(As of 9 June 2017) 1
Executive Summary 3 Advantage India...5 Market Overview & Trends.7 Porter Five Forces Model Analysis 18 Strategies Adopted...20 Growth Drivers...22 Opportunities..39 Success Stories....41 Useful Information..47 2
EXECUTIVE SUMMARY (1/2) Increasing trade activities & private participation in port infrastructure set to support port infrastructure activity 1806.8 CAGR: 17.5% 2493.0 By FY17, cargo capacity in India is expected to increase to 2,493.1 MMT from 1,806.8 MMT in FY15 FY15 MMT FY17 India has 12 major ports 606.37 CAGR: 55.53% 943.1 By FY17, cargo traffic at major ports in India is expected to rise to 943.1 MMT from 606.37 MMT in FY16 at a YoY of 55.53 per cent FY16 MMT FY17E India s 200 non-major ports are strategically located on the world s shipping routes 466.1 CAGR: 75% 815.2 By FY17, cargo traffic at nonmajor ports in India is expected to grow to 815.2 MMT from 466.1 MMT in FY16 FY16 FY17E Source: Ministry of Shipping, TechSci Research Notes: E Estimates, MMT - Million Metric Tonnes 3
EXECUTIVE SUMMARY (2/2) 21 Trade to boost demand for containers 8.20 FY16 CAGR: 156% FY17E By FY17, container demand in India (For major ports) is expected to increase to 21 million TEU from 8.2 million TEU in FY16 Infrastructural development to increase demand for iron & steel CAGR: 128.7% 43.6 228 By FY17, iron ore traffic (For Major & Minor ports) is expected to rise to 228 MMT from 43.6 MMT in FY15 FY15 MMT FY17(E) Source: Ministry of Shipping, TechSci Research Notes: FY17 (E) Estimates, TEU Twenty Foot Equivalent Unit, MMT - Million Metric Tonnes 4
ADVANTAGE INDIA
ADVANTAGE INDIA FY16 Cargo traffic in MMT: 1072.47 Robust demand Growing demand Port traffic in India is set to rise at a CAGR of 29.2 per cent over FY15 17 CAGR in traffic : Non-major ports: expected to increase by 140.5 per cent to 815 MMT by 2017 from March 2016 Major ports: expected to increase by 55.5 per cent to reach 943 MMT by 2017 from FY16 (April-December 2015) Attractive opportunities Non-major ports are set to benefit from strong growth in India s external trade Special Economic Zones are being developed in close proximity to several ports comprising coal-based power plants, steel plants & oil refineries FY17E Cargo traffic in MMT: 1,758.3 Competitive advantages India has a coastline which is more than 7,517 km long, interspersed with more than 200 ports Most cargo ships that sail between East Asia & America, Europe & Africa pass through Indian territorial waters India is the largest importer of thermal coal in the world Advantage India Policy support The government initiated NMDP, an initiative to develop the maritime sector; the planned outlay is USD11.8 billion FDI of 100 per cent under the automatic route & a 10n year tax holiday for enterprises engaged in ports Plans to create port capacity of around 3200 MMT to handle the expected traffic of about 2500 MMT by 2020 Source: Report of the Task force on Financing Plan for Ports, Govt. of India, TechSci Research Notes: FY Indian Financial Year (April March), NMDP National Maritime Development Programme, FDI Foreign Direct Investment, USD US Dollar, E Estimated, MMT Million Metric Tonnes, CAGR Compound Annual Growth Rate 6
MARKET OVERVIEW AND TRENDS
THERE ARE TWO BASIC CATEGORIES OF PORTS IN INDIA Ports in India (2016) Major Non-major (minor) There are 12 major ports in the country; 6 on the Eastern coast & 6 on the Western coast Major ports are under the jurisdiction of the Government of India & are governed by the Major Port Trusts Act 1963, except Ennore port, which is administered under the Companies Act 1956 India has about 200 non-major ports of which one-third are operational Non-major ports come under the jurisdiction of the respective state Governments Maritime Boards (GMB) Source: Ministry of Shipping; TechSci Research 8
MAJOR PORTS IN INDIA Kandla Kolkata Mumbai JNPT Paradip Visakhapatnam Mormugao New Mangalore Ennore Chennai Cochin Tuticorin Note: JNPT Jawaharlal Nehru Port Trust 9
CARGO TRAFFIC IS ON THE RISE (1/2) Cargo traffic at major ports in India Cargo traffic at major ports (MMT) 943.1 Stood at 606.37 MMT in FY16 CAGR: 7.4% Increased at a CAGR of 7.4 per cent during FY07 17E Cargo traffic in 2017 at major ports is expected to reach 943.1 MMT 463.6 519.2 530.4 561 569.8 560.1 545.6 555.3 581.3 606.37 During April to September 2016, 12 major ports in India handled 315.4 MT (Million Tonnes) of cargo, showing a growth of 5.1 per cent in comparison to the same time during previous year. As of February 2017, 12 major ports in India witnessed increase in cargo traffic by up to 7.14 per cent, with handling 535.35 million tonne of cargo in the 1 st 10 months of FY17. As of March 2017, 16 new cargo scanners are to be installed across major ports in India. In the 1 st phase, 5 of the 13 major ports i.e. Kamarajar (Ennore), New Mangalore, JNPT, Kolkata & Vizag will receive the scanners, which should be operational in the next 6 months. FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17E Source: Ministry of Shipping, TechSci Research Notes: MMT Million Metric Tonnes, CAGR Compound Annual Growth Rate, FY Indian Financial Year (April March), E Estimated 10
