Report Published as on 2nd August 2024
| Ticker | ADSEZ |
| Company Name | Adani Ports and Special Economic Zone Ltd |
| Shariah Compliance | PASS |
| DP-Ratio | 3.04% |
We have conducted a comprehensive review on Adani Ports and Special Economic Zone Limited from a Shariah point of view and analysed its sources of income to know whether they are complying with Shariah principles.
Adani Ports and Special Economic Zone Limited is an Indian multinational port operator and logistics company, part of Adani Group. APSEZ is India’s largest Private Port Operator that operates a network of 13 ports and terminals across India’s east and west coast. They also offer integrated logistics services beyond just port operations. This includes warehousing, transportation, and other value-added services for their clients. It manages India’s first port-based Special Economic Zone at Mundra, Gujarat.
The Group’s Port Operations include Cargo Handling, Berthing, Storage, and other Value-Added Services like cargo stuffing and de-stuffing, customs clearance assistance, and stevedoring. Logistics Services include Warehousing, Inland Transportation, and other services such as freight forwarding, customs brokerage, and supply chain management solutions. As far as the operation of Special Economic Zones, APSEZ leases land within their SEZ to companies setting up manufacturing or trading units. This generates rental income along with various support services within the SEZ, such as power supply, water supply, waste management, and security, for which they charge fees.
Let’s have a look at the operating segments from which the company derives its revenue and apply the Shariah screens to them:
Operating Revenue: (In INR Crores)
for the year ended 31std March 2024
| Segments | Revenue | Non-Permissible Revenue | % of Non-Permissible Revenue | Non-Permissible Segment Classification | Comments |
| Income from Port Operations | 24,691.51 | – | – | – | – |
| Aircraft Operations | 94.10 | – | – | – | – |
| Logistics Services | 1,371.41 | – | – | – | – |
| Lease, Upfront Premium and Deferred Infrastructure Income | 553.54 | – | – | – | – |
| Total | 26,710.56 | – | – | – | – |
Segment Breakup
Income from Port Operations:
As mentioned above, Port operations include Cargo Handling, Berthing, Storage, and other Value-Added Services like cargo stuffing and de-stuffing, customs clearance assistance, and stevedoring.
Aircraft Operations:
Karnavati Aviation Private Limited, a 100% subsidiary of APSEZL, is engaged in providing non-scheduled (passenger) airline services through its aircrafts.
Logistics Services:
As mentioned before, include Warehousing, Inland Transportation, and other services such as freight forwarding, customs brokerage, and supply chain management solutions.
Lease, Upfront Premium and Deferred Infrastructure Income:
No Income
Tricky Areas From a Shariah Perspective
A key concern voiced by Shariah compliant users is that su
Based on the above information, it is safe to assume that the business operations of Adani Ports and Special Economic Zone Ltd, would be Shariah Compliant.
Let’s have a look at the non-operating income of the company.
Non – Operating Revenue: (In INR Crores)
for the year ended 31std March 2024
| Segments | Revenue | Non-Permissible Revenue | % Non-Permissible Revenue | Non-Permissible Classification | Comments |
| Interest Income | 860.19 | 860.19 | 100% | – | – |
| Dividend income on Non-current Investments | 209.51 | 15.93 | 7.6% | Investment in Convertible Preference Shares | Note 4 shows 7.6% of the investments are non-compliant, rest are compliant equities. |
| Net Gain on Sale of Current Investments | 19.41 | 19.41 | 100% | Investment in Bonds and Funds | Note 10 |
| Scrap Sales | 52.74 | – | – | – | – |
| Profit on sale of Property, Plant and Equipment (net) | 8.89 | – | – | – | – |
| Gain on Financial Instruments at FVTPL (net) | 5.31 | 5.31 | 100% | Investments in Preference Shares, Bonds and Funds | – |
| Financial Guarantee Income | 8.54 | 8.54 | 100% | – | – |
| Gain on Derivatives / Swap Contracts (net) | 51.47 | 51.47 | 100% | Interest-Rate Swaps | – |
| Miscellaneous Income | 215.10 | – | – | – | – |
| Unclaimed liabilities / excess provision written back | 99.12 | – | – | – | Non-Cash Item |
| Amortisation of Government Grant | 20.61 | – | – | – | Non-Cash Item |
| Total | 1,499.42 | 960.85 | 64.08% | – | – |
It is clear from the table above that the non-operating income of the company includes interest income which is Shariah not compliant and other non compliant financial income. This amount is included for the calculation of the Sector Compliance and Dividend Purification.
Sector Compliance Calculation:
| Total Revenue | 28,209.98 |
| Non-permissible operating revenue | – |
| Interest Income | 860.19 |
| % of non-permissible revenue | 3.04% |
| Sector Compliance | PASS |
Dividend Purification Calculation:
| Revenue Description | Non permissible Revenue (INR Crores) |
| Non-permissible operating revenue | – |
| Non-permissible non-operating revenue | 960.85 |
| Total Non-permissible revenue | 960.85 |
| Total Revenue Of The Company | 28,209.98 |
| Dividend Purification Ratio | 3.04% |
Financial Ratio Screen:
(All figures in INR Crores for the Quarter ended 30th September 2023)
| Particulars | Amount | Remarks |
| 3 years Average Market | 1823562 | – |
| Total Debt | 493037.1 | – |
| Islamic Debt | 0 | – |
| Adjusted Debts | 493037.1 | – |
| LC Ratio | 0.27037 | – |
Source: All the above information is based on the website of the company and the latest Quarterly Report for the period ended 30th September 2023.
Conclusion
Given the above information, we at Islamicly believe that Adani Ports and Special Economic Zone Ltd is a Shariah Compliant company as per the Shariah screening criteria.
