Indian Ports Key Sector Trends

21st January 2010

This presentation

Trends: major and minor ports, commodities driving

growth, view on capacities
Outlook: things are looking up
Constraints: old; more pressing; and some emerging
caution points

2.

Traffic Snapshot (2008-09)

Port Traffic grew at 10% between
2004-05 and 2008-09

Traffic growth

Traffic at minor ports grew at

~14.2%, ~8.5% for major ports
Commodities: dominant share of POL,
followed by IO, containers and Coal
Growth in Major port traffic since
2004-05 driven by Containers (CAGR
14.6%), POL (CAGR 8.6%)

Traffic growth for Major ports for

Apr-Dec 09 vs. Apr-Dec 08: 5.4%
Capacity utilization levels peaking
for major ports: ~95%
Minor ports utilization at 68%

Composition for 2008-09

Others

POL

Cont.
Coal Iron Ore

3.

Recent developments select projects

Select recent projects
and expected
dominant
commodities

Recent capacities added to minor ports

Dominated by bulk capacities on the east
coast

Dhamra: IO & Coal, 2009

Gangavaram: Coal +, 2008
Krishnapatnam: Coal, IO,
2008
Karaikal: Coal +, 2008
4.

Select upcoming projects

Large capacity expansions underway: projected addition ~ 700 MT
Expected both for major and minor ports (18 and 20 planned projects resp.)
Key drivers: Coal imports for power gen, container demand
LNG capacities expected in western ports on the back of improved gas grid

Confidence wrt. projects coming up

Projects at major ports are at advanced stages of development
Many minor ports projects at existing ports and capable developers

Mundra: Coal; SPM

Dahej: LNG jetty
Mum: Offshore cont. (Gammon +)
JNPT: 4th cont. term.
Dighi: Coal & cont.
Mgoa: Coal & IO

CONTAINERS
BULK
5.

Valarpadam:
Cont. - dev. by
DP World

Paradip: Award of IO and

coal terminals
Krishnapatnam: Phase 2 exp
Ennore: Coal terminal
Chennai: 2nd
cont. terminal
(PSA Sical)

Outlook: Project flow expected to look up

Investments have been already happening on minor ports
Strong minor ports capacities in Gujarat; AP and Orissa are catching up

Projects flow for major ports has been subdued for various
administrative reasons
Delay in finalization of new MCA
Time taken for clearing tariffs for new projects as per 2008 TAMP guidelines

But projects flow is looking up

Recent awards at Paradip, JNPT 4 under bidding
The PPPAC approved 8 projects during Oct 08 Nov 09 with expected
project costs of INR ~ 11 thousand crores
4 projects for INR 4,179 crores under consideration

6.

Outlook: Ports to continue to witness strong growth

From 2008-09 to 2013-14 CRISIL expects traffic to grow at CAGR of 8.9%
to 1167 million tonnes
Major ports expected to grow at CAGR of 4.9% while minor ports at 16.3%
Traffic growth likely to be driven by coal (CAGR:14%), followed by containers

Current and expected commodity shares

7.

Minor ports: growth in share to continue

Consistent growth in market share: Traffic share grew from around
25% in 2005-06 to ~ 31% for 2008-09
Majority of recent capacities in minor ports
Rise in expected share beats past forecasts

Expected share in Capacity

at 36% as per 11th Plan

8.

Major Ports

Share in traffic expected to

grow to 42.2% for 2013-14

Minor Ports

Capacity utilizations to ease

Current and expected capacity utilizations
2008-09

2013-14 (P)

Major ports

~95%

~74%

Minor ports

~68%

~72%

Overall utilization levels would come down from the present

~85% to ~73%

9.

Issues
Many old constraints remain
Draft constraints at major ports, below par efficiency levels, poor hinterland
connectivity, delays in environmental clearance

Bringing bankable projects to market still the biggest hurdle

Reliance on private investment for capacity ports dev. is huge: ~USD 14 Bn
Poor project preparation, unattractive packaging lead to delays at
procurement and post award stages
Some minor port projects have highlighted systematic gaps in site selection:
environmental issues, unfavorable soil conditions etc.
Administrative, policy change issues

10.

Concerns / Caution points (Observations from recent projects)

Qualification criteria for bidding in major ports favoring a few large
players
Selection of only top 5 technical bids may lead to adequately qualified firms being
out of competition - same firms being selected for different projects
Large intl. players that bring qualification points are not necessarily investors
The top 5 selection criteria has been done away with for the roads sector

Differential royalty structure in minor ports adversely impacts the

economics of new port developments
Operational ports already have a first mover advantage
May delay investments / reduce competitive position of newer developments

Fast paced reform of domestic coal mining may multiply the coal
production in India
Thermal coal is the backbone of investment thesis for bulk ports
Domestic coal may simply replace the imported coal for power generation
11.

Summary
Traffic flow has started to look up after a brief depression
Growth will be lead by coal and containers

Trends from traffic and capacity addition expectations

Trend towards minor ports gaining market share will continue
Capacity utilisations shall ease, balance in favour of minor ports
Investments and traffic flows for the eastern cost to be driven by bulk
(esp. coal); mixed for western coast

Sector is poised for growth and investments

Many minor ports are sitting on potential for capacity ramp up and have
robust development plans, major ports projects flow will go up
Hinterland connectivity constraints and other issues however will need
to be managed

12.

