International Cargo Terminals and Infrastructure Private Limited

April 15, 2019

Summary of rating action

Previous Rated Amount Current Rated Amount
Instrument* Rating Action
(Rs. crore) (Rs. crore)
[ICRA]BBB; Reaffirmed and outlook revised
Term Loan 271.00 345.00
to Positive from Stable
Fund Based Limits 0.00 46.50 [ICRA]A3+; Reaffirmed
Non-Fund Based Limits 30.00 20.00 [ICRA]A3+; Reaffirmed
Total 301.00 411.50
*Instrument details are provided in Annexure-1

Rationale
While arriving at the ratings, ICRA has consolidated the financials of ICTIPL and five of its subsidiaries, namely 1)
International Cargo Terminals & Rail Infrastructure Private Limited (ICTRIPL) 2) Visakha Container Terminals Private
Limited (VCTPL), 3) Haldia International Container Terminal Private Limited (HICTPL), 4) Kandla International Container
Terminal Private Limited (KICT), and 5) Paradip International Container Terminal Private Limited (PICT) on account of
substantial financial linkages between these six entities. These entities form part of the J.M. Baxi Group and are
collectively referred, hereinafter, as ‘the group’.

The revision in rating outlook to ‘Positive’ factors in the completion of PICT and KICT ahead of the SCOD and the healthy
ramp up of volumes witnessed in the terminal. The ratings continue to derive comfort from the parentage of the
company – a part of J.M. Baxi Group of companies, one of the leading end to end logistics players in the country having
integrated presence in the logistic chain as well as port operations. The rating favourably factors in the healthy ramp up
of volumes at Kandla terminal during past 15 months of operation. ICRA further notes the favourable long-term
prospects for container traffic given the overall low containerisation levels of cargo being handled at various ports in the
country. The ratings also factor in the strong operational efficiency the company commands for its Container Freight
Station (CFS), port and rail operations, leading to healthy margins and cash accruals. ICRA also takes into account
improvement in utilisation levels in rail division in addition to revival of Rozi jetty and Inland Container Depot (ICD)
resulting in improved consolidated financial indicators.

The ratings continue to remain constrained on account of susceptibility of the company’s revenues to economic cycles
and variations in exim trade volumes. The consolidated financial risk profile has been impacted due to increase in debt
levels in consolidated financial profile due to the recently commissioned terminals and the planned large capital
expenditure (capex) at a Visakha terminal which are largely debt funded. While the equity commitments for expansion
projects of CFS operation of ICTIPL and ICD operation of ICTRIPL has already been met, the equity commitment for VCTPL
is to be met during FY2020 and FY2021; absence of timely equity infusion could exert pressure on ICTIPL’s standalone
cash flows in the near-term, however, the risk is partially mitigated as the major portion of the equity is to be brought in
from the cash reserves and internal accrual. ICRA further notes the pressure in ICTIPL’s standalone operations due to

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decline in realisation (per TEU1) in CFS division in the wake of heightened competition. The ratings also factor in the
promoter level debt of Rs. 500 crore from Piramal group by pledging shares of ICTIPL which will be due in FY2023.

Outlook: Positive
The positive outlook reflects ICRA’s belief that International Cargo Terminals & Infrastructure Private Limited will benefit
from the ramp up of volumes in PICT and KICT in addition to improved profitability from rail and ICD division in addition
to the continued benefit from the strong parentage of the J.M. Baxi Group. The ratings may be upgraded if the company
sees significant improvement in its returns supported by healthy ramp up of operations from recently commissioned
terminals as well as maintaining the strong utilisation levels in other operations. The outlook may be revised to 'Stable' if
the company witnesses any significant delay in project and hence material cost or time overrun, or witnesses decline in
profitability of its businesses

Key rating drivers

Credit strengths
Strong parentage with extensive presence in the logistics industry - ICTIPL is a part of Mumbai based end-to-end
shipping-logistic industry major - J. M. Baxi Group which has a history of 100 years in the sectors. Over the years, the
Group has transformed into one of India’s largest integrated shipping-logistic agency, handling wide assortment of
vessels at major and minor Indian ports. The operations of the Group have grown quite significantly since inception with
expansion of service offering in shipping business and forayed into port infrastructure related activities.

