Essar Ports to double volumes by 2016

Essar Ports, part of the $39-billion Essar Group, is on a consolidation path and currently focused on completing its existing projects at Paradip and Vishakapatnam which will enable it to double its volume in the next two-three years.

Speaking to Deccan Herald, Essar Port CEO & Managing Director Rajiv Agarwal said, “In the coming quarters, we expect to handle higher cargoes driven by increased off-take from anchor customers and an increase in third-party cargo."  He pointed out that Essar Ports currently has three operational port terminals at Hazira, Vadinar and Paradip, having a total capacity of 104 MTPA. 

The company now seeks to expanding the capacity to 181 MTPA over the next few years, which includes 14-MTPA coal terminal at Paradip port that was facing some issues earlier.  Agarwal said that the construction of the coal terminal at Paradip is “expected to start soon, as the Supreme Court has dismissed all the petitions filed by port users occupying the land during December 2013.” 

He added that the Paradip Port Trust has initiated action to vacate the land earmarked for the terminal.

Agarwal said that Essar Ports signed a concession agreement during the third quarter of this fiscal through its wholly-owned subsidiary Essar Vizag Terminals with the Vishakhapatnam Port Trust for developing three iron ore berths of 23 MTPA capacity.  Accordingly, it will "take over the two outer harbour berths soon and the operation and upgradation of the terminal will be undertaken simultaneously.”

Elaborating, another senior company executive said that these three berths (two outer harbour berths and one inner harbour berth) -- on BOT (build, operate and transfer) basis for 30 years --  will have a combined capacity of 23 million metric tonnes per annum (mmtpa). “This project will increase Essar Ports’ total capacity for iron ore export on the east coast to 39 mmtpa with 4 highly mechanized iron ore berths (three in Visakhapatnam Port and one in Paradip Port).” It is being developed at a cost of Rs 1,200 crore over a period of three years.

“Essar Ports will take over the two outer harbour berths soon and the operation and upgrading the terminal will happen simultaneously,” the company.  Visakhapatnam Port handled 12.3 million tonnes of iron ore during 2012-13 and this traffic is readily available for these berths from commencement. In this context, Agarwal said, “This project will significantly increase our third party cargo handling capacity and also boost our presence in the east coast. Iron ore export traffic at Vizag will increase substantially due to the competitiveness of this terminal which will facilitate industrial growth in the region.”

Meanwhile, Essar Ports for the quarter ended December 31, 2013 posted a 4 per cent rise in consolidated net profit at Rs 94 crore largely due to a subdued growth in sales. It had reported a net profit of Rs 90.42 crore in the corresponding quarter of the previous financial year.

Income from operations rose by nearly 3 per cent to Rs 376.86 crore in the quarter compared to Rs 365.97 crore in the corresponding quarter a year ago, the company release said. Of this, its main business - port and terminal services - reported a growth of 4.87 per cent to Rs. 376.86 crore.

However, Essar's income from fleet operating and chartering business declined by nearly 62 per cent to Rs 6.66 crore in the last quarter. Total expenditure of the company was Rs 144.12 crore in the last quarter, amounting to 38.24 per cent of its income from operations. Its finance cost rose by 14.35 per cent to Rs 144.59 crore, while it reported another income of Rs 21.93 crore in the last quarter as against Rs 1.03 crore in the third quarter of the previous financial year. 

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