1 / 18

Indian Ports – Key Sector Trends

Indian Ports – Key Sector Trends. 21 st 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. Traffic Snapshot (2008-09).

kedem
Download Presentation

Indian Ports – Key Sector Trends

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Indian Ports – Key Sector Trends 21st January 2010

  2. 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

  3. Traffic Snapshot (2008-09) Traffic growth • Port Traffic grew at 10% between 2004-05 and 2008-09 • 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

  4. Recent developments – select projects • Recent capacities added to minor ports • Dominated by bulk capacities on the east coast Select recent projects and expected dominant commodities Dhamra: IO & Coal, 2009 Gangavaram: Coal +, 2008 Krishnapatnam: Coal, IO, 2008 Karaikal: Coal +, 2008

  5. 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 Paradip: Award of IO and coal terminals Mum: Offshore cont. (Gammon +) JNPT: 4th cont. term. Dighi: Coal & cont. Krishnapatnam: Phase 2 exp M’goa: Coal & IO Ennore: Coal terminal Valarpadam: Cont. - dev. by DP World Chennai: 2nd cont. terminal (PSA Sical) CONTAINERS BULK

  6. 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

  7. 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

  8. 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 Share in traffic expected to grow to 42.2% for 2013-14 Expected share in Capacity at 36% as per 11th Plan Major Ports Minor Ports

  9. Capacity utilizations to ease • Overall utilization levels would come down from the present ~85% to ~73% Current and expected capacity utilizations

  10. 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

  11. 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

  12. 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

  13. CRISIL Risk and Infrastructure Solutions Limited A Subsidiary of CRISIL Limited, a Standard & Poor’s company www.crisil.com

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

  15. Short term GDP forecasts looking up

  16. PPPAC - Proposals Granted Approval

  17. PPPAC - Proposals Under Consideration

  18. Distribution of traffic – Major Ports Source: CRISIL Research

More Related