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Essar Ports owes its phenomenal success to its strategically-driven plans and its unique growth model

April 28, 2014 Bookmark and Share  
Essar Ports Ltd. (EPL) is one of the top private sector port companies in India. Reputed for its unique model for growth and marked by a mixed portfolio of facilities – owned, operated, and on concessions – Essar Ports provides port and terminal services for liquid, dry bulk, break bulk and general cargo. Essar Ports has facilities which are strategically located, over a wide geographical spread.

In 1972, Essar obtained its first project in the ports sector – the construction of a cargo berth in Tuticorin Port. This contract paved the way for several other projects over the decade, including the construction of iron ore berths in Marmugoa Port in 1975.

In the early 90s, Essar's larger business necessity required the creation of port infrastructure. This was achieved by simply scaling up its experience in the ports sector. Essar's first independent project in the ports sector took off in 1989 when Essar decided to set up a sponge-iron plant in Hazira in Gujarat. The project – the construction of a 2MTPA (million metric tons per annum) jetty in Hazira – was intended to cater to the cargo handling requirements of the Essar Steel plant.

In 2004, when Essar Steel doubled its capacity to 10MTPA, Essar Bulk Terminals (EBTL) Hazira was formed to build a 30MTPA deep-draft, all-weather port, to meet the requirements of Essar Steel. As a result, the Hazira terminal was commissioned in 2010.

Similarly, Vadinar Oil Terminal (VOTL), a dedicated facility for the requirements of Essar Oil's refinery complex at Vadinar, was commissioned in 2007. The 58MTPA Vadinar facility provides handling, storage and terminalling services for crude oil and petroleum products to refineries and traders.

Operational capacity
Vadinar: 58 MTPA liquid terminal
Hazira: 30 MTPA dry bulk/general
Cargo terminal
Paradip: 16 MTPA dry bulk terminal
Under construction
Salaya: 20 MTPA dry bulk terminal
Under development
Vizag: 23 MTPA iron ore berths
Hazira: 20 MTPA general cargo terminal
Paradip: 14 MTPA coal terminal
Vadinar: Expansion of liquid storage terminal

The Hazira advantage
The location of the Hazira Terminal has tremendous potential of being developed into a mega-port in the future. Although set up to meet internal requirements initially, the Hazira terminal will drive third-party revenues and value creation for the company over the next few years.

Essar Ports is in the process of getting the requisite approvals for handling merchant cargo on a regular basis from Hazira. A third facility in Gujarat, Essar Bulk Terminal (EBTL) Salaya, is expected to be commissioned by March 2015. EBTL Salaya will handle dry-bulk cargo for Essar Energy's power plants, and the merchant cargo, for which MOUs are being signed with clients.

Strategic intent
The company's sites at Vadinar, Hazira and Salaya are strategically located on the western coast of India in the state of Gujarat to service the growing demand from the land-locked northern, north-western and central regions of India and are well connected to the state highways.

With an eye on expansion of operations, Essar Ports has since turned its attention to the eastern coast of India, the mineral belt of the country. In December 2012, EPL commissioned the Paradip Dry Bulk Terminal (CQ3) in Odisha. While some capacity here is expected to be taken up by Essar Steel's pellet plants at Paradip, this terminal is also focused on handling third-party cargo. The Paradip facilities are well positioned to service cargo for the steel and power industries in the metals and mineral-rich area.

Public-private partnerships
Essar Ports has won concessions on PPP (public-private partnership) basis from the government for the 18MTPA Paradip coal berth, Odisha and the 23MTPA Vizag iron ore terminal, Andhra Pradesh. Both these facilities are on 30-year concessions and are purely merchant. Both the terminals have state-of-the-art all-weather facilities with the deepest drafts on the east coast of India. The terminals will be capable of handling fully-loaded Capesize (150,000 dead weight tonnage) ships. Essar Ports Ltd will see a significant increase in its third-party cargo handling business through these terminals.

By the end of 2016, EPL's capacity is slated to reach 181MTPA and around 135-140MTPA by 2017, of which, about 40-45MTPA would be third-party cargo. On a stand-alone basis, the third-party cargo of the company would grant it a position in the top-10 port companies of India, a remarkable achievement for EPL. With presence in strategic locations on the eastern and western coasts of the country, along with its experience in the ports sector, Essar Ports has in place a blueprint for success.

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