Adani Yet to Seek State Approval for MSC Stake Sale in Vizhinjam Port

Chief Minister V D Satheesan on Wednesday (1 July)  said the Adani Group has not sought the state government’s permission for the proposed transfer of a 49% stake in the Vizhinjam International Seaport to Mediterranean Shipping Company (MSC), asserting that such approval is mandatory under the project’s concession agreement.   Satheesan told the state assembly during question hour that the government learnt about MSC’s proposed acquisition — involving an investment of Rs 13,000 crore — only through media reports. “No file seeking approval for the share transfer has come before the government so far. We would examine the proposal if and when such a request is submitted,” he said.     The Chief Minister said any share transfer requires the state’s approval and, in certain cases, clearance from the Union government as well. Referring to the concession agreement governing the project, Satheesan said Clause 5(3) stipulates that prior approval of the state government is mandatory for any transfer of shares, and that any transfer carried out without such approval would have no legal validity.

He noted a key distinction in thresholds: while the Companies Act generally treats transfer of more than 75% of shares as a change in ownership, the concession agreement sets the threshold at 25%. As the Government of Kerala is the designated authority under the agreement, no change in ownership can take effect without its prior approval, he said.

Replying to a submission moved by Leader of the Opposition Pinarayi Vijayan, Satheesan said the government will decide on the proposed share transfer based on five parameters:     National security; safeguarding public interest through a common-user facility; ensuring fair competition; promoting equal investment opportunities for all companies and long-term development of Vizhinjam Port, including off-port activities and their impact on the state’s revenue   Only after examining all these aspects would the government consider granting approval, he said.

Satheesan added that MSC is not merely a financial investor but one of the world’s largest container shipping companies, and that the government will therefore examine how the company plans to use its investment and whether its entry could influence the port’s operations.      Pinarayi expressed concern over the proposed share transfer, saying Vizhinjam was envisioned as a world-class multi-operator port, but the proposed transaction could pave the way for monopolisation by a single shipping company. If that happens, he said, the port would lose both its multi-operator and multi-client character, leaving exporters dependent on a single company’s vessels and freight rates. Pinarayi urged the government to examine whether the proposed financial arrangement could artificially reduce the state’s revenue share from the port from 2035 onwards. He noted that the previous government had signed MoUs worth Rs 5,000 crore with public sector undertakings such as the Container Corporation of India (CONCOR) and Central Warehousing Corporation (CWC), warning that a single company gaining effective control of the port could undermine the growth prospects of these entities as well as other logistics firms. He urged the government not to permit any move that could lead to monopolisation of the port.

Meanwhile, Adani Group officials told TNIE that due procedures had been followed in the proposed sale of a 49% minority stake in its operating subsidiary, Adani Vizhinjam Port Private Limited (AVPPL), to MSC. The divestment, they said, is fully in line with the group’s contractual rights and remains subject to statutory approvals from the state and Union governments.     According to the officials, the concession agreement requires Adani Ports to retain at least a 51% stake during the construction phase and the first year of commercial operations. Thereafter, it is required to hold a minimum 26% stake, allowing it to divest the remaining shares with government approval. They added that, under the agreement, the Adani Group can legally divest up to 74% of its stake two years after the port’s formal commissioning. The officials also defended the group’s decision to notify market regulator SEBI before formally informing the state government. “Under regulatory requirements, we are legally bound to notify SEBI first and make a public disclosure. After that we will formally intimate the state and Union governments. The transaction will materialise only after obtaining their explicit approvals,” a company source said, adding that preparations were under way to formally inform the government and that the entire process is expected to take three to five months to conclude.