An emerging player in India's maritime growth story

- ARUN MAHESHWARI

Joint MD & CEO, JSW Infrastructure

How do you assess the Indian ports and shipping scenario in the past two years?

The past few years have been very challenging. Disruption across the globe due to COVID and thereafter geo-political re alignments forced to think and strategise the business with new dimensions. Post COVID, the ports sector is back on track. The pace of growth of Indian economy as compared to other major economies and geo-political developments across globe has enabled India to increase its footprint at a much faster mode. Economy of such size and scale overcame pandemic with all robustness while strengthening international relations very well.

Cargos at all ports (major or non-major) continue to grow in all sectors; be it dry, liquid or containers. After the initial hiccups in containers (which was short-lived), the entire sector is booming and will be able to consume any additional upcoming capacity.

What kind of momentum and support are the private port players giving for the growth of India's maritime business?

Given the long coast line catering to eastern and western world, Indian maritime has a long history of serving the entire world. Initially, like any other capital-intensive sector for economic growth, investments were done by government at strategic locations (major ports). With growing economy and rising demand for port infrastructure, private ports (non-major ports) were given opportunity to be part of this journey.

Non-major ports started with smaller investments in initial years. However, it has shaped extremely well in the past two decades and now are gaining majority of the growth share which otherwise would have been a lost opportunity for India as major ports were not equipped enough to cater the entire need. Over the past few years, private sector investment (including PPP at major ports) has accounted for more than 80 percent of the total investments in the sector.

While the overall growth of cargo through sea port sectors grew by 3 percent CAGR in the last five years, the bifurcation between non-major (CAGR 4.3%) and major ports (2.1%) tells a story of growing influence of non-major ports in this sector. During 2021-22, the non-major ports accounted for 45 percent of the overall cargo traffic handled at Indian ports. It is not only the share of cargo handled, but also the asset utilization where non-major ports are a step ahead.

Port utilization at non-major ports stands at an impressive 58 percent as compared to 48 percent at major ports. However, in recent times, major ports are really giving a decent healthy competition to non-major ports by upgrading their equipment, throughput, and efficiencies either by themselves of by getting into PPP mode on a revenue share model. PPP model per se becomes part of major ports, however it acts like a non major ports with certain guidance. It has been great move in this sector which has high entry barrier due to capital requirements.

How important is coastal shipping in India's domestic cargo movement?

If we look at any major economy globally, their logistics cost is in single-digit, as compared to 13-14% in India. This impacts the cost competitiveness to a great extent for India. Coastal movement or waterways movement is one such area which dramatically reduces the overall logistics cost and also supports economy like India which has poor surface infrastructure (rail/road for cargo movement), dependent on fuel oil imports and inadequate last mile connectivity.

India is blessed to have coast line on both sides of the country and a few rivers going into main land. This has been grossly underutilized until recently. Over the past few years, we have seen an upward trend in coastal shipping and waterways cargo movement.

The government has also been focusing on increasing the share of coastal shipping and inland waterways segment. It has taken initiatives such as relaxation in the cabotage law, extension of the Coastal Berth scheme and provision of financial support. As a result, the share of coastal cargo in the total cargo handled increased from 16.34 percent in 2015-16 to 22.61 percent in 2019-20, registering a CAGR of 6.71 percent. As per IWAI, there is an increment in cargo movement in NWs from 41.53 million tonnes (MT) in 2015-16 to 83.61 MT in 2020-21.

How has Jaigarh Port emerged as a key player in India's maritime infrastructure? How is the facility contributing to India's overall cargo operations?

While Gujarat with a coastline of 1,600 km is dotted with multiple full-fledged operational ports, its immediate neighboring state, Maharashtra, has relied heavily on ports off Mumbai coast and other states for a long time. Being the financial nerve center of the country with a diversified economy consisting of agricultural, industrial, and EXIM trade, Maharashtra requires an upgrade in infrastructure to keep up the pace with the economic growth. Over the past few decades, it has missed out the opportunity in a big way, however given the locational advantage and hinterland, it's still not too late. The state needed a modern, free-flowing and scalable port with enough draft to accommodate the existing ultra large cargo carriers and also be future-ready to meet the demands of trade growth.

