Institutional Equities Cement Sector 28 April 2016 Sagarmala Project: What Lies In Store For Cement Sector?

Transcription

1 Thematic Report: India Infrastructure Landscape Part 1 Gujarat Andhra Pradesh Tamil Nadu Odisha Karnataka Maharashtra West Bengal Goa Cement Sector 28 April 216 Sagarmala Project: What Lies In Store For Cement Sector? We are starting a series of reports on India s infrastructure sector and its impact on domestic cement industry. We believe that with the slowdown in demand from the traditionally strong housing sector, infrastructure sector is likely to provide the much needed fillip to cement demand growth. In order to gauge the demand potential from various infrastructure sub-segments, we will be coming out with reports under the India Infrastructure Landscape umbrella. In the first part of this series, we take a look at the port sector in India through the recently launched Sagarmala project. We also attended the first maritime summit in India organised by the shipping ministry called The India Maritime Summit 216 to understand investment opportunities in the sector. The Sagarmala project envisages investments of Rs4trn over the next 1 years to change the face of coastal shipping in India. Based on our assumptions, projects worth Rs2trn have a higher degree of visibility in terms of implementation. In our view, a total of 27mnmt of additional cement demand can be generated by Sagarmala project over the next five to six years. While the project does look ambitious, we believe the implementation is easier compared to other flagship schemes of the government as the onus of implementation is spread over multiple agencies - public as well as private. Based on our analysis, Gujarat and Andhra Pradesh will be key beneficiaries of this project followed by Tamil Nadu and Odisha. Depending on the presence of cement companies in these states, we believe that companies that will benefit the most from Sagarmala project are UltraTech Cement, Sanghi Industries, Sagar Cements, KCP, The Ramco Cements, India Cements and OCL India. Sagarmala, although ambitious, is a well thought-out project: This is an ambitious project of Indian government which looks to change the face of seaborne traffic in India through port modernisation and improved port connectivity. Sagarmala project aims to change the way logistics evacuation happens in India and save on logistics costs nationwide for cargo handled and evacuated through seaports. The project entails an investment of Rs4trn and is likely to contribute 2% to India s gross domestic product (GDP) from coastal states and create 1mn jobs. projects identified under four key pillars of Sagarmala for early execution: The proposed development model for Sagarmala project is based on four key pillars such as: 1) Port modernisation, 2) Connectivity, 3) Port-led industrialisation, and 4) Coastal community development. The shipping ministry has already undertaken Origin-Destination analysis and has come out with a list of early-bird projects that will be executed in a time-bound manner. In the list of projects under Sagarmala, 41 projects have been indentified to develop and modernise existing ports. The aim is to increase port capacity from 1,4mt to 2,mt through the modernisation of terminals and berths at existing ports and also greenfield projects by developing new ports by 22. Moreover, 4 road projects and 3 railway projects have also been identified to improve port connectivity to the hinterland. What lies in store for cement sector?: We believe cement sector in India will benefit from Sagarmala project predominantly in two ways. Firstly, through increased cement consumption owing to higher capex for implementation of this project. Based on our analysis, we expect 27mnmt of additional cement demand to be generated through these projects over the next five to six years. Our assumption is based on only half the projected investments of Rs4trn in the proposed plan. Assuming timely development of industrial clusters as per the plan, total cement demand is expected to exceed mnmt, in our view. The second benefit of Sagarmala project is reduced logistic costs for cement companies as the government plans to promote cement clusters along ports and increased usage of waterways to transport cement. As ocean freight rates are 6%-7% lower than road freight costs, cement can travel a distance of more than 1,2km-1,km and still be viable. Conclusion: The government s plan to push coastal economies through Sagarmala project is quiet commendable, in our view. As a large part of this project will be funded through agencies like National Highways Authority of India or NHAI and Indian Railways along with individual port trusts, implementation of this project is not too difficult. Moreover, the government is targeting multilateral or bilateral funding to complete large-scale greenfield projects in the sector which takes out financing problem to a great extent. Overall, we expect Sagarmala project to contribute meaningfully to higher cement demand. Mangesh Bhadang mangesh.bhadang@nirmalbang.com Saurabh Rathi saurabh.r@nirmalbang.com mnmt of additional cement demand expected from Sagarmala project Source: Nirmal Bang Research Total 27mnmt of incremental cement demand expected through investments in Sagarmala. Gujarat and Andhra Pradesh likely to be key beneficiries

