Essar Ports Q2 PAT at Rs 92 cr, down 10% year-on-year

Increased expenses, higher finance cost drags company's bottomline

Despite a marginal rise in revenues on a year-on-year basis and a declined bottomline in the June quarter, Essar Ports, one of the largest port companies in the country, is hopeful of an increase in volumes going ahead as its ongoing projects come on stream by FY18.

The company today detailed its June quarter results, where its consolidated net profit stood at Rs 92 crore, down 10 percent from last year mainly because of increased expenses and higher finance costs.

The rise in Essar Ports' net sales was a marginal one of about 2 percent to Rs 407 crore in the period under review led by increase in revenues from the port-and-terminal services segment.

Where the company's total expenses jumped 11 percent year-on-year to Rs 160 crore, its finance costs also moved up 10 percent to Rs 161 crore.

"Currently, the contribution from the third party cargo is negligible but by FY15 we plan to take it to 5 percent and by FY18 we are aiming at a 30 percent third party cargo business," Rajiv Agarwal, managing director and chief executive officer said at a post earnings conference call.

The company's operating profit also declined in the period under review as it stood at Rs 248 crore, as against Rs 255 crore in the corresponding period last year.

Post the Union Budget, where the government announced setting up of 16 new port projects, Agarwal is hopeful that this kind of boost for the infrastructure segment will perhaps bring down the cost of debt eventually and push up longterm financing requirement.

As on June 30, the company's total debt stood at Rs 5,863 crore, down Rs 60 crore from previous quarter.

"At the moment we are comfortable with the debt levels and if possible will look to reduce interest cost on the debt rather than look at options to lower the debt overall," said Agarwal.

Essar Ports has a current capacity of 104 million tonne which it plans to take to 194 million in the next few years.

Essar Ports has three operational port terminals at Hazira, Vadinar and Paradip. The Hazira port is an all-weather, deep-draft port with 30 million tonne of dry bulk and break bulk cargo handling capacity, Vadinar has 58 million tonne of liquid cargo handling capacity and Paradip dry bulk terminal with 16 million tonne capacity.

The company is also setting up a dry bulk terminal at Salaya with a capacity of 20 million tonne and additionally, plans to expand its Hazira port capacity by 20 million tonne to 50 million. With three iron ore berths at Visakhapatnam Port under expansion a total capacity of 32 million tonne is set to come up. The company also plans to develop a coal terminal at Paradip of 18 million tonne capacity.