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Adani Ports and Special Economic Zone's (APSEZ) logistics business is all set to become a significant driver of cargo growth over the next 3-4 years, gradually catching up with the ports business. The company is strategically expanding its warehousing capacity, rakes, industrial parks, and agri silos, marking a focused investment in the logistics sector.
During Q3FY24, the logistics business contributed approximately 8% of Adani Ports' total revenue and around 3% of its EBITDA. Managing Director Karan Adani highlighted the logistics segment's growth phase during an earnings call, emphasising its importance in the company's overall strategy. While specific investment figures for the logistics segment were not disclosed, the overall expected capital expenditure (CAPEX) for the year ranges between INR 7,000 toINR 7,500 crore, with ?5,500 crore already spent.
Adani Ports aims to triple the rake capacity in the logistics segment to over 300 by FY28, catering to both bulk and container cargo. Additionally, two multimodal logistics parks are under development—one near Mumbai and another in the north—scheduled for commissioning over the next 3-4 years. The current portfolio includes 11 logistics parks, projected to increase to 15 within the next two years.
Presently, the warehousing capacity stands at 2.4 million square feet, with plans to expand it to over 60 million square feet, constituting 15% of the total market capacity and ensuring a pan-India presence. Notably, the logistics business is experiencing faster growth than the port business, recording a 45% increase in EBITDA over the last five years compared to the port's 20% growth.
Looking ahead, Adani Ports anticipates doubling the return on capital employed in the logistics segment over the next three years, reaching 12-13%. This strategic focus on logistics reflects the company's commitment to diversifying and strengthening its business portfolio by capitalising on the growing demand for efficient logistics solutions.
In conclusion, Adani Ports' investment and expansion initiatives in the logistics sector underscore a forward-looking approach to capitalise on evolving market dynamics. As the logistics business continues to gain prominence, the company is strategically positioning itself to play a significant role in shaping the future of cargo movement and supply chain solutions.
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