JSW Infra buys Chettinad Group's port terminals for Rs 1,000 crore

Acquisition to give company instant access to third-party cargo

In a bid to strengthen its capacity and raise its third-party cargo share, JSW Infrastructure today announced it has acquired Chettinad Group’s port business for around Rs 1,000 crore.

“The acquisition is being funded via 70:30 debt-equity ratio. With this acquisition, we get instant access to third-party cargo as these terminals have been serving third-party alone. These terminals offer better hinterland, wide end variety of cargo and good customer base. It was ticking all the boxes,” Arun Maheshwari, joint managing director and chief executive officer at JSW Infrastructure told Business Standard.

The acquisition will allow the JSW Group company both ownership and operational control of a deep draft international coal terminal, a bulk terminal at Kamarajar Port Limited (KPL) and a coal and bulk commodity terminal at New Mangalore Port Trust (NMPT).

“These terminals are grossly under-utilised and that was the rationale behind picking up these assets. They were running at 50-60 percent capacity utilisation,” Maheshwari informed.

The company aims to take its third-party cargo share to 40-50 percent going ahead from close to 25 percent it is likely to do in FY21 and 10 percent it hit in FY20.

JSW Infrastructure’s acquisition announcement is in line with its vision to hit 200 million capacity in coming couple of years. This three acquired terminals put together will handle capacity of 17 million tonne.

“There is no major capex planned for these acquired terminals for atleast next couple of years. We just have some digitisation plan and also placing of small equipment at one of the terminals which is about 10 year old,” Maheshwari said.  

The newly acquired terminals will also have business synergies with upcoming 30 million tonne coal export terminal at Paradip Port Trust which is scheduled to commence operations during first half of calendar year 2021, said the company release.

With a workforce of about 200 at the terminal, JSW Infrastructure has no plans to hire afresh at this juncture.

KPL is a landlord port characterised by its mixed public-private orientation. Under this model, the Port authority acts as regulatory body and as landlord, while Port operations are carried out by private companies.

NMPT on the other hand is an all-weather, lagoon type port situated at Panambur, Mangalore in Karnataka.

The current acquisition could be a beginning to some of the new entrants in its portfolio, hinted Maheshwari.

“India has a very under-utilised coastal line and a lot of inefficiency as lot of cargo is transported via road or rail. For immediate future expansion, JSW Infrastructure will focus on India assets and utilise them completely. There are several assets available and at the opportune time, we will assess them. We are largely in bulk as of now and will start container segment next year. But, we are open to anything and would like to diversify in liquid, gas or container side,” he added.

In India, JSW Infrastructure competes with other private players such as Adani Ports and APM Terminal Pipavav.

JSW Infastructure India Portfolio

.	Capacity
Jaigarh, Maharashtra	45 million tonne
Dharamtar, Maharashtra

15 million tonne Paradip, Odisha 18 million tonne Mormugao, Goa 15 million tonne Mangalore, Karnataka 30 million tonne (under development)