Steel magnate Sajjan Jindal is quietly building a port empire that is envisaged to span from the West coast to East coast of India and farther, may be to some foreign shores.
From the current port capacity of 33 MTPA at three locations in the West coast, the JSW Group, led by Mr. Jindal, has ambitious targets to achieve port capacity of 200 MMTPA by 2020.
The port building activity of JSW Group started a decade ago primarily to meet the captive demand of JSW Steel and then of JSW Energy. But now the momentum has gathered steam. The port activities come under group firm JSW Infrastructure Ltd.
“It is really a tall order to have 200 MTPA by 2020. At JSW Group, we always set high targets and we are hopeful to achieve it. We are looking at various opportunities in the West coast and also in the East coast. We are also exploring acquisitions abroad,” said Mr. Sajjan Jindal, Chairman of JSW Group.
“There are many possibilities to acquire minor and major ports. It is all in the pipeline. Today, we are not a large port company, but it is our ambition to be one,” Mr. Jindal added.
JSW Infrastructure’s three existing ports include Dharamtar Port near Mumbai, South West Port terminals at Goa and Jaigarh Port at Ratnagiri, Maharashtra. Recently, JSW had signed a concession agreement with Paradip Port to develop a new iron ore berth on BOT (build, operate and transfer) basis.
The JSW Jaigarh Port, an all-weather deep-water port, has come up with an investment of Rs.1,000 crore, and the JSW Infrastructure is investing an additional Rs.2,000 crore in the next two years at the existing three ports, top company officials said.
Commenting on JSW Group’s ambitious target, Rohit Chaturvedi, Director, CRISIL Infrastructure Advisory, said, “In our view, it may be difficult to achieve the target only through development of new assets. Several large port players are already present in the key markets and some are in expansion modes. From a market perspective, there may not be such large headroom available for new ports to add such large capacities. Also, such a large capacity addition through new capacity creation has been unprecedented in the country.”
“However, to achieve the target capacity, JSW may look at the possibility of acquisition of existing port assets. On demand size, it seems achievable as JSW’s captive demand may contribute more than 50 per cent of the said volume,” he added.
To build additional 167 MTPA capacity, JSW would require an investment of around Rs.7,000 to Rs.8,000 croreBut, in case of acquisitions, the cost may escalate sharply. For example, it had cost Adani Ports Rs.5,500 crore to acquire the 14.3 MTPA Dharma Port in Odisha last year.
Mr. Chaturvedi said though there were limited opportunities available for 100 per cent acquisition for port assets, opportunities still exited for part stake sale through investment in equity of port companies.
To a question, Mr. Chaturvedi said: “With growing industrial development in the country through industrial corridors and smart cities, demand for infrastructure and raw material is expected to go up. JSW is planning to diversify its operations by handling third party cargo and increase its port presence in the country.”