71.4% 71.8% 71.3% 66.0% 64.4% 61.3% 58.4% 57.1% 55.2% 56.5% 53.6% 28.6% 28.2% 28.7% 34.0% 35.6% 38.7% 41.6% 42.9% 44.8% 43.5% 46.4% PORTS CARGO TRAFFIC IS ON THE RISE (2/2) Non-major ports are evolving faster than major ports- Percentage share of ports Non-major ports are gaining shares & a major chunk of traffic has shifted from major ports to non-major ports The contribution of non-major port s traffic to total traffic rose to 43.5 per cent in FY16 from 28.6 per cent in FY07 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17E Major Ports Non Major Ports Cargo traffic at non-major ports Cargo traffic at non-major ports (MMT) Stood at 466.1 MMT in FY16 Cargo traffic has expanded at a CAGR of 10.7 per cent during FY07 16 & is expected to grow annually at 15.9 per cent during FY07-17 CAGR: 15.9% 186.1 203.6 213.2 288.9 314.9 353.0 387.9 417.1 471.2 466.1 815.2 Cargo traffic in 2017 at non-major ports is expected to reach 815.2 MMT FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17E Source: Ministry of Shipping, TechSci Research Notes: MMT Million Metric Tonnes, CAGR Compound Annual Growth Rate, FY Indian Financial Year (April March); E Estimate 11
CARGO PROFILE AT MAJOR PORTS IN INDIA (1/2) Cargo at major ports in FY16 Cargo at major ports in FY17 1 Solid Share: 46.4% Liquid (petroleum, oil and lubricants) Share: 33.3% Container Share: 20.3% Solid Share: 47.97% Liquid (petroleum, oil and lubricants) Share: 32.89% Container Share: 19.15% Iron ore Share: 2.1% Iron ore Share: 14.06% Coal Share: 22.7% Coal Share: 46.09% Fertilizer Share: 2.6% Fertilizer Share: 5.03% Other cargo Share: 18.9% Other cargo Share: 34.82% Source: Ministry of Shipping; TechSci Research Note: Other cargo includes Fertiliser Raw Material (dry) and food-grains 1 Data from April 2017-December 2017 12
235.9 258.2 261.2 284.7 276.6 260.9 239.9 253.5 273 287.4 230.8 154.3 168.7 176.1 175.1 179.1 179.1 185.9 187.2 158.2 188.9 73.2 195.9 92.3 93.1 101.2 114.1 120.1 119.8 92.13 114.6 119.4 123.18 PORTS CARGO PROFILE AT MAJOR PORTS IN INDIA (2/2) Between FY07 FY17, cargo traffic grew at CAGR 0.38 per cent Cargo traffic at major ports (MMT) Over FY07 16, CAGR in the volume of different segments was as follows Solid cargo was 2 per cent Liquid cargo was 3.1 per cent Container cargo was 6 per cent Cargo traffic during FY17 (Till December 2016) for solid, liquid & container cargo was 230.8, 158.2 & 92.13 MMT, respectively During April-December 2016, cargo traffic at 12 major ports in the country was reported at 481.20 MT, showing a growth of 7.54 per cent over the same period during the previous year FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 Solid Liquid Container Source: Ministry of Shipping; Indian Ports Association (IPA), TechSci Research 1 Data from April December 2016 Note: Other cargo in Solid includes fertiliser raw material (dry) and food-grains 1 13
504.8 532.1 574.8 616.7 670.1 689.8 744.9 800.52 871.52 965.36 PORTS INCREASE IN CAPACITY OVER THE YEARS Capacity at major ports grew to 965.36 MMT in FY16, implying a CAGR of 7.5 per cent since FY07 Utilisation rates of major ports in India such as JNPT port, Kandla port, Ennore port, etc., are much above the world s average As of November 2016, 12 Major Ports were identified under Sagarmala project, for cargo handling till 2035. The objective of this project is to promote port led development & to provide infrastructure to quickly transport goods to & from ports, with higher efficiency & at lower cost. Indian Port Rail Corporation Ltd. (IPRCL), plans to conduct rail infrastructure expansion & modernisation work for JNPT, Kandla Port & Haldia Dock Complex in April 2017. Similar works have already started for Kolkata, Vishakhapatnam, Tuticorin, Mangalore & Chennai ports. Germany s Deutsche Bahn Engineering & Consulting plans to form a JV with Indian Port Rail Corp. Ltd (IPRCL) with an aim to connect Indian ports with railways. Germany and India are working on projects worth US$14.87 billion being implemented by IPRCL In May 2017, the government of India laid the foundation stone for various projects of the Kandla port. The construction of the Chabahar port will further encourage the growth of the Kandla port. The port has been renamed as Deendayal Port Trust Kandla. 1200 1000 800 600 400 200 0 Capacity and utilisation at major ports (MMT) FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 Capacity Utilization (RHS) Source: Indian Port Association, Ministry of Shipping, TechSci Research Note: MMT Million Metric Tonnes 120.00% 100.00% 80.00% 60.00% 40.00% 20.00% 0.00% 14
DROP IN TURNAROUND TIME IN FY13 Average turnaround time is influenced by factors such as type of cargo, parcel size & entrance channel The average turnaround time improved to 2.11 days in FY17 1 from 4.01 days in FY15 3.8 Average turnaround time for major ports (in days) 5.29 4.63 4.56 4.2 4.29 4 3.84 4.01 2.04 2.11 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 1 Source: Ministry of Shipping;, Indian Port Association TechSci Research Note: Turnaround time Total time spent by a ship from entry into port until departure 1 Data from April-December 2016 15
NOTABLE TRENDS IN THE PORTS SECTOR (1/2) Increasing private participation Strong growth potential, favourable investment climate & sops provided by state governments have encouraged domestic & foreign private players to enter the Indian ports sector. In addition to the development of ports & terminals The private sector has extensively participated in port logistics services Setting up of port-based SEZs SEZs are being developed in close proximity to several ports, thereby providing strategic advantage to industries within these zones. Development of SEZs in Mundra, Krishnapatnam, Rewas & few others is underway Government has announced plans to develop 14 CEZs (coastal economic zones) in a phased manner for port-led development in all the 9 maritime states by advancing efforts to develop 1 new port, each on the east & the west coast` Focus on draft depth All the greenfield ports are being developed at shores with natural deep drafts & the existing ports are investing on improving their draft depth. Higher draft depth is required to accommodate large sized vessels. Due to the cost & time advantage associated with the large sized vehicles, much of the traffic is shifting to large vessels from smaller ones, especially in coal transportation Ports to operate on Green energy Government of India is targeting to make the country the first in the world to operate all 12 major domestic government ports on renewable energy. The government plans to install almost 200 MW wind & solar power generation capacity by 2019 at the ports. The energy capacity could be ramped up to 500 MW in future years. Source: Ministry of Shipping, TechSci Research Notes: SEZ Special Economic Zone, PPP Public-Private Partnership 16