2 Sagarmala, although ambitious, is well thought-out government project Sagarmala project is an ambitious project of Indian government which looks to change the face of seaborne traffic in India through port modernisation and improved port connectivity. Despite having a long coastline and notable history of sea trade, the current status of Indian ports is not satisfactory, to say the least. India s economy has grown at a rapid pace in the past two decades, resulting in a choke-up in its transport systems. Both railways and roads as a transport medium have faced capacity constraints and poor transport modal mix led to minimal use of waterways to carry freight. Sagarmala project aims to change the way logistics evacuation happens in India and save on logistics costs nationwide for cargo handled and evacuated through seaports. While we believe the project look ambitious, we are confident of its succesful implementation on account of the well thought-out strategy. The onus of implementation of this project is entrusted to several public and private entities. Moreover, the government is looking at financing the same through lateral funding sources and private sector participation. The project entails an investment of Rs4trn and is expected to contribute 2% to the country s GDP from coastal states and also create 1mn jobs. Exhibit 1: Major ports in India Capacity and key commodities traded Major Ports Capacity 121.4mnt Utilisation 76.2 Commodity - POL 6% Capacity 119.8mnt Utilisation 9.3 Commodity 42% Kandla Haldia Capacity 49.8mnt Utilisation 62.3 Commodity 42% Capacity 44.mnt Utilisation 138. Commodity - POL 9% Capacity 79.4 mnt Utilisation 8.4 Commodity - 89% Capacity 43.8mnt Utilisation 33.6 Commodity 4% Capacity 77.8mnt Utilisation 47 Commodity - POL 63% Mumbai JNPT Capacity 49.7 mnt Utilisation 43. Commodity - POL 6% Mormugao Mangalore Cochin Vizag Ennore Chennai Tuticorin Paradip Capacity 37mnt Utilisation 81.8 Commodity 8% Capacity 86mnt Utilisation 61.1 Commodity 7% Capacity 44.6mnt Utilisation 72.8 Commodity 34% Capacity 96.8mnt Utilisation 6 Commodity 32% Source: Ministry of Shipping, Nirmal Bang Research Rationale for Sagarmala project India s maritime sector has faced growth constraints on account of: 1) Weak infrastructure at ports, 2) Connectivity problems, 3) No cohesive institutional arrangement, and 4) Limited economic benefit to the region and community. Indian ports have suffered on account of weak infrastructure which includes lack of mechanisation, lack of economies of scale, shallow draft (depth of the harbour) and delay in regulatory process. Even after going through this, connectivity to end markets of goods in terms of road and rail facilities is also limited. This resulted in higher turnaround days and as a result, higher working capital requirement for corporates. Even in case of development of infrastructure at ports, multiple agencies were involved with no cohesion in planning. Even major and non-major ports along with private ports act as separate and unconected entities. Finally, local communities did not benefit materially from development of ports as proper skill development and parallel other trade benefits were ignored. Through Sagarmala project, the government plans to plug these shortcomings and help in port-led development of coastal states. To this effect, the government with the help of a renowned consultant has published a detailed National Perspective Plan (NPP) on ports which has identified key constraints in development of port sector in India. This report also describes in detail the success of several other countries in promoting port-led development. Key countries included for comparison are China, Korea and Singapore. Below is a brief snapshot of the comparison between India and China with respect to port sector which depicts the extent of India s infrastrcuture deficit. 2 Cement Sector

3 Exhibit 2: Comparison of India and China in respect of ports Source: National Perspective Plan - Ministry of Shipping Focus of Sagarmala project The proposed development model for Sagarmala project is based on four key pillars such as: 1) Port modernisation, 2) Connectivity, 3) Port-led Industrialisation, and 4) Coastal community development. The idea behind Sagarmala project is to not only develop/add new capacity, but also improve/support infrastrcuture and increase efficiency to make Indian products competitive in international markets. Logistics costs in India are much higher compared to developed as well as several developing countries on account of higher reliance on roads to transport goods, scarcity of railway wagons, slow speed of railway freight carriers and unavailability of waterways. Thus the focus of this project is to develop industrial clusters alongside ports to help promote development of industries which rely more on imports/exports. Exhibit 3: Sagarmala project four key focus areas Port modernisation Connectivity Sagarmala Project Port-Led Industrialisation Coastal Community Development Source: Ministry of Shipping, Nirmal Bang Research The ministry has already undertaken Origin-Destination analysis and come out with a list of early-bird projects thatwill be executed in a time-bound manner. The projects entail an investment of Rs4trn. While the time frame to complete these projects is around 1 years, Shipping Minister Mr Nitin Gadkari has targeted completion of these projects within five years. The government recently conducted a grand maiden India Maritime Summit to promote Sagarmala project and attrract foreign investment. We attended this summit wherein various state govenrments showcased a number of port-related projects for investment. 3 Cement Sector

