PORTS - IBEF · 2017-06-21 · Kandla port, Ennore port, etc., are much above the world’s average...

11JUNE 2017

PORTS

JUNE 2017 (As of 9 June 2017) For updated information, please visit www.ibef.org

22JUNE 2017 For updated information, please visit www.ibef.org

❖ Executive Summary…………………………3

❖ Advantage India……………………….……..5

❖ Market Overview & Trends………………….7

❖ Porter Five Forces Model Analysis ………18

❖ Strategies Adopted………………..……….20

❖ Growth Drivers………………………..…….22

❖ Opportunities………………………………..39

❖ Success Stories………………..………. ….41

❖ Useful Information…………………………..47

PORTS

JUNE 2017

33JUNE 2017

466.1

815.2

FY16 FY17E

606.37943.1

FY16 FY17E

For updated information, please visit www.ibef.org

Source: Ministry of Shipping, TechSci Research

Notes: E – Estimates, MMT - Million Metric Tonnes

PORTS

By FY17, cargo capacity in

India is expected to increase to

2,493.1 MMT from 1,806.8

MMT in FY15

Increasing trade activities &

private participation in port

infrastructure set to support

port infrastructure activity

By FY17, cargo traffic at major

ports in India is expected to rise

to 943.1 MMT from 606.37

MMT in FY16 at a YoY of 55.53

per cent

India has 12 major ports

By FY17, cargo traffic at non-

major ports in India is expected

to grow to 815.2 MMT from

466.1 MMT in FY16

India’s 200 non-major ports are

strategically located on the

world’s shipping routes

EXECUTIVE SUMMARY … (1/2)

CAGR: 55.53%

CAGR: 17.5%

1806.82493.0

FY15 FY17MMT

CAGR: 75%

MMT

44JUNE 2017

43.6

228

FY15 FY17(E)

MMT

8.20

21

FY16 FY17E



Notes: FY17 (E) – Estimates, TEU – Twenty Foot Equivalent Unit, MMT - Million Metric Tonnes

PORTS

By FY17, container demand in

India (For major ports) is

expected to increase to 21

million TEU from 8.2 million

TEU in FY16

Trade to boost demand for

containers

By FY17, iron ore traffic (For

Major & Minor ports) is

expected to rise to 228 MMT

from 43.6 MMT in FY15

Infrastructural development to

increase demand for iron &

steel

EXECUTIVE SUMMARY … (2/2)

CAGR: 156%

CAGR: 128.7%

ADVANTAGE INDIA

PORTS

66JUNE 2017

Growing demand


ADVANTAGE INDIA

Source: Report of the Task force on Financing Plan for Ports, Govt. of India, TechSci Research

Notes: FY – Indian Financial Year (April–March), NMDP – National Maritime Development Programme, FDI – Foreign Direct Investment, USD – US Dollar,

E – Estimated, MMT – Million Metric Tonnes, CAGR – Compound Annual Growth Rate

Robust demand

• Port traffic in India is set to rise at a CAGR of 29.2 per cent over FY15–17

• CAGR in traffic :

• Non-major ports: expected to increase by 140.5 per cent to 815 MMT by 2017 from March 2016

• Major ports: expected to increase by 55.5 per cent to reach 943 MMT by 2017 from FY16 (April-December 2015)

Attractive opportunities

• Non-major ports are set to benefit from strong growth in India’s external trade

• Special Economic Zones are being developed in close proximity to several ports – comprising coal-based power plants, steel plants & oil refineries

Policy support

• The government initiated NMDP, aninitiative to develop the maritime sector;the planned outlay is USD11.8 billion

• FDI of 100 per cent under the automaticroute & a 10n year tax holiday forenterprises engaged in ports

• Plans to create port capacity of around3200 MMT to handle the expected trafficof about 2500 MMT by 2020

Competitive advantages

• India has a coastline which is more than 7,517 km long, interspersed with more than 200 ports

• Most cargo ships that sail between East Asia & America, Europe & Africa pass through Indian territorial waters

• India is the largest importer of thermal coal in the world

FY16

Cargo

traffic in

MMT:

1072.47

FY17E

Cargo

traffic in

MMT:

1,758.3

Advantage

India

PORTS

MARKET OVERVIEW AND TRENDS

PORTS


THERE ARE TWO BASIC CATEGORIES OF PORTS IN INDIA

Source: Ministry of Shipping; TechSci Research

PORTS

• There are 12 major ports in the

country; 6 on the Eastern coast

& 6 on the Western coast

• Major ports are under the

jurisdiction of the Government

of India & are governed by the

Major Port Trusts Act 1963,

except Ennore port, which is

administered under the

Companies Act 1956

• India has about 200 non-major

ports of which one-third are

operational

• Non-major ports come under

the jurisdiction of the respective

state Governments’ Maritime

Boards (GMB)

Ports in India (2016)

Major Non-major (minor)


MAJOR PORTS IN INDIA

Note: JNPT – Jawaharlal Nehru Port Trust

PORTS

Mumbai

JNPT

Kandla

Mormugao

New Mangalore

Cochin Tuticorin

Chennai

Ennore

Visakhapatnam

Paradip

Kolkata

1010JUNE 2017

463.6519.2 530.4

561 569.8 560.1 545.6 555.3581.3

606.37

943.1

FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17E


Cargo traffic at major ports (MMT)


Notes: MMT – Million Metric Tonnes,

CAGR – Compound Annual Growth Rate,

FY – Indian Financial Year (April–March),

E – Estimated

Cargo traffic at major ports in India –

Stood at 606.37 MMT in FY16

Increased at a CAGR of 7.4 per cent during FY07–17E

Cargo traffic in 2017 at major ports is expected to reach

943.1 MMT

During April to September 2016, 12 major ports in India

handled 315.4 MT (Million Tonnes) of cargo, showing a

growth of 5.1 per cent in comparison to the same time

during previous year.

As of February 2017, 12 major ports in India witnessed

increase in cargo traffic by up to 7.14 per cent, with handling

535.35 million tonne of cargo in the 1st 10 months of FY17.

As of March 2017, 16 new cargo scanners are to be

installed across major ports in India. In the 1st phase, 5 of

the 13 major ports i.e. Kamarajar (Ennore), New Mangalore,

JNPT, Kolkata & Vizag will receive the scanners, which

should be operational in the next 6 months.

CARGO TRAFFIC IS ON THE RISE … (1/2)

PORTS

CAGR: 7.4%

1111JUNE 2017

71

.4%

71

.8%

71

.3%

66

.0%

64

.4%

61

.3%

58

.4%

57.1

%

55

.2%

56

.5%

53

.6%

28.6

%

28

.2%

28

.7%

34

.0%

35

.6%

38

.7%

41

.6%

42.9

%

44

.8%

43

.5%

46

.4%


Major Ports Non Major Ports

186.1 203.6 213.2288.9 314.9 353.0 387.9 417.1

471.2 466.1

815.2



Percentage share of ports

CARGO TRAFFIC IS ON THE RISE … (2/2)

PORTS

Non-major ports are evolving faster than major ports-

Non-major ports are gaining shares & a major chunk of

traffic has shifted from major ports to non-major ports

The contribution of non-major port’s traffic to total traffic

rose to 43.5 per cent in FY16 from 28.6 per cent in FY07

Cargo traffic at non-major ports (MMT)Cargo traffic at non-major ports –

Stood at 466.1 MMT in FY16

Cargo traffic has expanded at a CAGR of 10.7 per cent

during FY07–16 & is expected to grow annually at 15.9 per

cent during FY07-17

Cargo traffic in 2017 at non-major ports is expected to reach

815.2 MMT


Notes: MMT – Million Metric Tonnes, CAGR – Compound Annual Growth Rate,

FY – Indian Financial Year (April–March); E – Estimate

CAGR: 15.9%



Note: Other cargo includes Fertiliser Raw Material (dry) and food-grains1Data from April 2017-December 2017

Cargo at major ports in FY171

Solid Liquid

(petroleum, oil

and lubricants)

Container

Share: 47.97%Share: 32.89%

Share: 19.15%

Iron ore

Coal

Fertilizer

Other cargo

Share: 14.06%

Share: 46.09%

Share: 5.03%

Share: 34.82%

CARGO PROFILE AT MAJOR PORTS IN INDIA … (1/2)

PORTS


Solid Liquid

(petroleum, oil

and lubricants)