NOTABLE TRENDS IN THE PORTS SECTOR (2/2) Specialist terminalbased ports Terminalisation: Focus on terminals that deal with a particular type of cargo This is useful for handling specific cargo such as LNG that requires specific equipment & hence high capital costs. Examples of specialist terminals: ICTT in Cochin, LNG terminal in Dahej Port Landlord port model To promote private investments, the government has reformed the organisational model of seaports From: A service port model where the port authority offers all the services To: A landlord port model where the port authority acts as a regulator & landlord while port operations are carried out by private companies Major ports following landlord port model: JNPT, Chennai, Visakhapatnam & Tuticorin Rising traffic at non major ports With the increasing private participation in establishing minor ports. Cargo traffic handled by the minor ports are outpacing cargo traffic at major ports, cargo traffic at non major port has expanded at a CAGR of 31.5 per cent during FY07 15. The cargo traffic at major ports was 481.20 MMT in FY17 1 Sanitation The Haldia Port of West Bengal was rated as the cleanest port among all the major ports in the 1 st ever ranking by the Ministry of Shipping. The ranking of major 13 Indian ports was conducted by the Quality Council of India (QCI) during the 'Swachhta Pakhwada. Source: TechSci Research Notes: ICTT International Container Transshipment Terminal, LNG Liquefied Natural Gas, MMT Million Metric Tonnes 1 Data from April-December 2016 17
PORTER FIVE FORCES ANALYSIS
PORTER S FIVE FORCES ANALYSIS Competitive Rivalry Increasing trade activities brought by rising imports of commodities like coal and crude to generate higher business & limit overall competition as most ports handle specific geographies There have been instances of private managed ports attracting the share of other ports (usually handled by government agencies) as in the case of JNPT & Mumbai Port Trust. However, demand expected to remain strong Threat of New Entrants (Medium) Threat of New Entrants 100 per cent FDI under automatic route & income tax exemption (10 years) is attracting foreign players. However, higher capital expenditure acts as a barrier Substitute Products With rising demand for port infrastructure due to growing imports (crude, coal) & containerisation, the threat of substitute products to remain weak Bargaining Power of Customers (Medium) Competitive Rivalry (Medium) Substitute Products (Low) Bargaining Power of Suppliers Considerable capacities to be added going forward. However, demand to continue to remain strong Bargaining Power of Customers Imports to continue to remain strong led by strong demand. However considerable port capacities to be added going forward Bargaining Power of Suppliers (Medium) Source: PricewaterhouseCoopers, Techopak, TechSci Research 19
STRATEGIES ADOPTED
STRATEGIES ADOPTED Pan-India presence Geographic diversification After having a strong advantage on India s West coast, Adani Ports & Special Economic Zone Ltd (APSEZ) is looking to strengthen its position by winning the bid of a new container terminal at Ennore port located on the east coast. Furthermore Adani Ports has acquired Dharma Port to replicate its development & growth on the eastern coast Essar Ports Ltd as a part of it strategic move to increase its potential on the east coast has won the contract for the modernisation of 3 ports at Visakhapatnam Essar Ports Ltd., a leading port operator, plans to build a port in Gujarat with investments worth US$1.49 billion. For the same, the company has signed a MoU with Gujarat Maritime Board (GMB) Geographic diversification as in the case of Adani group acquiring coal mines (Australia & Indonesia) & setting up coal terminal in Australia to take the benefit of increasing coal imports in India As of April 2017, Adani Ports is planning to expand & open a multi purpose port on Carey Island in Malaysia, as an extension of the Port Klang. A MoU was signed between APSEZ & MMC Port Holdings Sdn Bhd, a wholly-owned unit of MMC Corporation Berhad Allied activities Adani group, largest private port operator in India, is now venturing into providing allied services like dredging. Its dredgers which were being used only at its own ports in the past have now started taking work from other ports Container train operations Adani group has also ventured into the container railway business becoming the largest private link in the country. It conducts operations on a pan-india basis operating 6 container rakes Modernising Port authorities are modernizing & upgrading port facilities to meet the needs of the port users in competitive environment Source: Company website, TechSci Research 21
GROWTH DRIVERS