4 Gujarat Tamil Nadu Andhra Pradesh Odisha Karnataka Maharashtra West Bengal Goa Kerala Rajasthan Madhya Pradesh Overview of projects under Sagarmala Within the list of projects under Sagarmala, 41 projects have been indentified to develop and modernise existing ports. The aim is to increase port capacity from 1,4mt to 2,mt through the modernisation of terminals and berths at existing ports and also greenfield projects by developing new ports by 22. Following the rising traffic at major ports, the government plans to develop greenfield projects at Vadhavan (Maharashtra), Sagar Island (West Bengal), Paradip satellite port and at potential locations in Andhra Pradesh and Tamil Nadu. There are only a few ports in India which have sufficient draft and can match global cargo handling efficiency. Moroever, even after 6 years of independence, India does not have a transhipment hub and hence loses business to neighbouring couuntries like Sri Lanka. Therefore, the government has decided to develop trans-shipment hub at Enayam (Tamil Nadu) or Vizhinjam (Kerala), strategically located on the international shipping route. Port connectivity to the hinterland is an important aspect under Sagarmala project. As a part of this project, the government plans to develop 4 roads and 3 rail projects to connect with logistic hubs and hinterland. It will be executed to provide optimal mode of evacuation to/from ports for both export-import and domestic cargo. There is a plan to develop heavy haul rail corridor in Odisha from Talcher to Paradip with an investment of Rs6,mn. To provide last mile connectivity, in addition to this, the Ministry of Road, Transport and Highways has undertaken Bharatmala project for roads to be built from Gujarat to Mizoram at a cost of around Rs1,4,mn. Bharatmala project: The Road Transport and Highways Ministry has prepared a draft Cabinet note on the Rs2.6 trn Bharatmala project which envisages construction of 2,km of roads along India's borders, coastal areas, ports, religious and tourist places as well as over 1 district headquarters. The note also proposes to bring under the project all of the ministry's road construction schemes including Setu Bharatam, Char Dham Connectivity and National Highways Development Programme. The note will be finalised and placed before the Cabinet soon. The ministry aims to complete the project by 222. As of end-march 216, this project is yet to be launched formally. Out of the total investment of Rs2.67trn, around Rs 8,,mn investment is dedicated for the development of coastal roads including connectivity to ports. Out of projects, we have filtered about 12 projects which we believe have higher visibility and will face lesser constraints when it comes to implementation. We have excluded projects related to the development of industrial clusters or costal economic zones (CEZs), especially given the unfruitful experience of special economic zones or SEZs in the country. We have also excluded projects related to laying of pipelines as it invoves miniscule cement requirement, in our view. The projects that we have considered for our calculations mainly include connectivity and modernisation projects. Out of the total projects that we have considered under Sagarmala, roughly 68% projects in value terms are related to road connectivity and 22% belong to railways. Only 1% projects involve port modernisation in value terms. Moroever, among maritime states, Gujarat, Tamil Nadu and Andhra Pradesh are likely to receive highest investment of Rs43bn, Rs369bn and Rs367bn, respectively, followed by Odisha and Karnataka. Exhibit 4: Break-up of investments by different agencies Exhibit : Investment in different states under Sagarmala project 6 43 Railways 22% Ports 1% Roads 68% Source: Ministry of Shipping, Nirmal Bang Research Source: Ministry of Shipping, Nirmal Bang Research 4 Cement Sector

5 Gujarat Andhra Pradesh Tamil Nadu Odisha Karnataka Maharashtra West Bengal Goa What lies in store for cement sector? We believe cement sector in India will benefit from Sagarmala project predominantly in two ways. Firstly, through increased consumption through higher capex for implementation of this project and secondly, through reduced logistic costs in certain regions for cement companies post completion of this project. In order to ascertain incremental cement demand owing to increased capex of Sagarmala project, we have divided the projects into three parts, viz. roads, railways and ports. We have assumed approximate cement intensity of these projects to arrive at our estimate of cement proportion in total investment in value terms. We have then divided this number by average non-trade price of cement in a particular state to arrive at our volume estimate. Based on our calculations, Sagarmala project can generate additional cement demand of 27mnmt over the next five to six years. We believe that development of industrial clusters alongside ports will require much higher quantities of cement as it will also boost housing demand in the vicinity of the project. However, we have not taken industrial projects into consideration for the time being because of lack of clarity on its timeline. As per government estimates, the total investment in port- related projects will exceed Rs7trn-Rs8trn. Keeping this number in mind, and assuming ancillary investment, total cement consumption could be higher by more than mnmt, which is very significant. Exhibit 6: State-wise sectoral investments under Sagarmala project State (Rsbn) Ports Railways Roadways Total Gujarat Tamil Nadu Andhra Pradesh Odisha Karnataka Maharashtra West Bengal Goa Kerala Rajasthan Madhya Pradesh Total ,34. 1,973.8 Source: Ministry of Shipping, Nirmal Bang Research Exhibit 7: State-wise cement demand potential under Sagarmala project Total 27mnmt of incremental cement demand expected through investments in Sagarmala. Gujarat and Andhra Pradesh likely to be key beneficiries Source: Nirmal Bang Research The second benefit of Sagarmala project is through reduced logistics costs for cement companies as the government plans to promote cement clusters along ports and increased usage of waterways to transport cement. Sea routes or waterways are cheapest mode of transport of cement and in fact the cost of transport is ~% lower compared to roads, thus increasing the possibility of carrying cement to a far off distance. Cement, being a bulky commodity, freight is an important cost component. Thus, increased use of waterways will help bring down freight costs. Availability of limestone also plays a key role in determining how far cement will have to be transported as there are certain states with very limited limestone resources and hence they have to depend on inter-regional despatches. The major despatch routes in India are from southern region to western region and some parts of easterrn region, and from central India to east India. Cement Sector

