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Adani Ports: Opening the door to India

Mundra Port has set a global benchmark with investment in latest technology, says Dr Wilfried Aulbur

Dr Wilfried Aulbur 

Mundra Port
Mundra Port

Not unlike some of their global peers, Indian business people are renowned for their financial prudence. Investments are made after careful deliberation in a step-by-step fashion, often after exhausting existing capacities to the fullest. is the antithesis to this behaviour. Massive investments were made early on in anticipation of substantial demand as well as with the determination to become one of the leading port operators globally in terms of efficiency.

Growth in India's exports has outpaced most other nations. At a CAGR of 15.4 percent from 2002-2015, India grew faster than developing Asia (10.1 percent), Middle East and North Africa (MENA, 4.2 percent), the Euro area (3.9 percent) and Latin America (3.6 percent). With India being ‘boxed in’ by the Himalayas to the north and isolated from the rest of Asia via this impressive mountain range, maritime transportation is the primary mode of foreign trade. Over 90 percent of the country's trade by volume and 70 percent by value moves in and out of India via ships. However, total traffic handled in Indian only grew at a CAGR of 4.2 percent in the period from 2005 to 2015, from 384 million metric tonnes to 581 million metric tonnes (projected). 

Performance differences between India's 13 major (of which 12 are government trusts) and about 200 notified non-major (of which 69 engage in import and export) are partly to blame for the slow growth in port traffic. Non-major are very effectively leveraging the opportunity that India's growth brings and have been growing at a CAGR of 9.6 percent, or roughly three times faster than major  

& Special Economic Zone Ltd (APSEZL) is one of the key businesses of the Group and uniquely positioned to take advantage of the favourable environment for non-major in India. Mundra, APSEZL’s main port, has the fastest turnaround time for ships among Indian of 18-20 hours. It was also the first Indian port to cross the 100 million metric tonnes mark in cargo handling in FY14.

APSEZL's financial performance is outstanding. Revenue growth from FY10 to FY15 was at a CAGR of 34 percent with FY15 revenue of Rs 6,152 crore. Close to 90 percent of the revenues comes from & SEZ Ltd. The company's EBIT margin stands close to an exceptional 60 percent with a ROCE margin of 13-15 percent over the last two years. APSEZL stands out, both in terms of India and international comparisons.

So what drives the spectacular success of vs both national and international competitors? A capital-intensive business such as required volume to break even within a reasonable time frame. Volume required mechanisation to ensure fast and efficient handling of containers, coal, fertilisers, and other cargo. Mechanisation in turn required the right planning and master plan of the port as well as the perfect location for the same.

The cornerstone of the virtuous circle that Mundra leverages is demand. Mundra's hinterland is North India, a land-locked area that corresponds to about 40 percent of India's GDP. With superior service levels and the shortest distance to these demand pockets, cargo from North India would de facto be assured. As a consequence, investments could be made with the reasonable assumption that cargo and volume would follow.

The right location was found in the port of Mundra. Protected by the Saurashtra landmass, the port did not require heavy investment in the building of breakwaters. Its location near a creek allowed it to be a deep draft port with 365 days of operation.

Once the location was identified, and his team went about building a port that would compete with the best and biggest globally. Rather than waiting for cargo and then building the subsequent infrastructure, decided to turn the approach on its head. He and his team developed a 25-year master plan for Mundra that included significant investments in rail and road connectivity, water, electricity, and gas. 

decided to develop this infrastructure himself rather than waiting for government support as speed and scale were essential for his project to succeed. Guided by the principle that berths should wait for ships rather than the other way around, the port was constructed with a targeted berth productivity of 65 percent maximum. In addition, an inverted funnel at a factor of ten between maritime and evacuation capacity was built, ie, the capacity to discharge any cargo from ships to the hinterland was ten times larger than the berth capacity.