SECTOR BENEFITS FROM STRONG DEMAND, PRIVATE PARTICIPATION Growing Growing demand demand Policy support Innovation Increasing investments Increasing trade activities resulting in container traffic National Maritime Development Programme & National Maritime Agenda Expanding port development & distribution facilities in India Increasing investments in building ports & related activities Inviting Driving Resulting Rising demand for coal & other commodities FDI of up to 100 per cent under the automatic route Use of modern technology Private equity supporting private port developers Growing crude imports by the country Various sops & incentives for private players to build ports Providing support to global projects from India Increasing investments by foreign players Source: Ministry of Shipping, TechSci Research Note: NMDP - National Maritime Development Programme 23
INDIA S PORTS ARE BENEFITTING FROM STRONG GROWTH IN EXTERNAL TRADE (1/2) India s total external trade have grown to US$ 660.59 billion in FY17, implying a CAGR of 3.83 per cent done since FY09 India s external trade flows (USD billion) CAGR: 3.83% Ports handle almost 95 per cent of trade volumes; thus rising trade has contributed significantly to cargo traffic 304 288 185 179 250 370 489 491 450 448 306 300 314 310 381 384.31 262 276.28 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 Exports Imports Source: Directorate General of Foreign Trade, TechSci Research 24
INDIA S PORTS ARE BENEFITTING FROM STRONG GROWTH IN EXTERNAL TRADE (2/2) Increasing trade is translating into higher demand for containerisation due to their efficiency Container traffic at major ports (MMT) During FY07 17, container traffic rose to 123.2 MMT, implying a CAGR of 5.9 per cent During FY17 1, container traffic stood at 92.13 MMT 92.3 93.1 101.2 CAGR: 2.30% 114.1 120.1 119.8 114.6 119.4 123.2 92.13 73.4 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 Source: Indian Ports Association, TechSci Research Note: MMT Million Metric Tonnes FY17 1 : Data available for April - December 2016 1 25
111.5 121.67 132.78 159.26 163.6 143.81 171.73 184.8 189.24 189.44 202.85 PORTS PORTS TO BENEFIT FROM GROWING CRUDE IMPORTS (1/2) A consequence of strong GDP growth has been rising energy demand; the country currently meets about 75 per cent of total crude oil demand by imports Crude imports (MMT) India s crude imports touched 202.85 MMT in FY16, implying a CAGR of 6.9 per cent over FY07 16. The crude imports From April November 2016 stood at 14.81 MMT. FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 Source: Handbook of Indian Statistics (RBI), Petroleum Planning and Analysis Cell, TechSci Research Notes: MMT Million Metric Tonnes, FY17 1 Data available for April November 2016 1 26
154.3 168.7 176.1 175.1 179.1 179.1 185.9 187.2 181 195.94 158.25 81.2 91 97.8 137.7 145.4 156.3 168.6 169.8 167.3 180.9 191.5 PORTS PORTS TO BENEFIT FROM GROWING CRUDE IMPORTS (2/2) Private ports have been especially good at attracting crude import traffic POL have been the major contributors to total traffic at ports & contributed 33.3 per cent in FY16 POL traffic (MMT) CAGR: 5% POL traffic at both major & non-major ports added up to 376.84 MMT in FY16, implying a CAGR of 5 per cent over FY07 15 POL traffic in FY17 reached 349.75 MMT FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 1 Major Ports Minor Ports Source: Ministry of Shipping, TechSci Research Notes: POL Petroleum, Oil, and Lubricants, MMT Million Metric Tonnes 1 Figures from April December 2016 27
INCREASING COAL IMPORTS SET TO DRIVE RISING CARGO TRAFFIC (1/2) India is the largest importer of thermal coal in the world and this is expected to grow due to increased demand for power as coal-based power stations were the biggest contributors. Coal supply gap (import requirement) (MMT) CAGR: 19.60% A major chunk of this import is transported by sea With growing demand for power, coal imports are expected to reach to be 160.16 MMT in FY17 132.2 160.9 192.5 168.5 212.1 156.38 160.16 60 83.5 1 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17E Source: Ministry of Coal, TechSci Research Notes: The figures from FY9 14 in the above graph are as per the data provided by Coal Ministry Annual Reports, and the figure for FY17 is taken from the erstwhile Planning Commission Report data sourced from Coal Ministry Annual Report, Notes:: GW Gigawatt, MMT Million Metric Tonnes 28
59.9 64.9 70.4 71.7 72.7 78.8 86.6 104.7 118.7 125.9 106.3 PORTS INCREASING COAL IMPORTS SET TO DRIVE RISING CARGO TRAFFIC (2/2) Increasing coal imports are set to drive coal cargo traffic upwards at both major and non-major ports Coal cargo traffic (MMT) With private ports boosting their coal handling capacities, non-major ports look set to handle majority of coal imports in the future Coal cargo traffic has grown at a CAGR of 13.90 per cent over FY07 17 1 to reach 271.7 MMT. Total coal handled by India s 12 major ports jumped to 106.3 million tonnes in FY17 1 from 125.9 million tonnes in FY16 Coal cargo traffic by minor ports crossed the total traffic of major ports by 2013. In FY17 1, the coal traffic by minor ports reached 165.4 MMT 14 15.4 21.5 41.3 CAGR: 13.90% 58.5 79 109.3 126.3 158.7 144.2 165.4 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 Major Ports Minor Ports Source: Ministry of Shipping; TechSci Research Note: MMT Million Metric Tonnes 1 Data for April December 2016 1 29
