Aurobindo Group in mega infra push, to develop Kakinada port, SEZ as industrial-logistics hub

Aurobindo

Kakinada Gateway Port Ltd (KGPL), bankrolled by Aurobindo Pharma promoters, is betting big on an ambitious project involving a deep-draft port and an industrial park in Andhra Pradesh’s Kakinada, looking to develop it as a logistics hub on India’s east coast.

In the first phase of the port, three berths with a capacity of 16 million metric tons per annum (MMTPA) are expected to be operational by early 2027, KGPL's managing director Ram Reddy Ojili said in an interview with Moneycontrol.

They aim to make a multi-product logistics hub. “We’re planning container facilities and tying up with global liners,” Reddy said, adding they were also looking at fertilizer imports, rice exports, and “future cargo” such as green ammonia and minerals from Africa.

“This project is one of a kind in India — fantastically located with good logistical connectivity, close to a smart city like Kakinada,” Reddy said. “This is not just ships coming and going — it’s a 50-year vision.”

It is not coming cheap. The Aurobindo promoters are making a sizeable investment in the Kakinada SEZ, with a total exceeding Rs 10,000 crore. The port alone will cost Rs 3,300 crore, with Rs 350 crore for a dedicated rail link and Rs 1,310 crore for a desalination plant.

A sum of Rs 500 crore would be spent on industrial park infrastructure and investments in industrial units such as Pen-G.

“We’ve already spent nearly Rs 6,000 crore, mostly from promoter equity,” Reddy said.

Auro Infra Pvt Ltd (AIPL) acquired GMR's entire 51 percent stake in Kakinada SEZ (KSEZ), which has 5,600 acres of industrial land and a license to build a deep-water port, in September 2020.

KGPL is a step-down subsidiary of AIPL, ultimately held by RPR Enterprises, which owns 82.26 percent of AIPL. AIPL holds a 74 percent stake in KGPL through Kakinada SEZ Ltd.

Reddy said funding is structured conservatively with a 70:30 debt-equity mix, led by an SBI consortium.

“Financial closure is complete, but we’re revising the loan size upward from Rs 2,900 crore to Rs 3,300 crore,” he added.

Completion timelines

Talking about the port plan, Reddy said in Phase 2, the plan is to add eight berths for containers, LNG, and liquid cargo, pushing the capacity to 50 MMTPA by 2028, with a master plan of 100 MMTPA.

“Eventually, the east (India) has to be balanced like the west (where major trade flows),” he said, citing rising industrial activity in Andhra Pradesh, Telangana and Tamil Nadu in the south.

CARE Ratings has flagged cargo ramp-up risk, exposure to economic cycles, and stiff competition from established eastern coast ports such as Vizag, Gangavaram, and Krishnapatnam. However, it acknowledged strong promoter backing, long-term debt, and corporate guarantees as mitigating factors.

Reddy is unfazed. “A port is a cash cow for any company,” he said, citing EBITDA margins of 50–60 percent typical for Indian ports. Reddy said his optimism is built on developing the SEZ, which, in turn, creates dedicated cargo demand for the port.

Aurobindo Pharma has built a penicillin-G plant in the SEZ as the anchor, under the Centre’s production-linked incentive with Rs 2,500 crore investment.

It has also built another large facility to make other penicillin-based derivatives used in antibiotics.

“There is a lot of interest from investors and companies who want to put up units in the SEZ,” Reddy said.

With India’s trade volumes rising and east coast infrastructure lagging, Kakinada Gateway could emerge as a critical node for the Look East policy, serving Bangladesh, Southeast Asia, and beyond, he said.

KGPL operates under a Design, Build, Finance, Operate, and Transfer (DBFOT) concession agreement signed with the Andhra Pradesh Maritime Board. The contract spans 30 years from the commercial operations date, with an option to extend by two blocks of 10 years each, giving the project a potential 50-year horizon.