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Essar Ports may sign pact for Mozambique project - 2012-02-06


The Ruias-led Essar Ports, the second largest private port operator in India, is likely to sign a concession agreement with the Mozambique administration for development of a port there in the next six months

“We are in talks with Mozambique authorities. We expect to have a clear idea on the size and investment for the proposed port there within the next six months,” Mr Rajiv Agarwal, Managing Director of the company, told Business Line.

While the company is yet to peg an investment for the project, it will be looking at setting up a 30-40-million tonnes port in Mozambique, which will be its first overseas project.

The port will be handling iron ore for one of its affiliates and coal for third-party customers.

Essar Ports reported a nearly five-fold increase in its net profit for the third quarter of this fiscal at Rs 44.81 crore and 45 per cent jump in its revenues at Rs 276.78 crore, beating the recessionary trends in the global shipping markets. Average realisation per tonne improved 28 per cent to Rs. 237 this fiscal from Rs 185.

The company could get a steady cargo flow from its affiliates, which account for nearly 97 per cent of its total throughput. Its Hazira facility saw third-party cargoes contribute four per cent to its nine-month revenues.

While analysts give a negative ring to Essar Ports' over-dependence on cargo of the group companies, Mr Agarwal feels that “this is our strength”. He points out how Indonesian coal imports are clouded in uncertainty and iron ore exports from India dwindled due to an increase in export duty.

He, however, said the company was targeting a 20 per cent share in third-party cargo by 2014-15, by which time, its capacity will increase from the current 88 mt to 158 mt. It expects to handle 44 mt this fiscal, having so far achieved 31 mt.

Essar Ports is investing Rs 9,300 crore for this capacity expansion programme, out of which Rs 6,700 has already been spent, Mr Agarwal said, adding the entire financial closure for this has been completed with a debt-equity ratio of 70:30.

This include a 15 mt iron ore and 14 mt coal terminals in Paradip, with the first expected to be ready by the first quarter of next fiscal.

On BSE, the company's stock closed at Rs 65.80, up 2.41 per cent on Thursday.

Source: Hindu Business Line