark about this development.

An empowered committee headed by the State Chief Secretary is currently examining the proposal.

Did Adani Group not follow procedure in the proposed move to sell its shares to a foreign entity?

Vizhinjam International Transshipment Deepwater Multi-Purpose Port has been developed by the government of Kerala under the host port model with a Public-Private Partnership (PPP) component on Design, Build, Finance, Operation and Transfer (DBFOT) basis in partnership with concessionaire AVPPL, a private partner. The concession agreement for the construction of the port was signed in August 2015.

According to the articles in the concession agreement, Adani Ports must hold at least 51% shares during the construction period and the first year of commercial operation. After the first year, a minimum of 26% of the shares must be held. The agreement also makes it clear that the share transfer is subject to the prior approval of the state government.

According to Adani Group, Vizhinjam port is now entering its second year of operations, which allows it to dilute up to 74% of its shares. The recommended dilution is only 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 only be made with the prior permission of the State government. According to the state government and the Opposition, when the preliminary agreement was reached between Adani and MSC, this provision was not fulfilled.

Does the proposed share transfer raise other concerns?

First of all, prior approval of the State government is required for transfer of more than 25% of 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 ships and the freight rates it sets. Opposition Leader Pinarayi Vijayan argued that although competitiveness is the cornerstone of every market, the proposed share transfer could weaken it. Additionally, national security interests must also be taken into account when changing ownership of the Vizhinjam port, which is a highly critical piece of infrastructure.

What does Adani say about this?

AVPPL is a listed company and the proposed deal is subject to customary approvals, including regulatory clearances. The company must first comply with stock exchange disclosure requirements under the Securities and Exchange Board of India (SEBI) Listing Regulations. As a listed company, it is required to disclose the proposed transaction to the stock exchanges as per SEBI regulations. This is followed by a public announcement, including media releases, usually made immediately after the stock market announcement to ensure transparency.

Contract approvals must then be obtained. Since the company operates under a franchise agreement with the State government, approval from the State government is required. Once the state government’s approval is received, the company needs to apply to the Government of India for foreign direct investment (FDI) approval. It also requires approval from the Competition Commission of India. Once all conditions are met, the transaction can be completed and the shares can be transferred. This process is expected to take 3 to 6 months.

Public announcement was made, including SEBI statement and media statements. However, the company did not convey the preliminary understanding reached between Adani and MSC to the Kerala Chief Minister; but 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 stance of the Kerala government on this issue?

Conveying the state government’s dissatisfaction to APSEZ, Chief Minister VD Satheesan said that the partnership structure of the concessionaire can be changed only with the permission of the government. The government will make a decision on the issue after a detailed review of the proposal submitted by Adani Group, in line with the provisions, contractual obligations and instructions contained in the concession agreement and considering the interests of the state. He said the government’s objective is to “fully protect the interests of Kerala” and realize the full potential of the Vizhinjam port as a globally competitive transshipment hub.

Following the discussion, Adani’s hastily submitted offer was forwarded to the Legal Department for review. Following legal review, it will be examined by an Empowered Committee chaired by the Secretary-General. Based on the recommendations of the committee, the Kerala Cabinet will decide whether to approve the share sale.

Will this 49% stake transfer worth $1.397 billion (approximately Rs. 13,220 crore) bring further development to the port?

The state government has spent around Rs 4,000 crore on development of the port and ancillary infrastructure, including road and rail connectivity; The total financial commitment in the first phase is around 5,600 crore. Similarly, Adani Group has invested around 2,454 billion Indian rupees in the first phase as per the agreement and has committed another 16,000 billion Indian rupees for the second phase, which is currently ongoing and targeted to be completed by 2028.

The stake sale will enable AVPPL to raise ₹13,220 crore for the planned expansion. Under the concession agreement, AVPPL will be able to operate the port for 40 years until 2060. The company is also entitled to an extension for a further 20 years, subject to the approval of the State government, provided that subsequent development phases are completed as planned.

It was published – 03 July 2026 10:26 IST