Rajiv Agarwal, MD & CEO, Essar Ports, says that minor ports have been developed with robust planning and highly mechanised systems, keeping the best evacuation rates in mind.
What is the current cargo handling capacity of Essar Ports? And to what extent has cargo handling been mechanised?
The current cargo handling capacity of Essar Ports is 150 MTPA. Essar Ports specialises in development and operations of ports and terminals for handling liquid, dry bulk, break bulk and general cargo. It has five operational terminals in India across Hazira, Vadinar and Salaya (all in Gujarat) on the west coast, and one each in Visakhapatnam and Paradip on the east coast. All our facilities are state-of-the-art and completely mechanised with environment friendly operations.
Are there any expansion plans? If so, what is the investment earmarked?
The company is in the process of increasing its aggregate port capacity to 194 MTPA in India alone with expansion of the Hazira facility; a coal import terminal at Paradip Port in Odisha and expanding iron ore terminals consisting of three berths at Visakhapatnam in Andhra Pradesh. Over and above these, the facilities of Essar Ports have a large expansion potential with Vadinar Terminal having the concession to double its marine facilities. We expect to make investment of close to Rs.1,000 crore this fiscal year and an investment of close to Rs.8,000 to Rs.10,000 crore across existing facility expansions and new concessions over the next three-five years in India.
Meanwhile, for your expansion plans, what are the major equipment requirements?
All our expansion plans are proposed to have completely mechanised facilities ranging across dry bulk, liquid and break bulk category. Expansion of our facilities will see installation of SPM & subsea pipelines, ship loaders/unloaders, conveyor systems & pipelines, stacker, reclaimer & stacker-cum-reclaimer and wagon tipplers/rapid wagon loading systems.
What is your asset base (cargo handling equipment & machinery) as of now?
We have installed SPM & subsea pipeline network, ship loaders/unloaders, conveyor systems & pipelines, stacker, reclaimer and stacker-cum-reclaimer and wagon tipplers/loaders at our present facilities and similar type of equipment will be installed during expansion phase depending on the project requirements and cargo mix. These are expected to be high speed and capacity, delivering best-in-class operational parameters and enabling economies of scale and faster evacuation rates.
How do you find the availability, the fuel/energy efficiency and productivity of various equipment for cargo handling?
Our facilities have both domestic and imported equipment base and all of them are world-class and energy efficient. We take concerted efforts in designing and planning of our facilities and our engineering mandates for world class specifications. The level of efficiency can be identified by our low operating costs as we operate at EBITDA margins of ~75 per cent, i.e., the best in class in the port sector worldwide.
How efficient are your ports in handling a variety of cargo? How can equipment help the operations of a port?
Average turnaround time (TRT) for all major ports improved from 8.10 days in 1990-91 to 3.63 days in 2015, while the TRT of best-performing ports across the world is around a day. The high TRT in Indian major ports is on account of low level of mechanisation and low evacuation rates. However, there is a strong focus on overcoming these issues through modernisation and upgradation and PPP participation. At the other end are the non-major ports, which are providing world class operational parameters as they have been developed with robust planning and highly mechanised systems, keeping the best evacuation rates for the customer in mind.
All our facilities are state-of-the-art mechanised facilities and provide for all-weather, round-the- clock operations with deeper draft. All of our facilities are designed to provide for turnaround of vessels of ~100,000 DWT in a day and accounting for TRT of approximately a day.
Meanwhile, what will be the positive impact of GST while procuring equipment? How will it ease the burden on overall project cost?
The overall tax on the supply of indigenous goods is approximately in the range of 25-30 per cent. With the implementation of GST, the rate is expected to be much lower than the present tax rates on goods. This will lead to a lower tax burden for consumers, thereby facilitating consumption-led growth. Besides, one of the factors leading to the downtime of vehicles is trade barriers, such as check-post inspection, filing of waybills/entry permits, compliances under entry tax laws and local levies. Under the GST regime, the interstate movement of goods will be subject to GST, eventually leading to optimisation of delivery schedules and reduction in the operational costs of transporters, resulting in competitive pricing. Overall, it is expected to have positive impact on cargo movement and project costs.
Give us a glimpse of the future trends in port and cargo handling...
Going forward, India will see a surge on movement through maritime route with coastal movement or inland waterways having significant growth. Non-mechanised cargo handling will give way to mechanised facilities with deeper drafts, high level of mechanisation, efficient multimodal connectivity and evacuation options. These will lead to more efficient operational parameters and economies of scale. The focus will be on environment friendly systems and operations with state-of-the-art equipment with automation and IT systems playing a major role.
- RAHUL KAMAT