NATIONAL MARITIME AGENDA 2010 2020 (1/2) Focus on increasing capacity Increasing investments To create a port capacity of around 3,200 MT to handle the expected traffic of about 2,500 MT by 2020 Proposed investments in major ports by 2020 are expected to total USD18.6 billion, while those in non-major ports would be USD28.5 billion World-class infrastructure Landlord ports Strategically building ports Bringing ports under regulator To implement full mechanisation of cargo handling & movement at ports, thereby bringing Indian ports on par with the best international ports in terms of performance & capacity Major ports have been working towards implementing Landlord port concept duly limiting their role to maintenance of channels & basic infrastructure leaving the development, operation, management, of terminal & cargo handling facilities to the private sector To develop 2 major ports (1 each on East & West coast) to promote trade as well as 2 hub ports (1 each on the West coast & the East coast) Mumbai (JNPT), Kochi, Chennai & Visakhapatnam India & Tajikistan to work closely on developing trade & transport links through the Chabahar Port In April 2017, Indian government has approved MoU on passenger cruise services on the coast & protocol routes between India & Bangladesh to commence regular movement of tourists & passengers in vessels between the 2 countries. In May 2017, Commerce and Transport Minister of Odisha announced construction of two new ports in the state, one at Astarang in Puri district, and another at Subarnarekha in Balasore district. There are 14 potential sites identified for developing these minor ports. To establish a port regulator for all ports in order to set, monitor & regulate service levels, technical & performance standards Source: Ministry of Shipping, TechSci Research 30
NATIONAL MARITIME AGENDA 2010 2020 (2/2) National Maritime Agenda 2010 20 is aimed at all-round development of the Indian maritime sector As per the National Maritime Agenda, the government is likely to create port capacity of 3200 MT for handling about 2500 MT of cargo, by 2020 Agenda involves investments in new projects at major ports of around USD18.6 billion, of which USD12.4 billion is expected to come from private sector players & the remaining from budgetary allocation The total traffic on the Indian ports is expected to grow from about 2229 in 2018 & reach to 3033 MT by the end of 2020 The government, through this policy, aims to increase the tonnage under the Indian flag & Indian control as well as the share of Indian ships in EXIM trade The government is also working to float a specialised Maritime Finance Corporation with the equity of ports & financial institutions to fund the Port projects To boost the state s future maritime development, the Gujarat Maritime Board & the Port of Rotterdam inked a strategic tieup to seek expertise from the latter in a slew of projects including planning for new ports & churning out skilled professionals in shipping & transport sectors. Source: Ministry of Shipping, TechSci Research Note: EXIM - Export-Import, MT Million Tonne 31
12 TH FIVE-YEAR PLAN The 12 th Five-Year Plan (2012 17) is focused on the development of major & non-major ports through public & private investments The proposed outlay for port sector in the plan, excluding private investment, is USD4.9 billion The overall projected traffic of 1,758.3 million tonnes to be achieved by FY17, the total capacity of the port sector is envisaged to be 2,289.04 million tonnes by the end of 2017 The government anticipates private sector investment of around USD28.8 billion during the 12 th Plan Period. As of March 2017, government is planning to sell 51 per cent of its 73.47 per cent stake in Dredging Corporation. Planned capacity 12 th Five-Year Plan (MMT) Projected traffic12 th Five-Year Plan (MMT) 1,229.2 1,059.8 943.1 815.2 689.9 544.7 560.1 370.0 Major Ports Non- Major Ports Major Ports Non- Major Ports FY12 FY17E FY12 FY17E Source: E:Estimated 32
FAVOURABLE POLICIES ASSISTING THE PRIVATE SECTOR De-licensing and tax holidays Price flexibility Model Concession Agreement (MCA) Major Port Authorities Act, 2016 Favourable system The government has allowed FDI of up to 100 per cent under the automatic route for projects related to the construction and maintenance of ports & harbours A 10-year tax holiday to enterprises engaged in the business of developing, maintaining, & operating ports, inland waterways & inland ports Private ports enjoy price flexibility, as the government allows non-major ports to determine their own tariffs in consultation with the State Maritime Boards; at major ports, tariffs are regulated by the Tariff Authority for Major Ports (TAMP) An MCA has been finalised to bring transparency & uniformity to contractual agreements that major ports would enter into with selected bidders for projects under the Build, Operate & Transfer (BOT) model As on September 2016, the Ministry of Shipping proposed a new model concession agreement (MCA) to attract more private sector investments in the development of port infrastructure across the country. Primary focus of the scheme is to allow future public-private partnership operators to fix tariffs. With the implementation of this policy, port authorities will get the power to lease land for port-related use for up to 40 years & for non-port related use up to 20 years The system for security clearance for ports being streamline & made faster Expansion of existing framework to attract participation from the private sector for development of infrastructure facilities such as dredging, road infrastructure, creation of SEZ & development of integrated parking zones in the port area Source: Ministry of Shipping; TechSci Research; Note: FDI Foreign Direct Investment 33