6 Exhibit 8: Inter-regional despatch of cement between various states Source: National Perspective Plan - Ministry of Shipping The government has done Origin-Destination analysis for inter-regional movement of cement and believes that cost savings through the sea route with proper port infrastructure can reduce freight costs by Rs8- Rs1,2/mt. The NPP document quoted the example of moving cement between Andhra Pradesh and West Bengal. Currently, the cost of transporting cement from Mellacheruvu (Andhra Pradesh) to Birbhum (West Bengal) is around Rs2,2/mt through a mix of rail and road transport. The cost is only Rs1,246/mt via coastal shipping. Exhibit 9: Example of reducing logistics cost by using ocean freight Cost head Distance (km) Rate (Rs/km/mt) Total (Rs/mt) Rail freight from mine to port Ocean freight (Machilipatnam to Kolkata) Rail freight from Kolkata to Birbhum Port handling charges at origin - - Port handling charges at destination - - Total cost 1,246 Source: National Perspective Plan - Ministry of Shipping Exhibit 1: Cement plants identified for coastal transport of cement Source: National Perspective Plan - Ministry of Shipping 6 Cement Sector

7 FY1 FY2 FY3 FY4 FY (P) FY6 FY7 FY8 FY9 FY1 Brief note on India s port sector India is richly endowed with natural maritime advantages, with a 7,-km coastline covering 13 states and Union territories, a strategic location on key international trade routes and 14,km of potentially navigable waterways. Maritime logistics are an important component of India s economy, accounting for 9% of exim trade by volume and 72% of exim trade by value. A total of about 1bn tn of cargo is handled across more than 2 ports. In India, logistics cost account for 18%-2% of GDP compared to the benchmark of 8%-1% of China. Higher logistics costs and also time negatively impacts the trade as exporters are not able to commit to tight delivery schedules and have to finance higher working capital requirement while planning movement of exim cargo. Exhibit 11: Commodity-wise traffic handled at ports Exhibit 12: YoY total traffic growth rate at ports 1% 12% 21% 34% 9% 8% 7% 6% % 4% 3%.3% 3% 26% 4% Source: Ministry of Shipping, Nirmal Bang Research Source: Ministry of Shipping, Nirmal Bang Research Exhibit 13: State-wise cement demand potential under Sagarmala project 2% 1% % Share to Total Traffic at Major Ports (%) Share to Total Traffic at Non- Major Ports (%) 1,1 1,3 1, Source: Budget documents, Nirmal Bang Research India Maritime Summit 216 Maritime India Summit (MIS) was held from January 216 in Mumbai. It was a high decibel pitch for aggressively developing the country s port sector, accompanied by claims of firm commitment worth US$12bn and another US$6bn in the pipeline for projects in the sector. The summit provided a platform for participation, engagement and interaction of delegates from 42 countries. More than, delegates from around the globe participated in the summit. The three-day exhibition organised during the summit also drew an enthusiastic response from 197 exhibitors including 81 international companies, 8 Indian private sector companies and 36 government-owned entities. During the summit, Shipping Minister Nr. Nitin Gadkari had a meeting with around 1 high-level delegates from Bangladesh, Maldives, Mauritius, Madagascar, and Sudan. The summit showcased various thematic sessions based on the government s ambitious Sagarmala project for port-led development. Coordination is key to harnessing the potential of the country s ports. Along with port expansion, there needs to be better connectivity with the hinterland and Sagarmala project addresses the same with NHAI and Indian Railways also being a part of it. While several investments have been proposed and total 141 Memorandums of Understanding or MoUs worth Rs829.bn have been inked at the summit. 7 Cement Sector

