Jawaharlal Nehru Port Trust (JNPT) wants to augment its capacity through
acquisition of smaller cash-strapped ports, a strategic move that will help
JNPT stop cargo moving out to ports in Gujarat because of capacity constraint;
it will also get back its market share .
purpose, a consultant has been roped in both to carry out a feasibility study
and to identify acquisition targets, said Mr. Neeraj Bansal, IRS, Chairman,
options being evaluated on the West Coast are the loss-making Mormugao Port
Trust in Goa and Dighi Port, a private port in Maharashtra’s Raigad district
owned by Balaji Infra Projects Ltd and IL&FS Ltd, which was last month
admitted into insolvency court.
is also in the process of giving JNPT the rights to develop Rewas Port. The
project had been awarded to Reliance Logistics and Ports, a Reliance Industries
subsidiary, in 2002, but work on the project has not even begun.
sector is changing very fast,” Bansal said recently. “JNPT is exhausting its
capacity to handle coal, steel and other cargo. The State requires these
materials for power, infrastructure and other industries. At this time, when
the port is making profits, we must invest in infrastructure creation and look
for good investment opportunities,” he said.
In fact Dighi
Port is part of the Dedicated Freight Corridor and the Delhi-Mumbai Industrial
Corridor. Dighi Port has a capacity of 30 million tonnes and has started
operating at close to full capacity today. Because of its capacity constraints,
it has seen a lot of cargo traffic move to ports in Gujarat, like Hazira,
Mundra and Pipavav, said K. Ravichandran, Senior Vice-President & Group
Head, Corporate Ratings, ICRA.
acquisitions will help JNPT regain its market share, Ravichandran said. “Trade
is expected to grow 10-12% annually. JNPT is a profitable port and operates
efficiently. It is AAA rated, has significant cash reserves and has spent the
last couple of years building road connectivity.
The cost of
an acquisition depends on the financial health of the port.
profitable port will be priced at an EV/EBITDA multiple of 10-15 times. For a
weak port, depending on how much debt it has, this multiple will be much
lower,” he said.
JNPT said: “We are looking at options to leverage our savings. Ultimately, we
need to create more assets, so we have more muscle, more centres from which to
serve the nation. The Government is advocating for port-led development. If
JNPT can create (a profitable port) here, why not do it in other places too?”