Essar Ports, a leading private port company, is expanding its cargo handling capacity from 140 mtpa (million tonnes per annum) to 190 mtpa. This needs a fresh investment of Rs.2,000 crore, to be financed by internal accruals and long-term debt. But, RAJIV AGARWAL, managing director (MD) and chief executive officer (CEO) at the company, asserts there would not be a large increase in consolidated debt and peak debt would hover at around Rs7,000 crore (from Rs 6400 crore now). In an interview with Jayajit Dash, Agarwal speaks about the rising share of third-party cargo and the status of the planned LNG terminal at Hazira, Gujarat. Edited excerpts:
Essar Ports has planned to expand its total cargo handling capacity from 140 mtpa to 190 mtpa. When is the expansion slated for completion? How are you going to raise funds?
Essar Ports is operating terminals at Hazira, Vadinar and Salaya in Gujarat, Paradip in Odisha and Visakhapatnam in Andhra Pradesh. We are handling dry bulk cargoes such as iron ore, coal, limestone and dolomite, bulk liquid like crude oil and petroleum products and break bulk cargo like steel coils, steel plates and pipes. The capacity addition will be through various terminals across the country. We have already invested about Rs 9,500 crore in developing facilities and an additional Rs2,000 crore will be invested to achieve the 190-mtpa capacity. Funds will be raised through a combination of internal accruals and long-term project debt. The expansion is expected to be completed by 2018.
When is the supply of high-grade iron ore to steel companies in Japan and South Korea expected to commence?
We are not in the business of exporting iron ore. Our port facilities are being used by other exporters for this. The iron ore export facility at the Visakhapatnam port is a premium one in the country, being used to export iron ore to Japanese and South Korean steel companies.
Essar Ports is banking on third-party contracts to boost cargo. What would be the share of such parties to your total revenue?
The proportion of third-party cargo is increasing and is expected to reach 25 per cent in the next three years. Currently, Essar Ports is catering to the needs of many steel, mining and trading companies.
What is the status of the LNG terminal planned at Hazira?
We are working on the concept plan and feasibility of the project. Since we already have two captive customers — Essar Steel and Essar Power — who need LNG for their operation, setting up an LNG terminal at Hazira is an excellent business proposition.
What new terminals are planned for coal, iron ore and oil? What would be their capacity and investment?
We have recently commissioned a bulk terminal at Salaya, which will be primarily handling coal/pet coke. We are expanding the capacity of the iron ore export terminal at Visakhapatnam and increasing the capacity of the Hazira terminal for handling of iron ore, coal and LNG. We are also in the process of developing new berths at Vadinar for handling crude oil and petroleum products.
What is the consolidated debt of Essar Ports? Do you see it growing in the near-term?
The consolidated debt is about Rs6,400 crore. We are not expecting an increase in the debt in the near future and the peak debt would be about Rs7,000 crore.
What are your key export drivers?
We serve customers exporting various products through our terminal. Petroleum products such as gasoline, high-speed diesel, naphtha, iron ore and finished steel are exported through our terminals.