More than a year after the Ruia-owned Essar Group announced the sale of Essar Oil and the Vadinar port, it is planning fresh investments to expand its port capacity in India and overseas.
Essar Ports has planned investment of at least $500 million over the next two-and-a-half years to increase its total cargo handling capacity to around 140-150 million tonnes (MT).
In a bid to reduce its huge debts, Essar Group sold 98 per cent stake in Essar Oil and related infrastructure including the Vadinar Port in Gujarat, to a group-led by Russian oil major Rosneft and Singapore-based commodity trader Trafigura, along with United Capital Partners, in October 2016 for around $13 billion (Rs 86,000 crore).
To make up for the lost earnings and reduced capacity post the sale of the 58 MT Vadinar port, Essar Ports is increasing investments in its other facilities.
Essar Port has completed investment of Rs 2,800 crore in its terminals in Salaya in Gujarat and Visakhapatnam in Andhra Pradesh. This includes Rs 2,000 crore investment to set up Saurashtra's first deep-draft terminal facility for fully loaded vessels up to 100,000 DWT (dead weight tonnage) cargo capacity in Salaya and Rs 830 crore modernisation and expansion project at the Vizag terminal.
Post this expansion, its total cargo handling capacity will go up to 110 MT from 82 MT, spread across its facilities in Hazira, Visakhapatnam, Salaya and Paradip.
Further, it has plans to expand capacity to 140-150 MTPA in the coming years, which includes a 20 MTPA coal terminal it is setting up in Mozambique.
“We had a plan that was underway (expansion at Salaya and Visakhapatnam ). That is getting completed, but it cannot be that we will not have further growth. We are looking at expansion in Hazira, we will also expand (further) in Salaya over a period of time and also overseas we are putting up a project in Mozambique. In all we are looking at $500 million investment, which will be done in these projects,” said Rajiv Agarwal, CEO, Essar Ports.
The expansion plan in Salaya is in a “very preliminary” stage, and investment required could be in addition to the $500 million planned.
“We would like to set up another dry bulk terminal there ( in Salaya) and a few LNG (liquefied natural gas) berths. This is still at an approval stage,” said Agarwal.
Agarwal added that it was not just in Salaya, but the company was looking at a multi-location expansion to enhance its LNG handling capacity.
Essar Ports expects to close the current financial year ending March 31, 2018, with a revenue of around Rs 1,350 crore and EBITDA (earnings before interest, taxes, depreciation and amortization) of close to Rs 900 crore.
