It took Gautam Adani less than 24 years to grow his port empire from one to 15. From one large operational port in Gujarat’s Mundra in 2001, Adani Ports and Special Economic Zone added the 15th to its portfolio on Tuesday.

Adani Ports and Special Economic Zone (APSEZ)—the largest private operator of non-major ports (those not owned and operated by the central government), which handles more than a quarter of the nation's port-based cargo—acquired a 95% stake in Odisha’s Gopalpur Ports from Shapoorji Pallonji Group and Orissa Stevedores at an enterprise value of Rs 3,080 crore.

APSEZ bought a 56% stake from the SP Group and 39% from Orissa Stevedores. Gopalpur port’s cargo handling capacity is 20 million tonnes per annum. It handles dry bulk cargo, including iron ore, coal, limestone, ilmenite and alumina, playing a significant role for mineral-based industries in the surrounding regions.

The acquisition, however, raises a big question mark on how the Adani-led enterprise has managed to become the most dominant player and expand its capacity to the staggering extent it has.

How much power is too much power? Numbers speak volumes. A decade ago, the Adani brand had little presence in India's 5,422-km mainland coastline. Now, there’s an Adani-operated port every 500 km on an average along the coast, according to a report by The Indian Express last year.

With the Gopalpur port, APSEZ now has a volume capacity of 627 million tonnes while major ports controlled by the central government have a capacity of 1,617.39 million tonnes. And if it seems like the central government is ahead in terms of port capacity, remember that Adani has more ports under its control than the government, which has 12.

The meteoric rise of Adani's port operations is evident in its cargo handling volumes, which have surged nearly four-fold over the past decade at a compounded annual growth rate of 14%—much higher than the industry average of 4%. Without Adani's share, the industry's growth rate drops to only 2.7%, The Indian Express report said.

Between 2013 and 2023, APSEZ’s market share in total cargo handling jumped to 24% from merely 9% and this is set to rise further with the latest acquisition. In comparison, during the same period, the market share of ports controlled by the government declined from 58.5% in 2013 to around 54.5% in 2023.

APSEZ's rapid growth has been via the inorganic route, or acquisitions—at least six in the last decade. The Gopalpur port is the seventh one acquired by Adani through the inorganic route since 2014—when the Narendra Modi-led BJP came to power—adding to concerns about market concentration and the erosion of competition in such a critical infrastructure sector.

A port industry executive noted that “with eight ports/terminals, the east coast has now become an Adani monopoly with operating ports between Dhamra to Kattupalli”.

The increasing dominance of APSEZ across the coastline raises concerns about potential erosion of bargaining power of other shipping companies. Its market concentration can wipe away competition by creating high entry barriers for smaller players and since it handles the bulk of the non-major port cargo, it can set competitive prices.

A former chairperson of the Competition Commission of India told The Indian Express that while ports are typically seen as natural monopolies, there are concerns with the continuous growth of APSEZ's share. This gradual acquisition of capacity by one player while others struggle could become a problem in 5-10 years. “The government and the CCI should keep an eye,” this person added.

Another factor that could queer the pitch for government-owned ports is APSEZ’s better performance on some parameters, especially turnaround time—the time taken to get a cargo ship in and out of a port. In August last year, the company said that its average turnaround time was just about 0.7 days. For major ports, this is about 2.2 days as of FY22. This may make Adani ports the preferred choice for businesses.

These worries have also been compounded by a long list of allegations (read this, this and this) that the Adani group faces. Last year, Deloitte quit as auditor of APSEZ amid US short-seller Hindenburg’s accusations that Adani had pulled off the “largest con” in corporate history. The allegations indicated that several of Adani’s businesses and books were not clean.

Dominance unchecked? Interestingly, while APSEZ expands its portfolio unabated, its Mundra port—the country’s largest commercial port and coal import terminal—has run into many troubles. In 2013, an investigative committee found various violations of environmental guidelines. This included destruction of mangroves, blocked creeks and potential contamination of groundwater due to the construction and operation of this port. Yet, essentially, the company got off scot-free.

In 2021, over 3,000 kg of heroin was seized from the same port. The estimated value of the drugs was about Rs 21,000 crore. APSEZ distanced itself from the seizure, stating that it had no policing powers. However, a report by The Wire highlights how this port has, even after that incident, had issues with drug shipments. No major government clampdown of the port operator has taken place.

Critics have often claimed that Gautam Adani’s ties with Modi—dating as far back as 2002, when the latter was Gujarat’s chief minister—have led to the rise of his ports-to-energy empire. Allegations have been levied that Gautam Adani was able to clinch several overseas port deals, including those in Sri Lanka and Israel, owing to his closeness to Prime Minister Narendra Modi. While dominance alone may not be enough to call for regulatory action, in a country infamous for abuse of dominant position and where wealth concentration of the top 1% has been at a historic high for some time, it may be time to put this port empire under the microscope too.