THIRUVANANTHAPURAM: Asserting that government approval is mandatory for transfer of shares in the Vizhinjam International Seaport, Chief Minister V D Satheesan on Wednesday said the Adani Group has not sought the state’s permission for the proposed transfer of 49% stake to Mediterranean Shipping Company (MSC).
The government learnt about MSC’s proposed acquisition of a stake in the Vizhinjam port project, involving an investment of Rs 13,000 crore, only through media reports, Satheesan told the state assembly during question hour. “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.
He said any share transfer requires the state’s approval and, in certain cases, clearance from the Union government. Meanwhile, Adani Group officials maintained that the divestment is fully in line with the group’s contractual rights and remains subject to statutory approvals from the state and Union governments.
Later 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 the 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 Referring to the concession agreement governing the project, the CM said Clause 5(3) stipulates that prior approval of the state government is mandatory for any transfer of shares. Any such transfer without approval would have no legal validity, he added.
While the Companies Act generally treats the transfer of more than 75% of shares as a change in ownership, the concession agreement sets the threshold at 25%.
Due procedures followed, say Adani Group officials
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.
MSC is not merely a financial investor but one of the world’s largest container shipping companies, Satheesan said. 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, the port would lose both its multi-operator and multi-client character, leaving exporters dependent on a single company’s vessels and freight rates, he said.
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 PSUs such as the Container Corporation of India (CONCOR) and Central Warehousing Corporation (CWC), and warned that if the port came under the effective control of a single company, it could undermine the growth prospects of those public sector 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. 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.
The source added 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.
Govt’s 5 parameters to decide on share transfer
National security
Safeguarding public interest through a common-user facility
Ensuring fair competition
Promoting equal investment opportunities for all companies
Long-term development of Vizhinjam Port