8 FY4 FY FY6 FY7 FY8 FY9 FY1 Annexure 1 Summary of 12 major ports in India and its investement plans Haldia port It is the oldest (dating back to 187) operating port in India, and was constructed by British East India Company. The port has two distinct dock systems - Kolkata Docks in Kolkata and a deep water dock at Haldia Dock Complex, Haldia. In the 19th century, Kolkata port was the premier port in British India. After India s independence, its importance decreased because of factors including the partition of Bengal (19), reduction in the size of port hinterland and economic stagnation in eastern region. It has a vast hinterland comprising the entire North East region including West Bengal, Bihar, Jharkhand, Uttar Pradesh, Madhya Pradesh, Assam, North East hill states and two land-locked neighbouring countries, namely Nepal and Bhutan, and also Autonomous Region of Tibet (China). Total Investment of Rs.,7mn has been identified under Sagarmala project. However, overall investment by ports will be Rs 41,17mn. Exhibit 14: Commodity-wise traffic handled at the port Exhibit : YoY total traffic growth rate of the port (%) 6% 43% % 18% 7% 23% 3% Source: Ministry of Shipping, Nirmal Bang Research () (4.1) (9.) (1) (8.1) () (11.4) (2) (2.1) (2) Source: Ministry of Shipping, Nirmal Bang Research Exhibit 16: Key performance indicators Haldia (P) Average turnaround time (days) Average output per ship berth-day (tn) 6,243. 6,63. 6,728. 6,78. 6,13. 6,82. Capacity (%) Traffic (%) Utilisation (%) Source: Ministry of Shipping, Nirmal Bang Research Paradip port Paradip Port is an artificial, deep-water port on the east coast of India in Jagatsinghpur district of Odisha. It is situated at the confluence of Mahanadi river and Bay of Bengal. The need for another eastern port became particularly obvious following the partition when Dhaka port was separated from India. Paradip port was commissioned in March The port is strategically located to serve the vast hinterland over Odisha, Jharkhand, Chhattisgarh, Madhya Pradesh, Uttar Pradesh and Bihar. The port has advantages of soft underwater soil, so that it can be deepened to any depth depending upon the need. It has its own railway system having route length of 7.4km and track length of 84km. The port has state-of-the art mechanised coal handling plant to handle thermal coal traffic. Total investment of Rs.9,mn has been identified under Sagarmala project. However, overall investment by the port will be Rs36,11mn. 8 Cement Sector

9 FY4 FY4 FY FY FY6 FY6 FY7 FY7 FY8 FY8 FY9 FY9 FY1 FY1 Exhibit 17: Commodity-wise traffic handled at the port Exhibit 18: YoY total traffic growth rate at the port (%) % 6% % 12% 26% % () (1.7) (3.2) 3% (1) Source: Ministry of Shipping, Nirmal Bang Research Exhibit 19: Key performance indicators Source: Ministry of Shipping, Nirmal Bang Research Paradip (P) Average turnaround time (days) Average output per ship berth-day (tn) 13,83. 14,243.,99. 16,62. 18, ,736. Capacity (%) Traffic (%) Utilisation (%) Source: Ministry of Shipping, Nirmal Bang Research Vishakhapatnam port Visakhapatnam port is one of the major ports loacted in eastern part of Andhra Pradesh. The primary hinterland for the port is spread over Andhra Pradesh, Telangana, Chhattisgarh, Madhya Pradesh and southern Odisha. The port has an internal rail network of 18km with 32 handling terminals. It is well connected with east coast railway and south central railway. The cluster is predominantly bulk industryfocused with little role for discrete manufacturing. As a result of this, primary commodities shipped at the ports are thermal coal, coking coal and POL (Petroleum, Oil and Lubricants). Total investment of Rs 7,mn has been identified under Sagarmala project. However, overall investment by the port will be Rs 31,78mn. Exhibit 2: Commodity-wise traffic handled at the port Exhibit 21: YoY total traffic growth rate at the port (%) 8% 4% 1% 33% % 2% 14% Source: Ministry of Shipping, Nirmal Bang Research Exhibit 22: Key performance indicators Source: Ministry of Shipping, Nirmal Bang Research Vishakhapatnam (P) Average turnaround time (days) Average output per ship berth-day (tn) 1,484. 1,334. 1,74. 1,641. 1,92. 1,638. Capacity (%) Traffic (%) Utilisation (%) Source: Ministry of Shipping, Nirmal Bang Research 2 1 () (1) () (1.1) (.9) (12.4) (.9) (.9) 9 Cement Sector

