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Cash-rich 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 .

For this 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, JNPT.

Among the 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.

The Ministry 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.

“The ports 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 partial operations.

“JNPT is 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.

These 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.

“A highly 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.

Bansal of 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?”


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