Tata Steel, L&T ink pact for port joint venture

Tata Steel and Larsen & Toubro (L&T) today signed a definitive agreement to form a 50:50 joint venture for setting up a port at Dhamra in Orissa.

B Muthuraman, managing director, Tata Steel, said, "Tata Steel's cargo requirements will be around 10 million tonne in the next few years, therefore we have decided to come together with L&T to build this port.

The two companies will invest between Rs 1,500 crore and Rs 2,000 crore for the project, under the name - Dhamra Port Company, over three years. L&T holds a stake in Dhamra Port Company along with two other partners.

The two partners will exit by selling their stake to L&T and Tata Steel will buy out 50 per cent from L&T, explained a senior Tata Steel official. The project has a debt equity ratio of 2:1, with the equity portion amounting to Rs 330 crore," Dr A Ramakrishna, managing director and president-operations, L&T, said.

The project is likely to achieve financial closure by December 2004 and construction will begin by January 2005, with the target date of December 2007 for commencement of commercial operations," Muthuraman said.

"The Dhamra port will be the deepest ports with a 18 meter draft and a 20 million tonne cargo capacity, which will be enhanced to 40 million tonne later, making it one of the largest ports in the country,' Ramakrishna said.