Extensive experience in various businesses with strong executional capabilities - Integrated presence of the promoter
group in the logistics chain, port operations and cargo generating activities through its own CFS at JNPT port, container
terminal at Visakhapatnam, Haldia, Kandla and Paradip Ports, and Inland Container Depot (ICD) at Sonepat, Haryana. The
company has witnessed healthy ramp up of volumes at recently commissioned Paradip and Kandla terminals in addition
to revival of rail operation.

Timely execution of the projects and ability to attract healthy volumes – ICTIPL has started operation of Kandla and
Paradip terminal way ahead of scheduled commercial operation date (SCOD). KICT has been able to attract 2,44,000
TEUs of cargo in FY2019 whereas PICT has handled 9,000 TEUs and 1.2 million bulk cargo during 9 months of operation in
FY2019. The ramp up in volumes will impact the revenue and profitability of the company at consolidated level.

Healthy profitability at consolidated level - The revenue levels of ICTIPL witnessed healthy upward movement with
continued strong performance of the terminal operations at Vishakhapatnam and ICD business of ICTRIPL. Moreover, the
healthy realisation levels from the rail operations as well as from the KICT and PICT operations is expected to improve
the overall profitability of the group going forward.

Credit challenges
Susceptibility of revenues to economic slowdown and variations in trade volumes – The revenues of the company
remain susceptible to economic cycles in the CFS, ICD as well as the container terminal businesses. Apart from that, the
variations in exim trade volumes also impact the overall sales recorded by the group. However, the favourable long-term
prospects for container traffic given the overall low containerization levels of cargo being handled at various ports in the

1 TEU: Twenty-foot Equivalent Unit

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country, and established relationships of the group with all major shipping lines along with its integrated presence in the
logistic chain and port operations mitigate the risk to a large extent.

Sizeable capital expenditure plans exposing the company to project risk - The large-scale capital expenditure plans
under ICTIPL and its subsidiary VCTPL, with significant debt funding for the same are likely to impact the capital structure
at consolidated level. At the group level, sizeable capex has been envisaged in the development of second terminal at
Visakha; meeting the equity commitments for the projects are likely to exert pressure on ICTIPL’s standalone cash flows.
The long-term debt servicing capability post the availing of the project debt would hinge on adequate fund infusion from
the promoters and speedy ramp-up of cargo at the terminal post completion of construction.

Stretched capital structure with moderate coverage indicators - At the consolidated level, the gearing and debt
coverage indicators remained under stress with the additional debt being undertaken for upgradation of cranes under
the subsidiary, VCTPL as well as the debt on the books of PICT. The consolidated gearing was moderately high at 1.6
times as on March 31, 2018, TD/OPBDITA was high at 8.6 times and NCA/ Debt was at 7% for FY2018. Going forward,
these indicators are expected to improve as the newly completed projects ramp-up operations. Moreover, ICTIPL as well
as ICTRIPL have refinanced their long-term debt, which currently has a longer repayment tenure and thereby, eases the
repayment burden in the near-term.

High competitive pressures for container volumes at KICT and PICT - KICT faces significant competition from other
existing as well as upcoming container terminal operators on the west coast resulting in lower profitability margins.
Pipavav, JNPT, Hazira and Mundra are the ports which are the main competitors and any further addition of container
terminals at these ports pose a threat to the operations at Kandla. However, ICRA notes the inherent geographic
advantages to the company which would result in cost competitiveness in its target hinterland over the neighboring
container ports of Mundra and Pipavav. PICT faces competition from cargo and container terminal operators on the east
coast. However, the considering the targeted hinterland, PICT is well placed compared its competitor.

