 "We will invest Rs 2,000 cr more to expand cargo handling capacity: Essar Ports' MD & CEO")
Essar Ports, one of the leading private port companies is in a mode of rapid expansion. It is expanding cargo handling capacity from 140 mtpa to 190 mtpa. The expansion needs a fresh investment of Rs 2,000 crore- to be financed by internal accruals and long-term debt. But, Rajiv Agarwal, managing director and chief executive officer (CEO) at Essar Ports asserts there would not be a large increase in consolidated debt and peak debt would hover at around Rs 7,000 crore (from Rs 6,400 crore now). Agarwal also shares his thoughts on the rising share of third party cargo and status of the planned LNG terminal at Hazira in an interview with Jayajit Dash:
Essar Ports has planned to expand its total cargo handling capacity from 140 million tonne to 190 million tonne. When is the expansion slated for completion? What is the investment needed? How are you going to raise funds for the same?
As you may be aware, Essar Ports is one of the largest private port companies in India. It has cargo handling capacity of 140 million tonne per annum (mtpa) across various locations in India. 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 like 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. We are in the process to increase the capacity from 140 mtpa to 194 mtpa. Capacity addition will be through various terminals across the country- Hazira, Visakhapatnam port, Paradip port etc. Essar Ports has already invested approximately Rs 9,500 crore in developing its facilities and an additional Rs 2,000 crore will be invested in the expansion projects to achieve 194 mtpa capacity. Funds for expansion project will be raised through a combination of internal accruals and long term project debt. Expansion projects are expected to be completed by 2018.
You are looking to supply high grade iron ore to steel companies in Japan and South Korea. When are the supplies supposed to commence?
Essar Ports is not in the business of exporting of iron ore. The port facility is being used by the exporters for this purpose. The iron ore export facility at Visakhapatnam port is one of the premium iron ore export terminals of the country that is being used to export high grade iron ore to steel companies of Japan and South Korea
Essar Ports is banking on third party contracts to boost its cargo. Can you name the supply contracts already tied up and those in the offing? What would be the share of the third party cargo to your total revenue?
Essar Ports has a good mix of captive and third party cargo in its portfolio. Proportion of third party cargo is increasing and is expected to reach approximately 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 and hence setting up an LNG terminal at Hazira is an excellent business proposition.
Can you detail the new terminals planned for coal, iron ore and oil across all your terminals? What would be their capacities and investment planned thereof?
We have recently commissioned a bulk terminal at Salaya, which will be primarily handling coal/pet coke. We are expanding the capacity of iron ore export terminal at Visakhapatnam port and increasing capacity of 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 as of now? Do you see the figure growing in the near-term?
Consolidated debt of Essar Ports is approximately Rs 6,400 crore, we are not expecting much increase in the debt in near future and peak debt will be about Rs 7,000 crore.
Which items are your key export drivers?
We serve customers exporting various products through our terminal. Important commodities being exported through our terminals are petroleum products like Gasoline, HSD (high speed diesel), naphtha, iron ore, finished steel and project exports.
