Adani Ports eyes 20% container cargo growth in FY18

Growth to be driven by capacity addition at Mundra; 25% and 35% growth at Hazira and Kattupalli

Adani Ports and Special Economic Zone (APSEZ), the logistics and ports arm of the Adani Group, aims to achieve a 20 per cent growth in container cargo in FY18. Moreover, the company feels that containers would account for 41-42 per cent of its overall cargo from a current 36 per cent. 

A company spokesperson told Business Standard, "We are expecting container cargo growth at 20 per cent in FY18. This will be largely driven by capacity addition at Mundra (Container terminal 3 extension) and higher growth in the range of 25 per cent to 35 per cent at Hazira and Kattupalli." Going forward, containers would be contributing around 41-42 per cent of the overall cargo, over a five year horizon. 

Current capacity of container terminal 3 (CT3) is 1.5 million TEUs. APSEZ is expanding it to 3.1 million TEUs, and expects that of this around 1.2 million TEUs would be from transhipment containers. 

The basic idea is to complete the expansion of Adani International Container Terminal (AICTPL) at Mundra port by 2017-18 to create a transhipment hub for West Asia, South Asia and India. AICTPL is a joint venture with Terminal Investment (part of Swiss-based Mediterranean Shipping Company, the second largest shipping liner in the world). 

As per the company's latest investor presentation, the compounded annual growth rate (CAGR) for container cargo volumes between FY15 to FY17 is 21.5 per cent; from 2.9 million TEUs in FY15 to 4.24 million TEUs in FY17. 

In fact, APSEZ had outpaced the 10 per cent growth rate in container traffic movement at major public ports in 2016-17 by registering a 27 per cent increase in container cargo volumes. 

The company said that the container volume growth of 27 per cent was partly on account of addition of Kattupalli which operated only for a part of the year in FY16 (operations commenced in November 2015), excluding which the growth still was at 18 per cent. 

"This is primarily driven by push to garner higher market share from others," the company spokesperson said. Mundra and Hazira too did well during FY17, growing 18 per cent and 37 per cent respectively. 

At present containers account for 36-37 per cent of overall cargo, while coal is 36 per cent, crude at 12 per cent and other bulk cargo contribute around 15 per cent. "Going forward, we are bullish on container and other bulk cargo. We are currently focussing on the other bulk cargo at Dhamra which currently handles coal and minerals. We will be handling fertilisers, agri-commodities and steel this year at Dhamra. Apart from this, we are also looking at handling other bulk cargo apart from containers at Kattupalli," the spokesperson said elaborating the cargo plan for the fiscal 2017-18. 

Meanwhile, the APSEZ finance committee has approved the issuance of fixed rate unsecured notes aggregating $500 milion. The proceeds would be used for refinancing of existing indebtedness of the company and any balance of net proceeds may be used for capital expenditure requirements. 

APSEZ Cargo Volumes (%) split across product categories

Item	FY15	FY17
Bulk	12%	15%
Crude	12%	12%
Coal	47%	36%
Containers	29%	37%

Source: APSEZ Investor Presentation, June 2017

Cargo Volumes CAGR (FY15-FY17)

Item	CAGR
Other Bulk Cargo	25%
Container Cargo	21.5%
Crude	9.7%
APSEZ Total Cargo	8.1%

Source: APSEZ Investor Presentation, June 2017