10 FY4 FY FY6 FY7 FY8 FY9 FY1 Ennore port Ennore port, officially renamed Kamarajar port or KPL, is located on Coromandel coast, about 24 km north of Chennai port. The port operates on the landlord model in which KPL undertakes overall port planning, dredging, connectivity projects and renders marine services whereas cargo handling and terminals are developed primarily through the private-public partnership or PPP route under BOT (Build, Operate and Transfer) basis. The port has a 6-km-long rail link connecting coal and iron ore stack yards and North Chennai Thermal Power Station with Athipattu and Athipattu-Pudhunagar railway stations. Primary hinterland for the port is Tamil Nadu, Karnataka and Telangana. It can also provide a gateway for container volume (automobile) generation in Tamil Nadu. Total investment of Rs 3,2mn has been identified under Sagarmala project. Exhibit 23: Commodity-wise traffic handled at the port Exhibit 24: YoY total traffic growth rate at the port (%) % % % 9% 11% % (3.3) (.) (6.9) % (1) Source: Ministry of Shipping, Nirmal Bang Research Exhibit 2: Key performance indicators Source: Ministry of Shipping, Nirmal Bang Research Ennore (P) Average turnaround time (days) Average output per ship berth-day (tn) 21,66. 17, ,. 27, ,37. 3,4. Capacity (%) Traffic (%) Utilisation (%) Source: Ministry of Shipping, Nirmal Bang Research Chennai port Chennai port is ranked among the top 1 container ports in the world. The port has become a hub port for containers, cars and project cargo on the east coast of India. The port remains the primary reason for economic growth of Tamil Nadu, especially the manufacturing boom in South India, and has contributed greatly to the development of the city. Witnessing a phenomenal growth in container handling, in 29 it commenced operations of the second container terminal with a capacity to handle 1.mn TEUs (2 foot equivalent) to meet increased demand. The port is having railway lines running up to 41km, and eight sidings to handle a wide range of cargo like granite, food grains, dry bulk cargo, etc. For handling containers, separate sidings are available. Total investment of Rs.11,mn has been identified under Sagarmala project. 1 Cement Sector

11 FY4 FY4 FY FY FY6 FY6 FY7 FY7 FY8 FY8 FY9 FY9 FY1 FY1 Exhibit 26: Commodity-wise traffic handled at the port Exhibit 27: YoY total traffic growth rate at the port 18% 7% 24% % % % 1% () (1) () (9.4) (4.1) (4.3) 2.8 Source: Ministry of Shipping, Nirmal Bang Research Exhibit 28: Key performance indicators Source: Ministry of Shipping, Nirmal Bang Research Chennai (P) Average turnaround time (days) Average output per ship berth-day (tn) 11,428. 1,984. 1,32. 12,46. 14,268.,419. Capacity (%) Traffic (%) Utilisation (%) Source: Ministry of Shipping, Nirmal Bang Research Tuticorin port V.O.Chidambaranar port, formerly Tuticorin port, is one of the 12 major ports in India. Tuticorin port is strategically located close to east-west international sea route and has services to US, China, Europe, Sri Lanka and South East Asia. It witnessed flourishing trade and handled a variety of cargo after the construction of all-weather port and excellent facilities for storing bulk cargo with railway siding. Total investment of Rs 7,mn has been identified under Sagarmala project. However, overall investment by the port will be Rs.1,1,mn. Exhibit 29: Commodity-wise traffic handled at the port Exhibit 3: YoY total traffic growth rate at the port (%) 2% 33% % 34% 26% % % Source: Ministry of Shipping, Nirmal Bang Research () Source: Ministry of Shipping, Nirmal Bang Research Exhibit 31: Key performance indicators Tuticorin (P) Average turnaround time (days) Average output per ship berth-day (tn) 6,934. 7,3. 6,733. 7,42. 9,633. 1,147. Capacity (%) Traffic (%) Utilisation (%) Source: Ministry of Shipping, Nirmal Bang Research 11 Cement Sector