About 15 years ago, JSW built a port meeting those requirements at Jaigarh in Ratnagiri district. It is located at around 131 nautical miles south of Mumbai, close enough to move cargo without any hindrances using single or multimodal mode of transportation. Jaigarh's locational advantage gives it proximity to Southern Maharashtra and other neighboring states as well.

Today, Jaigarh Port has seven berths with quay length of 2,319 meters with max draft of 17.5 meter. Currently, the port capacity is 50 MTPA and is expected to expand up to 80 MTPA. The port is capable of handling all kinds of cargo like bulk, break-bulk, liquid, LPG, LNG, project cargo, agri products, fertilizers, containers etc. JPL has India's largest covered shed for bulk handling and India's first floating storage and regasification unit (FSRU) based LPG and LNG terminal. In the past few years, Jaigarh Port has become the highest sugar exporter amongst all the private ports in India. Jaigarh Port has registered an impressive grown of 23% CAGR for cargo in the last six years.

In the later part of last decade, we developed Jaigarh Port under a hub & spoke model and supply raw material to Dolvi steel plant (Maharashtra) through specially designed MBC from Amba River (NW 10) to our Dharamtar Port (DDPL). This made DPPL the biggest riverine port in India and NW 10 the busiest waterways in India, contributing more than 25 percent of cargo handled by waterways. We have a dedicated specialized MBC loading facility, which made it possible for us to increase our Dolvi steel plant capacity from 3.3 MTPA to 5.0 MTPA and now to 10.0 MTPA. These two ports contribute more than 80 percent cargo at Maharashtra Maritime Board.

What are the major services offered by your ports and terminal facilities in India?

We (JSW Infrastructure Limited - JSWIL) are one of the leading developers and operators of maritime ports, terminals and related infrastructure in India in terms of installed cargo handling capacity in fiscal 2022, and are among the fastest growing port-related infrastructure companies in the private sector in India in terms of installed cargo handling capacity and cargo volumes handled during fiscal 2020 to 2022.

We operate nine port concessions in India with an installed cargo handling capacity of 158 MMTPA as of December 31, 2022, and our leadership position and recognition as a large player in the Indian maritime infrastructure industry enables us to leverage economies of scale in project development capabilities and resource optimization.

We also operate Fujairah Bulk Terminal, UAE with the capacity of 24 MTPA. The existing ports and terminals of the company are capable of handling vessels up to cape size and offer mechanized and multi-cargo.

Our strategy to grow in multiple trade segments made us enter into our first container terminal project at New Managalore Port through our Mangalore Container Terminal. We also have India's all-weather riverine port at Dharamtar (Maharashtra) on Amba River (NW10) with a capacity of 34 MMTPA.

What are the major opportunities and challenges in the current market scenario?

India has ambitious target of USD 30-trillion economy from the existing USD 3.7 trillion. This ambition is possible through increased trade flows only which is not feasible without touching the coast line (95% of the EXIM trade is through sea route today).

With opportunity of vast coastline, eagerness to grow, appetite to invest, government policy to support such investments are right ingredient that this sector is all set to grow multifold in coming decades.

Vision to reduce logistics costs, development of back up infrastructure, utilization of inland waterways efficiently and integration of multi modal logistics are all in a way offering opportunities to invest and build on this sector.

Since this is relatively new sector for government to open up hence a robust mechanism of dynamic policy frame work, relevance in changing business scenario, making private investments sustainable, fast track resolution mechanism for ambiguity and disputes will incite private players to put in more investments. Another challenge is the delay in the grant of clearances. Due to multiple approvals required in this sector (marine, land, environment, rail, road etc), there is a lag of couple of years between the date of the project being awarded and the commencement of construction work. This leads to the cancellation of projects. India has not seen any big port coming up in the last 10 years due to such delays.

What are your major expansion plans in the coming years in terms of port infrastructure and services?

JSW Infrastructure is presently 158 MTPA and planning to add more capacity through greenfield and brownfield expansion/acquisition. While we are an established player in bulk cargo, our focus will be on container and liquid cargo along with group cargo requirements. Currently, we are working on adding a new LPG facility at our Jaigarh Port. We are also working on expanding our container handling facility at the Mangalore Terminal.

India is a growing market and our expansions will be in line with the business requirements in the various regions and segments of business. We are also exploring new opportunities into dredging, liquid storage, slurry pipeline and other Infrastructure related services. While India remains our focus area of growth, any compelling opportunity overseas is welcome.

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