Dr Wilfried Aulbur, managing partner India, Roland Berger
Dr Wilfried Aulbur, managing partner India,
Roland Berger
Mechanisation allowed highly efficient port operations, which in turn translated into best total cost for customers. This drove cargo traffic. For example, when building the world's largest coal import terminal capable of handling the largest coal ships globally, invested in the latest technology for gravel loaders, unloaders, and cranes. It worked with the best consultants to ensure optimal berth layout. 

“We have never taken a nickel and dime approach to innovation. Investing in the latest technology has allowed us to achieve world-class performance, eg, in terms of EBITDA ratios. Working with the best consultants enabled us to build our much faster than the competition. Minor cost savings in these areas are always more than overcompensated by the gain in contribution margin when you can start operating terminals a few months earlier than planned,” says Sudipta Bhattacharya, ex-CEO of and Group CTO.

Global benchmarking is key for Mundra. Malay Mahadevia, director Ports, says, "It would be easy to benchmark ourselves against Indian ports, but that is not our competition. We want to be among the best globally and hence we compare our performance in coal, steel, containers, etc. against the leading globally whether they are from China or Europe or wherever. We also continuously work with consultants to ensure that we are abreast of the latest thinking and innovation. We can't stop innovating in this game as we would fall immediately behind.”

With the clear ambition to continue to drive the port sector in India, Mundra's future development is bright. 
____________________________________________________________________________________________________
Dr is the managing partner at Roland Berger, and author of 'Riding the Tiger'

Above article is based on an extract from the book 'Riding the Tiger'

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Adani Ports: Opening the door to India

Mundra Port has set a global benchmark with investment in latest technology, says Dr Wilfried Aulbur

Mundra Port has set a global benchmark with investment in latest technology, says Dr Wilfried Aulbur
Not unlike some of their global peers, Indian business people are renowned for their financial prudence. Investments are made after careful deliberation in a step-by-step fashion, often after exhausting existing capacities to the fullest. is the antithesis to this behaviour. Massive investments were made early on in anticipation of substantial demand as well as with the determination to become one of the leading port operators globally in terms of efficiency.

Growth in India's exports has outpaced most other nations. At a CAGR of 15.4 percent from 2002-2015, India grew faster than developing Asia (10.1 percent), Middle East and North Africa (MENA, 4.2 percent), the Euro area (3.9 percent) and Latin America (3.6 percent). With India being ‘boxed in’ by the Himalayas to the north and isolated from the rest of Asia via this impressive mountain range, maritime transportation is the primary mode of foreign trade. Over 90 percent of the country's trade by volume and 70 percent by value moves in and out of India via ships. However, total traffic handled in Indian only grew at a CAGR of 4.2 percent in the period from 2005 to 2015, from 384 million metric tonnes to 581 million metric tonnes (projected). 

Performance differences between India's 13 major (of which 12 are government trusts) and about 200 notified non-major (of which 69 engage in import and export) are partly to blame for the slow growth in port traffic. Non-major are very effectively leveraging the opportunity that India's growth brings and have been growing at a CAGR of 9.6 percent, or roughly three times faster than major  

& Special Economic Zone Ltd (APSEZL) is one of the key businesses of the Group and uniquely positioned to take advantage of the favourable environment for non-major in India. Mundra, APSEZL’s main port, has the fastest turnaround time for ships among Indian of 18-20 hours. It was also the first Indian port to cross the 100 million metric tonnes mark in cargo handling in FY14.

APSEZL's financial performance is outstanding. Revenue growth from FY10 to FY15 was at a CAGR of 34 percent with FY15 revenue of Rs 6,152 crore. Close to 90 percent of the revenues comes from & SEZ Ltd. The company's EBIT margin stands close to an exceptional 60 percent with a ROCE margin of 13-15 percent over the last two years. APSEZL stands out, both in terms of India and international comparisons.

So what drives the spectacular success of vs both national and international competitors? A capital-intensive business such as required volume to break even within a reasonable time frame. Volume required mechanisation to ensure fast and efficient handling of containers, coal, fertilisers, and other cargo. Mechanisation in turn required the right planning and master plan of the port as well as the perfect location for the same.

