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We will invest in capacity augmentation

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Essar Ports is in the process of expanding its capacity from 140 million tonnes to 170 million tonnes by the end of 2017 and to 194 million tonnes by 2019, Rajiv Agarwal, MD & CEO of Essar Ports, tells Business India magazine

July 21, 2016 Bookmark and Share  

With a portfolio of five ports and terminals, Essar has emerged as a leading player in the private ports segment. According to Rajiv Agarwal, MD, Essar Ports, the company has drawn major plans to scale up its capacity in the medium run and will also be provisioning more for the third-party cargo

We will invest in capacity augmentation

How has your port business evolved?

Essar Ports Ltd (EPL) has been engaged in developing and operating ports and terminals for over 25 years. Starting in 1989, with the construction of a 2 million tonnes per annum jetty in Hazira, Gujarat, to cater to the cargo handling requirements of a sponge iron plant that Essar was setting up in Hazira at that time, to becoming one of the largest private sector port companies in India, Essar Ports has seen a quarter century of continuous growth and development.

In 2004, Essar decided to develop the Hazira facility into a 30 million tonne deep draft, all weather port to meet the needs of the Essar Steel plant which was doubling its capacity to 10 million tonnes. The Hazira terminal was commissioned in 2010. Earlier in 2007, Essar built and commissioned a 46 million tonne liquid terminal, called the Vadinar Oil Terminal, to cater to Essar Oil's refinery complex in Vadinar, Gujarat . The Vadinar Terminal now has a capacity of 58-million tonnes.

In later years, Essar Ports turned its attention to the mineral belt along the eastern coast of India. In 2012, Essar Ports commissioned the 16 million tonne dry bulk export terminal at Paradip Port in Odisha. Essar Ports went on to win concessions on PPP (Public Private Partnership) basis for an 18-million tonne coal berth at Paradip Port, and a 16-million tonne iron ore handling complex in Visakhapatnam Port in Andhra Pradesh that has been operational since 2015.

The fifth and latest facility in Essar Ports' portfolio is a 20-million tonne mechanised all weather, deep draft dry bulk terminal with both import and export facility in Salaya, Gujarat, which was commissioned in May 2016.

Essar Ports' five operational facilities provides services for liquid, dry bulk, break bulk and general cargo, to a wide range of industries across the country. With an aggregate capacity of 140-million tonnes in India , Essar Ports contributes to 10 per cent of India's total ports capacity.

What is the near to medium term target you have for capacity expansion?

Essar Ports is in the process of expanding its capacity from 140-million tonnes to 170-million tonnes by the end of 2017 and to 194-million tonnes by 2019.

How important will third-party cargo be for you in the future?

Diversifying our customer profile is key to our expansion strategy and entails a significant chunk of third-party cargo handling. We have received long-term approval to handle third-party cargo at Hazira. Our newly added port facilities in Visakhapatnam, Paradip and Salaya will ensure further enhancement in the share of third-party cargo.

EPL expects cargo handling to increase from 59 million tonnes in FY 2016 to 85 million tonnes in FY 2017 , a growth of more than 40 per cent year-on-year. Of this, the share of third-party cargo is expected to increase from about 15 per cent in FY 2017 to nearly 30 per cent in the medium term.

What is the investment made in your port business? And what is the projection for the future?

We have invested over Rs10,500 crore in India. We expect to make further investments in excess of Rs1,000 crore this fiscal. Over the next 35 years, we expect to additionally invest more than Rs10,000 crore towards expanding existing facilities and obtaining new concessions in India.

What is the level of competition that new private ports face in terms of customer acquisition?

The trade has seen sufficient growth in the 10 per cent CAGR range over The last decade. This has led to healthy competition and development of new ports. Factors, like location, high levels of mechanisation, multimodal evacuation facilities and rapid turnaround times, will drive customer preferences on which port to go with.

Do you expect the major ports to strike back in the coming years?

Major ports have strategic locations and large tracts of backup land and waterfront. Their potential has been constrained by structural issues. However, there is a strong focus on overcoming these issues that will lead to resurgence in the cargo handling undertaken by major ports.

Cargo traffic at Indian ports has doubled to 1 billion tonnes per annum between 2004-05 and 2014-15. It is expected to reach 1.7 billion tonnes per annum by 2022. In future, both major and non major ports will coexist and help meet Indian demand, as well as this country's huge untapped potential.

Source: Business India ( June 20-July 3, 2016)

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