STRONG PRIVATE SECTOR PARTICIPATION IN PORTS PROJECTS (1/3) Private investment Greenfield projects Private terminals 39 Public Private Partnership (PPP) projects are operational at a cost of around USD2219.4 Million & capacity of 240.72 Million Tonnes Per Annum (MTPA). 32 PPP projects at an estimated cost of around USD3917.6 Million & capacity 264.77 Million Tonnes Per Annum (MTPA) awarded & are under implementation. As of September 2016, the National Green Tribunal has given nod for construction of multi-crore Vizhinjam International Seaport Ltd (VISL). The port is being developed by Adani Group in collaboration with Kerala Government. 2 mega port projects in Colachel in Tamil Nadu & Dahanu in Maharashtra with an initial investment of USD2.3 billion has been introduced & are being awaited for approval under PPP model in FY16. As of October 2016, Central Government is planning to setup logistic hubs near seaports with the help of private sector players, to augment exports from the country. In January 2017, a new container service, operated by K Line, commenced operations between CITPL (Chennai International Container Terminals Pvt. Ltd) at Chennai port & the Far East. In May 2017, DP World has agreed to develop Indian port projects & plans to sign an MoU with the National Investment & Infrastructure Fund (NIIF), the Indian wealth fund. The projects worth US$ 1.3 billion include the development of Sagarmala & Bharatmala projects. Source: Ministry of Shipping; TechSci Research; Notes: PPP PublicPrivate Partnership 34
STRONG PRIVATE SECTOR PARTICIPATION IN PORTS PROJECTS (2/3) Terminals in major ports with private sector involvement Port agency Estimated cost (USD million) Container terminal, Ennore Ennore 293.1 LNG terminal, Cochin Cochin Port Trust 729.1 Container terminal, NSICT JNPT 156.3 Oil jetty related facilities (Vadinar) Third container terminal (Mumbai) Crude oil handling facility (Cochin) ICTT at Vallarpadam (Cochin) Construction of SPM captive berth (Paradip) Development of second container terminal (Chennai) Kandla Port Trust 156.3 JNPT 187.5 Cochin Port Trust 146.5 Cochin Port Trust 262.9 Paradip Port Trust 104.2 Chennai Port Trust 103.1 Key private sector companies Maersk P&O Ports Dubai Ports International PSA Singapore Adani Maersk Navyuga Engineering Company Ltd DVS Raju group JSW Marg Ports they developed JNPT (Mumbai) JNPT, (Mumbai & Chennai) (Cochin and Vishakhapatnam) Tuticorin Mundra Pipavav Krishnapatnam Gangavaram Jaigarh Karaikal As on 2015 Source: Indian Ports Association, TechSci Research Notes: NSICT Nhava Sheva International Container Terminal, Mumbai, ICTT International Container Transshipment Terminal, SPM Single Point Mooring 35
STRONG PRIVATE SECTOR PARTICIPATION IN PORTS PROJECTS (3/3) Terminals in major ports with private sector involvement (FY15) Port agency Capacity (Million tonnes) Estimated cost (USD million) Development & Operation of International Container Transshipment Terminal (ICTT) at Vallar-padam Cochin Port 12.5 to 40 MMT in Phases 353 Setting up of LNG Port & ReGasification Terminal at Puthuvypeen by Cochin. / Cochin Port Trust Multi-User Liquid Terminal (MULT) at Puthuvypeen SEZ (International Bunkering Terminal at Cochin) Conversion of berth No. 8 as container terminal on Development of North Cargo Berth II on DBFOT basis. Enhancement of Cargo Handling capacity by installing rapid in motion wagon loading facility by SWPL Cochin Port 5 MMPTA 691.1 Cochin Port 4.10 MMTPA 38.4 Tuticorin 7.2 MTPA 52.03 Tuticorin 7.0 MTPA 55.36 Mormugao Port Trust 2.50 MTPA 7.5 Development of Container Terminal on DBFOT basis Development of Multi Cargo Terminal on DBFOT basis Kamarajar Port Ltd Kamarajar Port Ltd 16.8MT 210.68 2.00 25.05 As on FY15 Source: Indian Ports Association, TechSci Research Notes: NSICT Nhava Sheva International Container Terminal, Mumbai, ICTT International Container Transshipment Terminal, SPM Single Point Mooring 36
Projects Completed and Awarded During FY15 & FY16 A PPP project worth USD220 million for redevelopment of berths 8, 9 & barge berths at the Port of Mormugao, Goa has been awarded in September 2016 Kamarajar Port Marine Liquid Terminal-II PPP project & Chidambaranar Port PPP Project (shallow draught berth) for handling general cargo, was introduced in 2016 Increase in capacity due to productivity of CBI & CBII (1.00 MTPA) Metric tonnes per annum Development of WQ6 berth for 225m length & 22.5m width for handling dry bulk cargo on DBOFT basis (6.00) at VPT (Visakhapatnam Port Trust). Development of EQ-10 berth in inner harbor for handling liquid cargoes & chemicals on DBOFT basis (1.84 MTPA) at VPT. Increase in capacity at CICTPL coal berth due to productivity (1.00 MTPA) at KPL (Kamarajar Port Ltd.) Increase in capacity at ETTPL berth due to productivity (1.00 MTPA) at KPL. Increase in capacity at General Cargo berth (2.00 MTPA) at KPL. Installation of floating cranes for handling the cargo vessels (2.49 MTPA) at VoCPT (V.O.Chidambaranar Port Trust) Construction of Mooring Dolphins at Liquid Cargo Jetty (1.00 MTPA) at JNPT (Jawaharlal Nehru Port Trust)) Increase in capacity due to deepening & widening of channel (10.20 MTPA) at JNPT. In February 2017, at an estimated cost of US$1.37 million, construction of fishing harbor at Tirmulliavasal was completed on schedule, under the Rural Infrastructure Development Fund (RIDF). Source: Indian Ports Association, TechSci Research PPP: Public Private Partnership; MTPS: Million Tonnes per Annum; JNPT: Jawaharlal Nehru Port Trust 37