Liquidity Position:
The liquidity of ICTIPL remain robust driven by undrawn bank facilities of ~Rs. 67 crore as on March 31, 2019. The
company has strong banking relationships and can also raise funds in favourable terms, as demonstrated in the past. The
debt level at consolidated level is expected to increase owing to the development of second terminal of VCTPL.
Nevertheless, the loans are of longer tenor (15 years for ICTIPL debt, 18 years for PICT, 14.5 years for KICT, 10 years for
VCTPL-1, 15 years for VCTPL-2) with average maturity more than 15 years. Hence given the expected ramp up in recently
commissioned Kandla and Paradip terminal in addition to healthy cash accruals of ICTIPL, the liquidity profile of ICTIPL
will remain comfortable.

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Analytical approach:
Analytical Approach
Applicable Rating Methodologies
Parent/Group Support
Consolidation / Standalone
Comments
Corporate Credit Rating Methodology
Parent/Group Company: JM Baxi Group
The rating assigned to ICTIPL factors in the very high likelihood of its parent, JM
Baxi Group, extending financial support to it because of the high strategic
importance that ICTIPL holds for the group. There also exists a consistent track
record of JM Baxi group having extended timely financial support to ICTIPL in the
past, whenever a need has arisen.
For arriving at the ratings, ICRA has considered the consolidated financials of
International Cargo Terminals and Infrastructure Private Limited. As on March
31, 2018, the Company had 5 subsidiaries and 3 JVs, that are enlisted in
Annexure-2

About the company:

International Cargo Terminals and Infrastructure Private Limited (ICTIPL) was set up in the year 1947 and started as a
provider of shipping support services, mainly stevedoring. It gradually expanded its service offerings to container
handling, cargo consolidation, shipping agency services, ship chartering etc. In 2002, it set up its own CFS at Dronagiri in
Navi Mumbai near JNPT Port. Currently, ICTIPL operates one CFS of 90,000 TEUs capacity at JNPT Port and also carries
out bulk cargo handling operations at Rozi Jetty in Jamnagar, Gujarat. ICTIPL, as on date, is completely held by the
promoter family (Kotak family).

Profile of ICTIPL’s subsidiaries

a) International Cargo Terminals & Rail Infrastructure Private Limited (ICTRIPL) was incorporated on February 20, 2006
as one of the first private rail operators in India and commenced operations in April 2008. It has a Category-III
license from Indian Railways using which it can offer exim services on rail corridors serving the ports of Pipavav,
Mundra, Chennai/Ennore, Vizag and Kochi and their hinterland. It has also set up its own Inland Container Depot
(ICD) at Sonepat in Haryana of 1,20,000 TEU capacity which has become operational from December 2014. ICTIPL
holds 99% stake in ICTRIPL. With the recently approved scheme of restructuring, the rail operations will be
transferred under the parent viz. ICTIPL while the ICD business will continue to remain under ICTRIPL.

b) Visakha Container Terminals Private Limited (VCTPL) was incorporated in 2002 as a joint venture between ICTIPL and
M/s. Dubai Ports World FZE (Rated Moody’s Baa3) to operate the container terminal on Build, Operate and Transfer
(BOT) basis at Visakhapatnam Port. VCTPL is an all-weather container terminal that operates all days throughout the
year and has a total yard side capacity of 5,00,000 TEU. VCTPL provides container handling facilities for container
ships, berthing facilities for non-container ships visiting the terminal and renders all related support services.

c) Haldia International Container Terminals Private Limited (HICTPL) is a Special Purpose Vehicle and a 100% subsidiary
of ICTIPL which has been formed in February 2015 to operate and maintain a container terminal at Haldia. Kolkata
Port Trust has awarded the Operation and Maintenance contact for Haldia Container Terminal to HICTPL for
Integrated Container Handling operations for a period of 10 years. The commercial operations of this company
commenced in FY2016.

d) Kandla International Container Terminals Private Limited (KICT) is a Special Purpose Vehicle and a 100% subsidiary of
ICTIPL formed in February 2016. It has been awarded a contract by the Kandla Port Trust to upgrade, operate and

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 maintain two existing berths no. 11&12, as a container terminal at Kandla port. The container terminal has a
capacity to handle 6,00,000 TEU of cargo per annum from these two berths. KICT has achieved commercial
operations for the berths in June 2017 and has witnessed healthy cargo throughput post inception.

