Post US pullout, Dubai Ports speeds up consolidation in India

Debunks fears that, post PO takeover, it will create a monopoly in India, says will boost investments, increase efficiency

Dubai Ports World, which has acquired P038;O Steam Navigation8217;s container terminal business in India as part of global buyout earlier this year, is looking at consolidating its presence in the country.

In the face of opposition to the deal on monopoly grounds, both companies have chartered out an integration plan which should take about four months to complete.

Ganesh Raj, DP World8217;s regional director Indian sub-continent says, 8216;8216;India is a key focus for us. Indian infrastructure is crucial to sustain the economic growth and we are keen to add value to this economic process.8217;8217;

Without elaborating on its plans, the company also said that it would look at creating capacity before demand.

In a 6.9-billion deal, Dubai Ports had bought over the global operations of P038;O, UK, creating one of the world8217;s largest shipping companies controlling container terminals in UK, China and India. The deal has already generated hostility in the US market, leading to DP dropping the buyout plan of the US unit.

Opponents of the deal in India say that with the buyout of P038;O India, DP World8212;which already operates here8212;will corner more than 50 per cent of the country8217;s container shipping traffic business, leading to creation of a monopoly. 8220;The acquisition of P038;O8217;s container terminals in India by DP World will lead to the creation of a monopoly in container port service,8221; says M Lawrence, president of the Water Transport Workers Federation of India.

The federation has asked the government to take steps under the Monopolies and Restrictive Trade Practices Act MRTPC Act to prevent DP World8217;s takeover of P038;O terminals in the country.

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However, DP World allayed fears of the players in this sector and claimed that the buyout would help in creating port-related infrastructure in India. 8220;The fear of monopoly of the container service trade as a result of P038;O Ports acquisition by DP World is misplaced. On the contrary, it will provide the country with a much-needed boost for investment in port-related infrastructure,8221; Raj said.

Dubai Ports already operates in the Cochin Port, and with this deal it will get access to P038;O India8217;s container terminals at Nhava Sheva, Chennai Container Terminal and Mundra International Container Terminal in Gujarat. The deal will also give DP World access to the Vishaka Container Terminal at Vishakapatnam. P038;O also has two other major ports in the region: Qasim in Pakistan and Colombo in Sri Lanka.

8220;Both these players account for over 50 per cent of the total container traffic of around 4mn TEUs in India. However, this will also lead to better efficiency in the container terminal business and the turnaround time for ships could be further reduced due to better operational efficiency,8221; shipping analyst R. Ramachandran said.

The central government has still not decided to take a closer look at the issue. However, in a move which could will put a spanner in DP World8217;s proposed acquisition of P038;O India, the Gujarat Maritime Board, a regulatory agency for all seaports in Gujarat, has shot of a show-cause notice to the management of P038;O Ports India asking why its concession agreement for the Mundra Terminal should not be cancelled as it had not been informed about the takeover of the company by Dubai Ports.