The cornerstone of the virtuous circle that Mundra leverages is demand. Mundra's hinterland is North India, a land-locked area that corresponds to about 40 percent of India's GDP. With superior service levels and the shortest distance to these demand pockets, cargo from North India would de facto be assured. As a consequence, investments could be made with the reasonable assumption that cargo and volume would follow.

The right location was found in the port of Mundra. Protected by the Saurashtra landmass, the port did not require heavy investment in the building of breakwaters. Its location near a creek allowed it to be a deep draft port with 365 days of operation.

Once the location was identified, and his team went about building a port that would compete with the best and biggest globally. Rather than waiting for cargo and then building the subsequent infrastructure, decided to turn the approach on its head. He and his team developed a 25-year master plan for Mundra that included significant investments in rail and road connectivity, water, electricity, and gas. 

decided to develop this infrastructure himself rather than waiting for government support as speed and scale were essential for his project to succeed. Guided by the principle that berths should wait for ships rather than the other way around, the port was constructed with a targeted berth productivity of 65 percent maximum. In addition, an inverted funnel at a factor of ten between maritime and evacuation capacity was built, ie, the capacity to discharge any cargo from ships to the hinterland was ten times larger than the berth capacity.

Dr Wilfried Aulbur, managing partner India, Roland Berger
Dr Wilfried Aulbur, managing partner India,
Roland Berger
Mechanisation allowed highly efficient port operations, which in turn translated into best total cost for customers. This drove cargo traffic. For example, when building the world's largest coal import terminal capable of handling the largest coal ships globally, invested in the latest technology for gravel loaders, unloaders, and cranes. It worked with the best consultants to ensure optimal berth layout. 

“We have never taken a nickel and dime approach to innovation. Investing in the latest technology has allowed us to achieve world-class performance, eg, in terms of EBITDA ratios. Working with the best consultants enabled us to build our much faster than the competition. Minor cost savings in these areas are always more than overcompensated by the gain in contribution margin when you can start operating terminals a few months earlier than planned,” says Sudipta Bhattacharya, ex-CEO of and Group CTO.

Global benchmarking is key for Mundra. Malay Mahadevia, director Ports, says, "It would be easy to benchmark ourselves against Indian ports, but that is not our competition. We want to be among the best globally and hence we compare our performance in coal, steel, containers, etc. against the leading globally whether they are from China or Europe or wherever. We also continuously work with consultants to ensure that we are abreast of the latest thinking and innovation. We can't stop innovating in this game as we would fall immediately behind.”

With the clear ambition to continue to drive the port sector in India, Mundra's future development is bright. 
____________________________________________________________________________________________________
Dr is the managing partner at Roland Berger, and author of 'Riding the Tiger'

Above article is based on an extract from the book 'Riding the Tiger'

image
Business Standard
177 22

Adani Ports: Opening the door to India

Mundra Port has set a global benchmark with investment in latest technology, says Dr Wilfried Aulbur

Not unlike some of their global peers, Indian business people are renowned for their financial prudence. Investments are made after careful deliberation in a step-by-step fashion, often after exhausting existing capacities to the fullest. is the antithesis to this behaviour. Massive investments were made early on in anticipation of substantial demand as well as with the determination to become one of the leading port operators globally in terms of efficiency.

Growth in India's exports has outpaced most other nations. At a CAGR of 15.4 percent from 2002-2015, India grew faster than developing Asia (10.1 percent), Middle East and North Africa (MENA, 4.2 percent), the Euro area (3.9 percent) and Latin America (3.6 percent). With India being ‘boxed in’ by the Himalayas to the north and isolated from the rest of Asia via this impressive mountain range, maritime transportation is the primary mode of foreign trade. Over 90 percent of the country's trade by volume and 70 percent by value moves in and out of India via ships. However, total traffic handled in Indian only grew at a CAGR of 4.2 percent in the period from 2005 to 2015, from 384 million metric tonnes to 581 million metric tonnes (projected). 

