JSW Infrastructure to enter Adani bastion for piece of commercial cargo

Firm to bid for mega projects like Rs 77,000 crore Vadhavan Port, Rs 44,000 crore Nicobar Port

JSW Infrastructure (JSW Infra) is looking to go big in the commercial cargo sector, an area overwhelmingly dominated by Adani Group.

For 17 years, JSW’s ports business was an arm to support the cargo needs of the conglomerate’s various manufacturing businesses.

The company, with a newfound purpose in 2019 and going public in 2023, will be active in the Centre’s ongoing monetisation plan as it requires low capital expenditure (capex) and offers high returns on capital. With a limited presence in the container segment, the company is keen to go for mega projects like Rs 77,000 crore Vadhavan Port, Rs 44,000 crore Nicobar Port, and the Tuticorin Container Terminal worth Rs 7,000 crore, the company’s joint managing director and chief executive officer, Arun Maheshwari, told Business Standard in a video interview.

“These are prized projects of the government of India and capital-intensive. No individual company would be able to do that kind of a project on its own. These are container ports, which have been a missing link for us in the bigger picture. We have an urge and intention to be in this segment, as our expertise has previously been in bulk cargo. Container bidding has been pricey of late, but these three ports -- we would be keen to explore all opportunities,” he said.

The company, from catering to 94 per cent captive cargo of JSW Group in 2019, has diversified its clientele and services. According to the FY24 results, announced last week, JSW Infra’s current cargo volumes contain 40 per cent of third-party cargo, and it plans to increase it in the near term.

The company, which operates 10 port concessions strategically located on the west and east coasts of India, reported a 9.8 per cent year-on-year rise in its net profit at Rs 330 crore and a 19.8 per cent rise in its core revenue at Rs 1,096 crore for the January-March quarter or FY24.

Its international presence includes a liquid tank storage terminal of 465,000 cubic metres in Fujairah, United Arab Emirates.

PPP projects lucrative on low capex, high returns

“We are one of the largest concession holders in India today and we continue to find this space very good. These are in major ports which are operating -- capex is low, the risks are almost minimal, and you get an existing customer base. Our asset base is 50 per cent terminals and 50 per cent greenfield, capacity-wise,” Maheshwari said.

The company is considering two sizable terminal projects, including one in Deendayal Port, for which they’re awaiting bid opening.

Investments in the pipeline

The company recently signed the concession agreement for Rs 4,100-crore Keni Port in Karnataka, which will be developed as a mixed cargo port and offer additional capacity 30 million metric tonnes per annum in the first phase of development.

To achieve its targets, the company is looking to inject Rs 30,000 crore over the next six years in two tranches of Rs 14,000 crore and Rs 16,000 crore, according to insights from the analyst conference held on Friday.

These investments will help the port operator increase its capacity to 400 million metric tonnes per annum from the current 170.

While it looks to have an independent identity as a commercial operator, the larger ambitions of JSW Group will be a key factor to look at, and the firm will be a source of support in the supply chain wherever the group requires, the CEO said.

According to Maheshwari, the operator will primarily look at having an anchor customer for it to make greenfield investment in ports, and it only works to its advantage that sometimes the anchor customer is from the group itself, such as its ports in Jaigarh and an upcoming port in Jatadhari, Odisha.

For overseas investment, Maheshwari expressed keenness in several geographies including West Asia, but said factors like bulk cargo opportunities, anchor customers, and geopolitical stability would play a key role in any potential acquisitions.

India’s coasts will be a core area for the company, but the broader strategy will be a combination of its commodity-specific aspirations and strategic locations.

According to Maheshwari, the market leader in the industry -- APSEZ -- is an aspiration for JSW Infra, being a flagship port business.

“They have done really well. We’re relatively new, but India has a big coastline and many opportunities. There are hardly any port players and no economy can grow without touching the shores. We see a great opportunity (to grow),” he said.

“It (APSEZ) is a good example for us in terms of how we can grow our business as well,” he added.

Shipping – To be or not to be

JSW Group operates 18 mini bulk carriers and accounts for 28 per cent of the inland waterways cargo, albeit entirely captive. Over the past financial year, various central ministers have stressed the need for India to have a robust domestic shipping and shipbuilding industry.

“Getting into shipping needs different skill sets and operating practices, and a different mindset. As a group, we are not averse to any business opportunity. We have too much on our plate for now. Now and then, we keep coming back to the question of whether we should own a shipping line or hire, but as of now there is no visibility on a shipping business,” Maheshwari said.