PRIVATE EQUITY INTEREST IN INDIAN PORTS/SHIPPING REMAINS HEALTHY PE Deals since 2014 Target Acquirer Value (USD million) Year Saurashtra Freight Fairfax India Holdings Corporation 30.0 2017 LCL Logistix CMA CGM Group - 2015 Kattupalli port Adani Ports and Special Economic Zone Ltd - 2015 The Dhamra Port Co Ltd Adani Ports and Special Economic Zone 926.0 2014 Samson Maritime Ltd Kotak Private Equity Group 126.0 2014 Fourcee Infrastructure General Atlantic LLC 104.0 2012 Mundra Port 3I Group, GIC Real Estate 100.0 NA Karaikal Port Pvt Ltd (2 nd round) Ascent Capital 41.7 NA Ocean Sparkle Ltd Standard Chartered PE 41.6 2012 Karaikal Port Pvt Ltd (1 st round) IDFC Project Equity 32.6 NA Gujarat Pipavav Port Ltd IDFC 28.5 NA Karaikal Port Pvt Ltd Standard Chartered PE (Mauritius) II Ltd 27.1 2012 20Cube Logistics Zephyr Peacock India 17.0 2013 Continental Warehousing Nhava Sheva Aureos India Fund, Eplanet Venture 16.4 NA Source: E&Y, Grant Thornton, Thompson ONE Banker, TechSci Research 38
OPPORTUNITIES
OPPORTUNITIES Increasing scope for private ports Ship repair facilities at ports Port support services With rising demand for port infrastructure due to growing imports (crude, coal) & containerisation, public ports (major ports) will fall short of meeting demand This provides private ports with an opportunity to serve the spill-off demand from major ports & increase their capacities in line with forecasted new demand. Cochin Port Trust (CPT) announced measures to increase its revenue by generating higher container traffic & increasing the number of passenger liners. CPT is also planning to setup a small industrial port at the southern end of Willingdon Island to boost business. Dry docks are necessary to provide ship repair facilities. Out of all major ports, Kolkata has 5 dry docks, Mumbai & Visakhapatnam have 2; the rest have 1 or no dock at all Given the positive outlook for cargo traffic & the resulting increase in number of vessels visiting ports, demand for ship repair services will go up. This will provide opportunities to build new dry docks & setup ancillary repair facilities. Operation & maintenance services such as pilotage, dredging, harbouring & provision of marine assets such as barges & dredgers are expected to increase in coming years Increasing investments & cargo traffic point to a healthy outlook for port support services These include Operation & Maintenance (O&M) services like pilotage, harbouring & provision of marine assets like barges & dredgers. JNPT in Navi Mumbai signed an agreement with Development Bank of Singapore & State Bank of India, for external commercial borrowing worth USD400 million for expansion of road network connecting the port. Source: Ministry of Shipping, TechSci Research Note: O&M Operations & Maintenance 40
SUCCESS STORIES
MUNDRA: THE LARGEST PRIVATE PORT IN INDIA (1/2) Mundra Port and Special Economic Zone Ltd was renamed as Adani Ports & Special Economic Zone Ltd Net sales (USD million) 1213.1 It is the largest private port in India in terms of volume Net Sales (FY16): USD1213.1 million Operating profit (FY16): USD710.5 million Adani s Mundra Port crosses 100 MMT mark of cargo handling in FY16. The only commercial port in India to achieve 100 MMT traffic. Further, cargo traffic of the company touched 109.02 MMT in FY16 Container traffic contributed the most, followed by coal and edible oil, chemicals and POL Has the world s largest fully mechanised coal terminal with a capacity of 60 MTPA Handles the 2nd highest container traffic in India During FY08 16, total revenue rose to USD1213.1 million, implying a CAGR of 25 per cent 202.9 255.7 300.7 439.5 575.4 658.6 801.2 1020.6 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 Source: Company sources, including Annual Reports and news items; Assorted news articles; TechSci Research Notes: POL Petroleum, Oil and Lubricants, MTPA Million Tonnes Per Annum, MMT Million Metric Tonnes Adani Group plans to convert the Dhamra Port, in Odisha, into country's biggest seaport with industrial park, and set up LNG and LPG terminals there by 2021. Dhamra Port is expected to have 35 berths having 315 million tonnes capacity. 42
JNPT: MAJOR PORT WITH THE LARGEST CONTAINER CAPACITY (1/2) Jawaharlal Nehru Port Trust (JNPT) has the 3 rd highest cargo traffic & the highest container traffic in the country It is a container-focused port & having container traffic of 37.64 MMT in FY16 Handled 63.8 million tonnes of cargo in FY15 Poised to handle 3 million TEUs of containers by the year FY16 Traffic handled at JNPT for FY16 was 42.6 MMT Distribution of JNPT s container traffic for FY16 across its various terminals was a s follows Jawaharlal Nehru Port Container Terminal (JNPCT): 1.43 million TEUs Nhava Sheva International Container Terminal (NSICT): 1 MMT APM Terminals: 16.1 MMT Notes: TEU Twenty-Foot Equivalent Unit, MMT Million Metric Tonnes 43
JNPT: MAJOR PORT WITH THE LARGEST CONTAINER CAPACITY (2/2) JNPT was developed to relieve the pressure of Mumbai port and was commissioned in 1989 Cargo profile of JNPT (FY17) 1.35% It serves most of North India & has good hinterland connectivity through road & rail networks JNPT, with a capacity of 4.76 million TEU, handles over 58 per cent of India s container traffic, as of FY16 10.91% Container POL JNPT is a pioneer in involving private sector participation in major ports & operates under a landlord model; NSCIT is the 1 st private terminal in the country 87.74% Others The port is poised to handle 5.03 million TEUs of containers by 2016 17 Proposed capacity additions by FY17 Source: JNPT s website, Indian Ports Association, Ministry of Shipping, TechSci Research Notes: POL Petroleum, Oil, and Lubricants, MMT Million Metric Tonnes, TEU Twenty-Foot Equivalent Unit, MTPA Million Tonnes Per Annum Marine chemical: 30 MTPA Container terminal: 58 MTPA 44