CRISIL Risk and Infrastructure Solutions Limited

A Subsidiary of CRISIL Limited, a Standard & Poors company
13.

www.crisil.com

Opportunities exist for Brownfield expansions at Major Ports and

Greenfield Minor Port Ventures
The
The 11
11thth Five
Five year
year plan
plan aims
aims to
to more
more than
than double
double the
the existing
existing port
port capacity
capacity to
to 1575
1575 MTPA
MTPA
Major
Major Opportunities
Opportunities exist
exist in
in
BOT
BOT expansions
expansions at
at Major
Major Ports
Ports (ROCE
(ROCE in
in the
the range
range of
of 14%-16%)
14%-16%)
JNPT-IV
JNPT-IV Container
Container Terminal
Terminal
High
High Degree
Degree of
of Certainty
Certainty on
on Port
Port Traffic:
Traffic: serves
serves industrial
industrial western
western region
region and
and landlocked
landlocked North
North India
India
Presence
Presence of
of entire
entire logistics
logistics chain
chain
Ennore
Ennore && Chennai
Chennai Container
Container Terminals
Terminals
Shall
Shall play
play aa leading
leading role
role in
in Intra-Asia
Intra-Asia trade
trade
Ennore
Ennore preferable
preferable to
to Chennai
Chennai as
as Chennai
Chennai has
has land
land constraints
constraints and
and may
may face
face congestion
congestion issues
issues
Tuticorin
Tuticorin Container
Container Terminal
Terminal
Shall
Shall serve
serve the
the Central
Central Tamilnadu
Tamilnadu Industrial
Industrial Cluster
Cluster
Presently
Presently facing
facing some
some tariff
tariff fixation
fixation issues
issues
Greenfield
Greenfield Private
Private Service
Service Ports
Ports (ROCE
(ROCE in
in the
the range
range of
of 14%-20%)
14%-20%)
AAlarge
large number
number of
of Concessions
Concessions have
have been
been awarded
awarded on
on East
East as
as well
well as
as West
West Coast
Coast
However,
However, locational
locational studies
studies would
would yield
yield 3-4
3-4 strategically
strategically located
located ports,
ports, alternatively
alternatively secondary
secondary
acquisitions
acquisitions can
can be
be looked
looked at.
at.
ICDs/
ICDs/ CFS
CFS
Relatively
Relatively smaller
smaller investment
investment and
and serve
serve as
as aa traffic
traffic aggregator
aggregator for
for owned
owned ports
ports
14.

Short term GDP forecasts looking up

15.

PPPAC - Proposals Granted Approval

1

Construction of Deep draught iron ore berth on

BOT basis by Paradip Port Trust

Port (Department of
Shipping)

Orissa

Construction of Deep draught coal berth on BOT

basis by Paradip Port Trust

Port (Department of
Shipping)

Orissa

Development of Eighth Berth as Container

Terminal on Build Operate & Transfer (BOT)
basis at Tuticorin Port

Port (Department of
Shipping)

Tamil Nadu

Construction of Container Terminal at Ennore Port

in Tamil Nadu on BOT basis

Port (Department of
Shipping)

Tamil Nadu

Development of a Coal Terminal at Port of

Mormugao, Goa on Design, Build, Finance,
Operate and Transfer (DBFOT) Basis

Port (Department of
Shipping)

Goa

591.35
-127.34
497.01
-103.15
312.23
-67.23
1407
-302.97
334
-71.92

Sub-Total

Proposal approved
on 23.10.2008

Proposal approved
on 23.10.2008
Proposal approved
on 13.01.2009
Proposal approved
on 13.01.2009
Proposal approved
on 13.01.2009.

3683.25

3141.59

-793.12
S.

Nameoftheproject

No.

Sector

State

(Sponsoring
Authority)

Projectcost

Remarks

in Rs. Crore
(in US$, Million*)

Development of Standalone container handling

facility with a quay length of 300m towards
North at Jahawar Lal Nehru Port Trust

Ports (Ministry of
Shipping)

Maharashtra

Mechanism of Coal Handling facilities and

upgradation of General Cargo Berth at Outer
Harbour of Visakhapatnam Port to cater
200,000 DWT vessels on DBFOT basis

Ports (Ministry of
Shipping)

Andhra
Pradesh

438.36

Development of Fourth Container Terminal at

Jawahar Lal Nehru Port Trust

Ports (Ministry of
Shipping)

Maharashtra

6700

Sub-Total

600.08
-129.22

-94.39

-1,442.72
7738.44
-1,666.33

16.

Proposal approved
on 11.11.2009
Proposal approved
on 11.11.2009

Proposal approved
on 11.11.2009

PPPAC - Proposals Under Consideration

S.

Nameofthe
project

Sector

Development of
Container
Terminal at New
Mangalore Port
on BOT basis

Ports (Ministry of
Shipping)

Karnataka

275.82

Development of
Multipurpose
Berth to handle
clean cargo
including
containers on
BOT basis at
Paradip Port

Ports (Ministry of
Shipping)

Orissa

445.51

Development of
North Cargo
Berth II for
handling bulk
cargo at
Tuticorin Port on
DBFOT basis

Ports (Ministry of
Shipping)

Tamil Nadu

332.16

Development of
Mega Container
at Chennai Port

Ports (Ministry of
Shipping)

Tamil Nadu

3125

No.

Sub-Total
17.

State

(Sponsoring
Authority)

Projectcost
inRs.Crore

4178.49

Distribution of traffic Major Ports

18.

Source: CRISIL Research