12 FY4 FY4 FY FY FY6 FY6 FY7 FY7 FY8 FY8 FY9 FY9 FY1 FY1 Cochin port Cochin port is a major port on the Arabian Sea- Indian Ocean sea route and is one of the largest ports in India. The port lies on two islands in the Lake of Kochi, Willingdon and Vallarpadam, towards the Fort Kochi river mouth opening on to the Arabian Sea. The International Transshipment Terminal (ICTT), part of Cochin port, is the largest container transshipment facility in India. An all-weather natural port, and located strategically close to the busiest international sea routes, Cochin port is promoting a major liquid terminal, bulk terminal and maritime industries in its port-based SEZs. Total investment of Rs 2,8mn has been identified under Sagarmala project. Exhibit 32: Commodity-wise traffic handled at the port Exhibit 33: YoY total traffic growth rate at the port (%) 8% % 1% % % 24% 6% (2) (4) (1.) 3.2 (2.) 2..2 (1.2) 3.4 Source: Ministry of Shipping, Nirmal Bang Research Exhibit 34: Key performance indicators Source: Ministry of Shipping, Nirmal Bang Research Cochin (P) Average turnaround time (days) Average output per ship berth-day (tn) 11,89. 11,72.,784.,878., ,77. Capacity (%) Traffic (%) Utilisation (%) Source: Ministry of Shipping, Nirmal Bang Research New Mangalore port New Mangalore port is deep-water, all-weather port at Panambur, Mangalore, in Karnataka. The port serves the hinterland of Karnataka and to some extent the state of Kerala. The major commodities exported through the port are iron ore concentrates and pellets, iron ore fines, manganese, granite stones, coffee, cashew and containerised cargo. The major imports at the port comprise crude oil and petroleum products, LPG, wood pulp, timber logs, finished fertilisers, liquid ammonia, phosphoric acid, other liquid chemicals, containerised cargo, etc. The port is strategically located as it has connectivity to Konkan Railway, South Western Railway and Southern Railway. Total investment of Rs.9,8mn has been identified under Sagarmala project. However, overall investment by the port will be Rs18,616mn. Exhibit 3: Commodity-wise traffic handled at the port Exhibit 36: YoY total traffic growth rate at the port (%) 2% % 4% 3% 22% 6% 63% () (1) () (7.) (3.2) (11.2) (1.3) Source: Ministry of Shipping, Nirmal Bang Research Source: Ministry of Shipping, Nirmal Bang Research 12 Cement Sector

13 FY4 FY FY6 FY7 FY8 FY9 FY1 Exhibit 37: Key performance indicators New Mangalore (P) Average turnaround time (days) Average output per ship berth-day (tn) 13, , ,97., , ,414. Capacity (%) Traffic (%) Utilisation (%) Source: Ministry of Shipping, Nirmal Bang Research Mormugao port Mormugao port is located in South Goa district of Indian state of Goa. With the emergence of mining as a major industry in Goa, a master plan was evolved by the Portuguese for development of Mormugao port as an iron ore terminal. However, since 212 iron ore throughput has diminished. The port has been gradually building up its cargo base and has registered high growth figures during the past three years. Total investment of Rs12,mn has been identified under Sagarmala project. Exhibit 38: Commodity-wise traffic handled at the port Exhibit 39: YoY total traffic growth rate at the port (%) % 2% 2% 4% 29% % Source: Ministry of Shipping, Nirmal Bang Research Exhibit 4: Key performance indicators Source: Ministry of Shipping, Nirmal Bang Research Mormugao (P) Average turnaround time (days) Average output per ship berth-day (tn),2. 4,49. 1,3. 11,484. 1,18. 11,332. Capacity (%) Traffic (%) Utilisation (%) Source: Ministry of Shipping, Nirmal Bang Research JNPT port 8% (1) (2) (3) (4) () (6) Jawaharlal Nehru Port Trust (JNPT) port is the largest container port in India, located east of Mumbai in Maharashtra. JNPT handles containers, liquid cargo including POL, vegetable oil and chemicals and cement in dry and break-bulk cargo. JNPT has Maharashtra as its primary hinterland for containers with NCR, Punjab, Rajasthan, Uttar Pradesh and Madhya Pradesh as secondary hinterland. Total investment of Rs23,4mn has been identified under Sagarmala project (22.) (4.7) (33.8) Cement Sector

14 FY4 FY4 FY FY FY6 FY6 FY7 FY7 FY8 FY8 FY9 FY9 FY1 FY1 Exhibit 41: Commodity-wise traffic handled at the port Exhibit 42: YoY total traffic growth rate at the port (%) % % % 6% % % (1.9) (3.3) 89% - Source: Ministry of Shipping, Nirmal Bang Research Exhibit 43: Key performance indicators Source: Ministry of Shipping, Nirmal Bang Research JNPT (P) Average turnaround time (days) Average output per ship berth-day (tn) 21,63. 2, , , ,14. 24,411. Capacity (%) Traffic (%) Utilisation (%) Source: Ministry of Shipping, Nirmal Bang Research Mumbai port Mumbai port is a port which lies mid-way on west coast of India, on the natural deep-water harbour of Mumbai, Maharashtra. The main navigational harbour channel is, for the great part, a natural deep-water fairway. The channel has been deepened to 11 metres. With a mean high water neap tide of 3.3 metres, the channel is adequate to meet the requirement of a large number of cargo vessels, passenger ships and deepdrafted tankers. With a good lighting arrangement, navigation is allowed at the port round the clock. Mumbai is the fourth-largest port in India in terms of volume handling of more than 6mtpa of cargo, with POL constituting the bulk of it. Total investment of Rs3,mn has been identified under Sagarmala project. Exhibit 44: Commodity-wise traffic handled at the port Exhibit 4: YoY total traffic growth rate at the port (%) 1% FRM % $ 1% 32% 7% % 9% Source: Ministry of Shipping, Nirmal Bang Research Exhibit 46: Key performance indicators Source: Ministry of Shipping, Nirmal Bang Research Mumbai (P) Average turnaround time (days) Average output per ship berth-day (tn) 6,122. 6,42. 6,476. 8,79. 7,7. 7,619. Capacity (%) Traffic (%) Utilisation (%) Source: Ministry of Shipping, Nirmal Bang Research () (1) () (9.1) Cement Sector

