Gujarat Pipavav Port cuts expansion plan on lower bulk cargo visibility

Cost of expansion slashed by 68 percent to Rs 460 crore

Citing weak demand for bulk cargo in coming months, AP Moller-Maersk group company Gujarat Pipavav Port has slashed its capacity expansion plans, in turn reducing cost of expansion to Rs 460 crore from around Rs 1,200 crore earlier.

"Our outlook on bulk cargo traffic is quite bearish since there is a significant drop in imported coal due to weak demand from the power plants. Due to this, there is lower bulk cargo visibility," Managing Director Prakash Tulsiani told Business Standard today.

The port's bulk cargo mainly comprises coal and fertilisers.

The earlier capacity expansion budget envisaged 930 crore for container facilities and balance for bulk expansion.

Under the revised scope of work, Gujarat Pipavav Port has cut bulk capacity to 4-5 million tonne from 20 million tonne earlier and has put on hold all bulk related infrastructure development at the port, the company said in a release.

Though Gujarat Pipavav Port remains cautiously stable on growth of its container traffic for FY15, it has cut expansion plans for this segment as well.

Expansion plan for container capacity has been cut to 1.35 million TEUs from the earlier 1.5 million TEUs.

Currently, the port has a container capacity of 850,000 TEUs of which the utilisation is about of 76 percent.

"We do not see the need for so much capacity in container segment and so have cut the capacity by just about 10 percent, which is not much," said Tulsiani.

Apart this, the port has also decided to build container yard in a phased manner rather than a full-fledged development as per the earlier plan. Number ofrubber tyred gantry crane have also been halved to four.

RTGs are used at container terminals and container storage yards to straddle multiple lanes of rail/road and container storage. This apart, the plan for a 348-meter new container berth-5 has been cancelled and instead strengthening of existing berth-3 is part of the plan.

Plan for the 2 million tonne liquid terminal, however, remains intact though the existing liquid jetty will not be relocated, said the company. The port's capacity in liquid cargo facility is currently at 2 million tonne. Recently, logistics company Aegis Group had made a new bulk liquid terminal at the Pipavav port commercially operational.

"Our cash reserves as on Dec 31 are at Rs 150-200 crore and we plan to fund this expansion mainly via internal accruals,"said Tulsiani.

Gujarat Pipavav Port is one of western India's fastest growing gateway ports. Its promoter APM Terminals is one of the largest container terminal operators in the world and offers the global shipping sector an integrated global terminal network of 56 ports and 154 inland facilities in 63 countries.

Shares of Gujarat Pipavav Port today ended at Rs 86.50, up 0.41 percent from previous close.