GUJARAT: PORT HUB OF INDIA... (1/2) Gujarat is endowed with 1,215 kilo meters of coastline i.e. 1/6 th of total Indian coastline The state has 42 ports of which 41 are non major, while Kandla is the sole major port During FY07 16, cargo traffic in Gujarat increased at a CAGR of 10.17 per cent, with the cargo volume handled reaching 440 MMT in FY16. Favourable policies of the Gujarat government helped the state in gaining private investors interest in port related activities 53 131 Cargo handled at major and non-major port of Gujarat (MMT) 151 153 206 CAGR: 10.17% 231 65 72 80 82 83 259 288 310 336 340 94 97 92 100 100 269.9 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 Major Ports Minor Ports 1 Kandla port handled 499.68 million tonnes of cargo traffic, during April 2016 to January 2017. Overall India s cargo traffic increased by 7.14 per cent. Source: Shipping Ministry, TechSci Research 1Data for April December 2016 45
GUJARAT: PORT HUB OF INDIA... (2/2) In FY16, Gujarat Maritime Board (GMB) handled 339.77 MMT of cargo, with a capacity addition of 466 MMT in the same year. During the 12 th Five-Year Plan, the government estimates investment of about USD9.4 billion in the port sector by private players in Gujarat With 7 ports under construction & 5 proposed ports, Gujarat has the highest number of privately operated greenfield ports in India As of October 2016, Ministry of Shipping has sanctioned Capital Dredging Project for Ro Pax Ferry Services between Gogha & Dahej, in Gulf of Cambay in Gujarat. The total project cost is US$ 35.75 million, of which 50 per cent will be funded by Centre Government under the Sagarmala programme As of November 2016, Ministry of Shipping sanctioned sum of USD1.49 million to Gujarat Maritime Board for capacity building & safety training of workers involved in ship recycling activities under Sagarmala In June 2017, Adani Ports and Special Economic Zone Ltd. (ASPEZ) voiced plans to acquire a major stake in Gujarat Pipavav Port Ltd. (GPPL). The company has initiated talks to acquire APM Terminals Management B.V. s 43.01% stake in GPPL. Greenfield ports Port of Pipavav Mundra Port Dahej Port Hazira Port Developer GMB and Gujarat Pipavav Port Ltd Gujarat Adani Port Ltd Petronet LNG Ltd and GMB Shell Gas B.V. Source: Shipping Ministry, TechSci Research 46
USEFUL INFORMATION
INDUSTRY ASSOCIATIONS Indian Ports Association (IPA) 1 st floor, South Tower, NBCC Place Bhishma Pitamah Marg, Lodi Road New Delhi 110 003 Phone: 91-11-24369061, 24369063, 24368334 Fax: 91-11-24365866 E-mail: ipa@nic.in, ipadel@nda.vsnl.net.in Indian Private Ports & Terminals Association Darabshaw House, Level-1, N.M. Marg, Ballard Estate, Mumbai 400 001, India Tel. No: 022-22610599 Fax. No: 022-22621405 Email: secretary@ippta.org.in 48
NOTES Major and non-major ports do not have a strict association with traffic volumes. The classification has more of an administrative significance Cargo traffic includes both loading (export) and unloading (imports) of goods Containerisation is the increased use of container for transporting non-bulk goods. It leads to increased efficiency (both time and money) Turnaround time is the total time spent by a ship from entry into port till departure Twenty Equivalent Units (TEU) is a standard measure of containers which are 20 feet in length and 8 feet in width; the height can vary Draft is the vertical distance between waterline and the bottom of the ship. It determines the depth of water a ship or boat can safely navigate. Higher capacity ships will need higher draft, hence ports with higher natural draft will attract bigger ships Waterfront availability is the length of the water line on the coast where ships can rest and the goods are unloaded. Longer waterfront lengths reduce waiting time and help raise capacity Terminals are certain sections of the ports where different types of cargo are unloaded Single Point Mooring (SPM) is a loading buoy anchored offshore that serves as a mooring point and interconnect for tankers loading or offloading gas or fluid product A dry dock is a narrow basin that can be flooded to allow a ship to be floated in, then drained to allow that ship to come to rest on a dry platform. Dry docks are used for construction, maintenance and repair of ships 49
GLOSSARY (1/2) FY: Indian Financial Year (April to March) So FY11 implies April 2010 to March 2011 USD: US Dollar FDI: Foreign Direct Investment IPA: Indian Ports Association NMDP: National Maritime Development Programme POL: Petroleum, Oil & Lubricants SEZ: Special Economic Zone CAGR: Compounded Annual Growth Rate ICTT: International Container Transshipment Terminal TEU: Twenty-Foot Equivalent Unit MMTPA: Million Metric Tonnes Per Annum MMT: Million Metric Tonnes 50
GLOSSARY (2/2) GOI: Government of India NSICT: Nhava Sheva International Container Terminal, Mumbai O&M: Operation and Maintenance services LNG: Liquefied Natural Gas Wherever applicable, numbers have been rounded off to the nearest whole number 51
EXCHANGE RATES Exchange rates (Fiscal Year) Year INR equivalent of one USD 2004 05 44.81 2005 06 44.14 2006 07 45.14 2007 08 40.27 2008 09 46.14 2009 10 47.42 2010 11 45.62 2011 12 46.88 2012 13 54.31 2013 14 60.28 2014-15 61.06 2015-16 65.46 2016-17 (E) 66.95 Exchange rates (Calendar Year) Year INR equivalent of one USD 2005 43.98 2006 45.18 2007 41.34 2008 43.62 2009 48.42 2010 45.72 2011 46.85 2012 53.46 2013 58.44 2014 61.03 2015 64.15 2016 (Expected) 67.22 Source: Reserve bank of India, Average for the year 52
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