e) Paradip International Container Terminals Private Limited (PICT) is a Special Purpose Vehicle and a 100% subsidiary
of ICTIPL formed in February 2015. It has been formed for undertaking construction and development of a
multipurpose berth at Paradip port through PPP mode on a Build, Operate and Transfer (BOT) basis. The
multipurpose berth will cater to container traffic and clean cargo at Paradip Port. The Concession Agreement
between Paradip Port Trust (PPT) and on behalf of Paradip Port and PICT was signed on March 07, 2016. PICT has
achieved commercial operations for the berths in July 2018 and has witnessed healthy cargo throughput post
inception.

ICTIPL and its subsidiaries belong to the Mumbai based J.M. Baxi Group of Companies – one of the leading end to end
logistics players in the country. The group was established by three individuals - Mr. Baxi, Mr. Jayantilal Kotak and Mr.
Manilal Kotak and has a history of 100 years in shipping/logistics sector. The three partners started a partnership firm
named J M Baxi & Company in 1916 for providing stevedoring services at Mumbai port. Over the years, operations of the
group have grown quite significantly with expansion of service offering in shipping business and foray into port
infrastructure related activities. The group divides its operations in three segments, namely 1) Shipping services, 2)
Logistics, and 3) Infrastructure, which are handled by different entities.

Key financial indicators (audited)

FY2017 FY2018
Operating Income (Rs. crore) 878.9 1,127.1
PAT (Rs. crore) 0.4 26.5
OPBDIT/OI (%) 9.6% 14.4%
RoCE (%) 8.8% 11.4%

Total Debt/TNW (times) 1.2 1.6

Total Debt/OPBDIT (times) 7.3 8.6
Interest coverage (times) 1.9 1.6

Status of non-cooperation with previous CRA: Not applicable

Any other information: None

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Rating history for last three years:
Current Rating (FY2019) Chronology of Rating History for the past 3 years

Date & Date &

Instrument Amount Date & Date & Rating in
Amount Rating in Rating in
Rated Rating FY2018
Type Outstanding FY2019 FY2017
(Rs.
(Rs Crore) April Jul
crore) Feb 2018 May 2017 Dec 2016
2019 2018
Long [ICRA]BBB [ICRA]BBB [ICRA]BBB [ICRA]BBB [ICRA]BBB
1 Term Loan 345.00 271.00
Term (Positive) (Stable) (Stable) (Stable) (Stable)
Short term
Long
2 Fund based 46.50 - [ICRA]A3+
Term
limits
Non-fund
Short
3 based 20.00 - [ICRA]A3+ [ICRA]A3+ [ICRA]A3+ [ICRA]A3+ [ICRA]A3+
Term
limits

Complexity level of the rated instrument:

ICRA has classified various instruments based on their complexity as "Simple", "Complex" and "Highly Complex". The
classification of instruments according to their complexity levels is available on the website www.icra.in

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Annexure-1: Instrument Details
Date of Amount
Maturity Current Rating
ISIN No Instrument Name Issuance / Coupon Rate Rated
Date and Outlook
Sanction (Rs. crore)
[ICRA]BBB
NA Term Loan FY2018 11.45% FY2035 345.00
(Positive)
NA Fund based limits FY2018 11.45% NA 46.5 [ICRA]A3+
NA Non-fund based limits NA NA NA 20.00 [ICRA]A3+
Source: International Cargo Terminals and Infrastructure Private Limited

Annexure-2: List of entities considered for consolidated analysis

Company Name Ownership Consolidation Approach
International Cargo Terminals and Rail Infrastructure
99.9% Full Consolidation
Private Limited
Visakha Container Terminal Private Limited 74% Full Consolidation
Haldia International Container Terminal Private Limited 100% Full Consolidation
Kandla International Container Terminal Private Limited 100% Full Consolidation
Paradip International Cargo Terminal Private Limited 100% Full Consolidation
Boxco Logistics Infratrans Private Limited 100% Full Consolidation
Samudra Bharat Feeder Private Limited 51% Equity Method
M/s Malgham brothers 50% Equity Method

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