India: Essar Ports to Increase Capacity

Ruia-owned port company Essar Ports has its hands full with expansion projects at its ports and is not looking for further expansion into new ones, its top executive said, adding that the company’s new iron-ore terminal in Orissa will be commissioned by the end of the month.

“At the moment, we are not looking for expansion into new ports abroad or in India. We have enough on our plate,” said managing director Rajiv Agarwal. The company has an aggregate capacity of 88 MMTPA across two facilities located at Vadinar and Hazira in Gujarat. It expects to scale the capacity to 158 MMTPA with expansion projects at these two facilities, a new port at Salaya in Gujarat and two terminals at Paradip in Orissa. The company is also awaiting the results of its bid for a Rs.4,000-crore container terminal project in Chennai, after the project got a go-ahead from the union home ministry.

Agarwal added the company’s iron ore terminal at Paradip is completed and should start by the end of the month. The company is said to have invested Rs.520 crore for the iron-ore berth project. It had bagged the 30-year concession BOT order in 2009 from the Paradip Port Trust. The company has a debt of Rs.5,601 crore as on September 30. “Regarding refinancing of debt, we will keep exploring. At the moment, we don’t have anything on the cards,” he said, adding that the company would be relieved if the interest rates come down. The current average interest rate for the company is 12-13%. In October, the company’s CFO had said it had approached the RBI to allow it as a special case to raise around Rs.1,500 crore though external commercial borrowing to part refinance its debt.

Essar Ports, which was formed last year through the demerger of erstwhile Essar Shipping Ports & Logistics, also undertook the take out financing scheme of the government through India Infrastructure Finance and refinanced Rs.405 crore of its debt for the Hazira Port in Gujarat. This has brought down its interest cost by 2.65% for the amount.

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Press Release, December 5, 2012