Container

Share: 46.4%Share: 33.3%

Share: 20.3%

Iron ore

Coal

Fertilizer

Other cargo

Share: 2.1%

Share: 22.7%

Share: 2.6%

Share: 18.9%



Cargo traffic at major ports (MMT)

Source: Ministry of Shipping; Indian Ports Association (IPA), TechSci Research1Data from April – December 2016

Note: Other cargo in Solid includes fertiliser raw material (dry) and food-grains

Between FY07– FY17, cargo traffic grew at CAGR 0.38 per

cent

Over FY07–16, CAGR in the volume of different segments

was as follows–

Solid cargo was 2 per cent

Liquid cargo was 3.1 per cent

Container cargo was 6 per cent

Cargo traffic during FY17 (Till December 2016) for solid,

liquid & container cargo was 230.8, 158.2 & 92.13 MMT,

respectively

During April-December 2016, cargo traffic at 12 major ports

in the country was reported at 481.20 MT, showing a growth

of 7.54 per cent over the same period during the previous

year

CARGO PROFILE AT MAJOR PORTS IN INDIA … (2/2)

PORTS

23

5.9

25

8.2

26

1.2

28

4.7

27

6.6

26

0.9

239.9

25

3.5

27

3

28

7.4

23

0.8

15

4.3

16

8.7

17

6.1

17

5.1

17

9.1

17

9.1

18

5.9

18

7.2

18

8.9

19

5.9

15

8.2

73

.2 92

.3

93

.1

10

1.2

11

4.1

12

0.1

119.8

11

4.6

11

9.4

12

3.1

8

92

.13

FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17

Solid Liquid Container

1

1414JUNE 2017

50

4.8

53

2.1

57

4.8

61

6.7

67

0.1

68

9.8

74

4.9

80

0.5

2

871.5

2

96

5.3

6

0.00%

20.00%

40.00%

60.00%

80.00%

100.00%

120.00%

0

200

400

600

800

1000

1200

FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16

Capacity Utilization (RHS)


Capacity and utilisation at major ports (MMT)

Source: Indian Port Association, Ministry of Shipping,

TechSci Research

Note: MMT – Million Metric Tonnes

Capacity at major ports grew to 965.36 MMT in FY16,implying a CAGR of 7.5 per cent since FY07

Utilisation rates of major ports in India such as JNPT port,Kandla port, Ennore port, etc., are much above the world’saverage

As of November 2016, 12 Major Ports were identifiedunder Sagarmala project, for cargo handling till 2035. Theobjective of this project is to promote port led development& to provide infrastructure to quickly transport goods to &from ports, with higher efficiency & at lower cost.

Indian Port Rail Corporation Ltd. (IPRCL), plans to conductrail infrastructure expansion & modernisation work forJNPT, Kandla Port & Haldia Dock Complex in April 2017.Similar works have already started for Kolkata,Vishakhapatnam, Tuticorin, Mangalore & Chennai ports.

Germany’s Deutsche Bahn Engineering & Consultingplans to form a JV with Indian Port Rail Corp. Ltd (IPRCL)with an aim to connect Indian ports with railways.Germany and India are working on projects worthUS$14.87 billion being implemented by IPRCL

In May 2017, the government of India laid the foundationstone for various projects of the Kandla port. Theconstruction of the Chabahar port will further encouragethe growth of the Kandla port. The port has been renamedas Deendayal Port Trust – Kandla.

INCREASE IN CAPACITY OVER THE YEARS

PORTS


Average turnaround time for major ports (in days)

Source: Ministry of Shipping;, Indian Port Association TechSci Research

Note: Turnaround time – Total time spent by a ship from entry into port until departure1Data from April-December 2016

Average turnaround time is influenced by factors such

as type of cargo, parcel size & entrance channel

The average turnaround time improved to 2.11 days in

FY171 from 4.01 days in FY15

DROP IN TURNAROUND TIME IN FY13

PORTS

3.84

4.2

4.63

5.29

4.564.29

3.844.01

2.04 2.11



Increasing private

participation

• Strong growth potential, favourable investment climate & sops provided by state governmentshave encouraged domestic & foreign private players to enter the Indian ports sector. In addition tothe development of ports & terminals –

• The private sector has extensively participated in port logistics services

Setting up of port-based

SEZs

• SEZs are being developed in close proximity to several ports, thereby providing strategicadvantage to industries within these zones.

