JSW Infra seeks to buy terminal in Kamarajar Port as part of capex plan

In line with its strategy of growing via the inorganic route, JSW Infrastructure is in talks with Kamarajar Port (formerly Ennore Port) to acquire one of its terminals. 

The proposed acquisition is part of the infrastructure firm’s Rs 88 billion capex plan.

“There are low hanging fruits at Ennore Port. Talks are at an initial stage and hence not much can be revealed now,” a company source close to the development told Business Standard. 

According to the annual report for FY17, Kamarajar Port has eight berths which includes iron ore, coal and container terminal along with a general cargo berth-cum-automobile export terminal and an LNG terminal.

“It’s not that we are looking only for a coal or iron ore terminal but we are also open to a container terminal at this port,” said one of the sources.

The container terminal at the Kamarajar Port has been awarded to Adani Ports and would be developed in two phases to a full installed capacity of 1.4 million tonnes.

Unlisted JSW Infrastructure currently has a total capacity of 75 million tonnes and aims to touch 200 million tonnes before it goes for an initial public offering (IPO) in FY21. For this expansion, JSW has earmarked Rs 88 billion and at present has ongoing projects in Dolvi, Jaigad and the southwest region on the west coast and Paradip on the east coast. 

“With our main focus on the domestic market, the total capacity would be built in a manner so that 60 per cent is captive and the rest will be used for third party cargo,” the source said. 

The Sajjan Jindal-led company currently has presence in liquid and bulk. Though it is managing the UAE’s Fujairah Port, it does not have major plans for overseas presence at the moment.

JSW Infrastructure has to compete with other private players such as Adani Ports and Essar Ports which also have strong presence on both coasts of the country. 

Adani has aggressively used the inorganic route to growth so far, while Essar Ports is more with captive-based capacities. 

Profit making JSW Infrastructure has a debt-equity ratio of 0.8 which it aims to maintain even going ahead and hence will be planning its funding for expansion accordingly.

So far, JSW group’s steel and energy businesses have largely grown via the inorganic growth route which is mainly domestic market centric. JSW Infrastructure, too, is adopting the same strategy. The company had earlier tried to acquire Gujarat-based APM Terminals which could have paved the way for listing of the entity but the deal did not go through as APM Terminals deferred its plans. 

“The company was also ready for dilution during the Pipavav deal talks but APM Terminals chose to defer,” said the company source. 

Port Pipavav is located in Gujarat. It has excellent access to the main shipping lines and immediate access to the rich hinterland and key markets in northwest India.