Group looks to boost the capacity of ports over six-fold by 2020
MUMBAI: Sajjan Jindal's JSW Group plans to shape its ports business into a major player in the next five years, becoming the only Indian conglomerate that can pose a challenge to the steep rise in this sector.
The steel-to-energy behemoth, along with its partners, plans to put in Rs. 10,000 crore to expand its ports even as it plans to increase capacity more than six times to 200 million tonnes (MT) by 2020. “We at JSW don't set up any goals that are easily achievable.
We are not a very large port company today but our ambition is to convert it into one of the major port companies in India,“ Chairman Sajjan Jindal said.
Apart from the Rs. 10,000-crore organic expenditure, Jindal is looking at acquisitions on the east coast to speed up the process of achieving the 200 MT target. It is scanning major and non-major ports, across Andhra Pradesh, Odisha and Tamil Nadu.
The group, through its subsidiary JSW Infrastructure, already operates two ports in Maharashtra and two cargo berths in Goa. It is also building a terminal in Odisha's Paradip Port.
Capt. BVJK Sharma, JSW Infrastructure CEO said. “If we have to grow from 33 MT to 200 MT, we will have to grow at 25% compounded annual growth rate every year. For that, brownfield expansions, some acquisitions, addressing connectivity to attract third party cargo, growing the scale to accommodate larger ships, these are our plans.”
JSW may list JSW Infrastructure once it grows to a significant size.“We should come up to a reasonable level compared with our steel and energy businesses that are already listed,“ said Sharma, adding that the company will have to reach an Ebitda (earnings before interest, tax, depreciation and amortisation) of at least Rs. 1,000 crore and a market valuation of Rs. 12,000 crore before it considers a public share sale.JSW Infra posted Ebitda of Rs. 350 crore last year and hopes to touch Rs. 500 crore this financial year. It recently signed a concession agreement with the Government to build a railway line connecting its Jaigarh Port in Maharashtra with Konkan Railway.
JSW is looking to build or acquire the first phase of ports wherever its steel, power and cement plants are coming up, Sharma said. It will then create additional capacity for outsiders. The group wants to bring captive cargo contribution down to 50% from 60% at present by 2020. There are concerns that if the India growth story does not play out as expected, ports could be staring at redundant capacities and high debt.