15 FY4 FY FY6 FY7 FY8 FY9 FY1 Kandla port Kandla port is a seaport in Kutch district of Gujarat in western India, near the city of Gandhidham. The port is closest to northern states, which is a large hinterland for both containers and POL. It acts as a gateway to import crude oil to feed the refineries in north Gujarat and north India. The port has largest liquid storage capacity and is strategically located with close proximity to the Middle East and Europe. Total investment of Rs 36,mn has been identified under Sagarmala project. Exhibit 47: Commodity-wise traffic handled at the port Exhibit 48: YoY total traffic growth rate at the port % % 2% 11% 21% 6% 2 1 () (1) (7.1) 6.3 1% Source: Ministry of Shipping, Nirmal Bang Research Source: Ministry of Shipping, Nirmal Bang Research Exhibit 49: Key performance indicators Kandla (P) Average turnaround time (days) Average output per ship berth-day (tn) 13,49. 14, ,272.,728., ,47. Capacity (%) Traffic (%) Utilisation (%) Source: Ministry of Shipping, Nirmal Bang Research Cement Sector

16 Disclaimer Stock Ratings Absolute Returns BUY > % ACCUMULATE -% to% SELL < -% This report is published by Nirmal Bang s Research desk. Nirmal Bang group has other business units with independent research teams separated by Chinese walls, and therefore may, at times, have different or contrary views on stocks and markets. Reports based on technical and derivative analysis may not match with reports based on a company's fundamental analysis. This report is for the personal information of the authorised recipient and is not for public distribution. This should not be reproduced or redistributed to any other person or in any form. This report is for the general information for the clients of Nirmal Bang Equities Pvt. Ltd., a division of Nirmal Bang, and should not be construed as an offer or solicitation of an offer to buy/sell any securities. We have exercised due diligence in checking the correctness and authenticity of the information contained herein, so far as it relates to current and historical information, but do not guarantee its accuracy or completeness. The opinions expressed are our current opinions as of the date appearing in the material and may be subject to change from time to time without notice. Nirmal Bang or any persons connected with it do not accept any liability arising from the use of this document or the information contained therein. The recipients of this material should rely on their own judgment and take their own professional advice before acting on this information. Nirmal Bang or any of its connected persons including its directors or subsidiaries or associates or employees or agents shall not be in any way responsible for any loss or damage that may arise to any person/s from any inadvertent error in the information contained, views and opinions expressed in this publication. Nirmal Bang Equities Private Limited (hereinafter referred to as NBEPL ) is a registered Member of National Stock Exchange of India Limited, Bombay Stock Exchange Limited. NBEPL has registered with SEBI as a Research Entity in terms of SEBI (Research Analyst) Regulations, 214. (Registration No: INH to ). NBEPL or its associates including its relatives/analyst do not hold any financial interest/beneficial ownership of more than 1% in the company covered by Analyst. NBEPL or its associates/analyst has not received any compensation from the company covered by Analyst during the past twelve months. NBEPL /analyst has not served as an officer, director or employee of company covered by Analyst and has not been engaged in market-making activity of the company covered by Analyst. The views expressed are based solely on information available publicly and believed to be true. Investors are advised to independently evaluate the market conditions/risks involved before making any investment decision. Access all our reports on Bloomberg, Thomson Reuters and Factset. Team Details: Name Id Direct Line Rahul Arora CEO rahul.arora@nirmalbang.com - Girish Pai Head of Research girish.pai@nirmalbang.com / 18 Dealing Ravi Jagtiani Dealing Desk ravi.jagtiani@nirmalbang.com , Pradeep Kasat Dealing Desk pradeep.kasat@nirmalbang.com /811, Michael Pillai Dealing Desk michael.pillai@nirmalbang.com /813, Umesh Bharadia Dealing Desk umesh.bharadia@nirmalbang.com Nirmal Bang Equities Pvt. Ltd. Correspondence Address B-2, 31/32, Marathon Innova, Nr. Peninsula Corporate Park, Lower Parel (W), Mumbai-413. Board No. : /1; Fax. : Cement Sector