State-run ports seen losing traffic to private sector: Icra

Says share of major ports fell to 58% in FY13 from 61% in previous fiscal

Major state-owned ports are expected to continue losing traffic share to the more efficient private sector peers which have better infrastructure, rating agency Icra has said.

The report comes as the Mundra Port, run by the Adani Group, recently overtook the state-owned Kandla Port to become the country's largest port in terms of cargo handled in Q1 of the FY14.

While Mundra handled 24 million tonne of cargo in June quarter, the same came down to 23 mt for Kandla, which for long has been the largest cargo facility in the country.

"The non-major ports, by virtue of their superior cargo handling infrastructure, large capacity and high operating efficiency, will be well-placed to wean traffic away from major state-run ports as well as garner a larger proportion of the incremental cargo," the rating agency said in a report.

It added that the share of the major ports fell by 3 percentage points to 58% in FY13 from 61% in the previous fiscal. In the first quarter of the current fiscal, the cargo throughput from the major ports has declined by 1%, it added.

In FY13, the major ports saw a 3% de-growth in cargo handling as against the 13% increase at the private ones, the report said.

There was an increase of 2.4% in the total throughput at the ports at 935 million tonne, the Icra report said, attributing the modest growth primarily to the dip in iron ore handling.

"The cargo growth outlook for the ports continues to be strong over the medium- to long-term driven by the rising coal requirement," it said.

On the port capacity additions, the report said though there is an uptick in the award of projects, its translation into actual boost to capacity will be an uphill task because of a host of issues including statutory clearances.

"Given that no near term resolution of these structural problems appears to be in sight, the capacity addition at Indian ports is likely to fall short of envisaged targets and demand requirements," it said.

As a result of this, the major ports will continue facing issues around capacity and efficiency, the report said.