Performance differences between India's 13 major (of which 12 are government trusts) and about 200 notified non-major (of which 69 engage in import and export) are partly to blame for the slow growth in port traffic. Non-major are very effectively leveraging the opportunity that India's growth brings and have been growing at a CAGR of 9.6 percent, or roughly three times faster than major  

& Special Economic Zone Ltd (APSEZL) is one of the key businesses of the Group and uniquely positioned to take advantage of the favourable environment for non-major in India. Mundra, APSEZL’s main port, has the fastest turnaround time for ships among Indian of 18-20 hours. It was also the first Indian port to cross the 100 million metric tonnes mark in cargo handling in FY14.

APSEZL's financial performance is outstanding. Revenue growth from FY10 to FY15 was at a CAGR of 34 percent with FY15 revenue of Rs 6,152 crore. Close to 90 percent of the revenues comes from & SEZ Ltd. The company's EBIT margin stands close to an exceptional 60 percent with a ROCE margin of 13-15 percent over the last two years. APSEZL stands out, both in terms of India and international comparisons.

So what drives the spectacular success of vs both national and international competitors? A capital-intensive business such as required volume to break even within a reasonable time frame. Volume required mechanisation to ensure fast and efficient handling of containers, coal, fertilisers, and other cargo. Mechanisation in turn required the right planning and master plan of the port as well as the perfect location for the same.

The cornerstone of the virtuous circle that Mundra leverages is demand. Mundra's hinterland is North India, a land-locked area that corresponds to about 40 percent of India's GDP. With superior service levels and the shortest distance to these demand pockets, cargo from North India would de facto be assured. As a consequence, investments could be made with the reasonable assumption that cargo and volume would follow.

The right location was found in the port of Mundra. Protected by the Saurashtra landmass, the port did not require heavy investment in the building of breakwaters. Its location near a creek allowed it to be a deep draft port with 365 days of operation.

Once the location was identified, and his team went about building a port that would compete with the best and biggest globally. Rather than waiting for cargo and then building the subsequent infrastructure, decided to turn the approach on its head. He and his team developed a 25-year master plan for Mundra that included significant investments in rail and road connectivity, water, electricity, and gas. 

decided to develop this infrastructure himself rather than waiting for government support as speed and scale were essential for his project to succeed. Guided by the principle that berths should wait for ships rather than the other way around, the port was constructed with a targeted berth productivity of 65 percent maximum. In addition, an inverted funnel at a factor of ten between maritime and evacuation capacity was built, ie, the capacity to discharge any cargo from ships to the hinterland was ten times larger than the berth capacity.

Dr Wilfried Aulbur, managing partner India, Roland Berger
Dr Wilfried Aulbur, managing partner India,
Roland Berger
Mechanisation allowed highly efficient port operations, which in turn translated into best total cost for customers. This drove cargo traffic. For example, when building the world's largest coal import terminal capable of handling the largest coal ships globally, invested in the latest technology for gravel loaders, unloaders, and cranes. It worked with the best consultants to ensure optimal berth layout. 

“We have never taken a nickel and dime approach to innovation. Investing in the latest technology has allowed us to achieve world-class performance, eg, in terms of EBITDA ratios. Working with the best consultants enabled us to build our much faster than the competition. Minor cost savings in these areas are always more than overcompensated by the gain in contribution margin when you can start operating terminals a few months earlier than planned,” says Sudipta Bhattacharya, ex-CEO of and Group CTO.

Global benchmarking is key for Mundra. Malay Mahadevia, director Ports, says, "It would be easy to benchmark ourselves against Indian ports, but that is not our competition. We want to be among the best globally and hence we compare our performance in coal, steel, containers, etc. against the leading globally whether they are from China or Europe or wherever. We also continuously work with consultants to ensure that we are abreast of the latest thinking and innovation. We can't stop innovating in this game as we would fall immediately behind.”

With the clear ambition to continue to drive the port sector in India, Mundra's future development is bright. 
____________________________________________________________________________________________________
Dr is the managing partner at Roland Berger, and author of 'Riding the Tiger'

Above article is based on an extract from the book 'Riding the Tiger'

image
Business Standard
177 22