• Development of SEZs in Mundra, Krishnapatnam, Rewas & few others is underway

• Government has announced plans to develop 14 CEZs (coastal economic zones) in a phasedmanner for port-led development in all the 9 maritime states by advancing efforts to develop 1new port, each on the east & the west coast`

NOTABLE TRENDS IN THE PORTS SECTOR … (1/2)

PORTS

Focus on draft depth

• All the greenfield ports are being developed at shores with natural deep drafts & the existing portsare investing on improving their draft depth.

• Higher draft depth is required to accommodate large sized vessels. Due to the cost & timeadvantage associated with the large sized vehicles, much of the traffic is shifting to large vesselsfrom smaller ones, especially in coal transportation


Notes: SEZ – Special Economic Zone, PPP – Public-Private Partnership

Ports to operate on

Green energy

• Government of India is targeting to make the country the first in the world to operate all 12 majordomestic government ports on renewable energy. The government plans to install almost 200MW wind & solar power generation capacity by 2019 at the ports. The energy capacity could beramped up to 500 MW in future years.


Specialist terminal-

based ports

• Terminalisation: Focus on terminals that deal with a particular type of cargo

• This is useful for handling specific cargo such as LNG that requires specific equipment &

hence high capital costs. Examples of specialist terminals: ICTT in Cochin, LNG terminal

in Dahej Port

‘Landlord port’ model

• To promote private investments, the government has reformed the organisational model ofseaports –

• From: A ‘service port’ model where the port authority offers all the services

• To: A ‘landlord port’ model where the port authority acts as a regulator & landlord whileport operations are carried out by private companies

• Major ports following ‘landlord port’ model: JNPT, Chennai, Visakhapatnam & Tuticorin

NOTABLE TRENDS IN THE PORTS SECTOR … (2/2)

PORTS

Rising traffic at non

major ports

• With the increasing private participation in establishing minor ports. Cargo traffic handled by the

minor ports are outpacing cargo traffic at major ports, cargo traffic at non major port has

expanded at a CAGR of 31.5 per cent during FY07–15. The cargo traffic at major ports was

481.20 MMT in FY171

Source: TechSci Research

Notes: ICTT – International Container Transshipment Terminal, LNG – Liquefied Natural Gas,

MMT – Million Metric Tonnes1Data from April-December 2016

Sanitation• The Haldia Port of West Bengal was rated as the cleanest port among all the major ports in the

1st ever ranking by the Ministry of Shipping. The ranking of major 13 Indian ports was conducted

by the Quality Council of India (QCI) during the 'Swachhta Pakhwada’.

PORTER FIVE FORCES ANALYSIS

PORTS

1919JUNE 2017

Source: PricewaterhouseCoopers, Techopak, TechSci Research

PORTER’S FIVE FORCES ANALYSIS

Competitive Rivalry

• Increasing trade activities brought by rising imports of commodities like

coal and crude to generate higher business & limit overall competition

as most ports handle specific geographies

• There have been instances of private managed ports attracting the

share of other ports (usually handled by government agencies) as in

the case of JNPT & Mumbai Port Trust. However, demand expected to

remain strong

Threat of New Entrants

• 100 per cent FDI under

automatic route & income tax

exemption (10 years) is

attracting foreign players.

However, higher capital

expenditure acts as a barrier

• With rising demand for port

infrastructure due to growing

imports (crude, coal) &

containerisation, the threat of

substitute products to remain

weak

Substitute Products

Bargaining Power of Suppliers

• Considerable capacities to be

added going forward. However,

demand to continue to remain

strong

Bargaining Power of Customers

• Imports to continue to remain

strong led by strong demand.

However considerable port

capacities to be added going

forward

Competitive

Rivalry

(Medium)

Threat of New

Entrants

(Medium)

Substitute

Products

(Low)

Bargaining

Power of

Customers

(Medium)

Bargaining

Power of

Suppliers

(Medium)

PORTS


STRATEGIES ADOPTED

PORTS

2121JUNE 2017

STRATEGIES ADOPTED

• After having a strong advantage on India’s West coast, Adani Ports & Special Economic Zone Ltd

(APSEZ) is looking to strengthen its position by winning the bid of a new container terminal at Ennore

port located on the east coast. Furthermore Adani Ports has acquired Dharma Port to replicate its

development & growth on the eastern coast

• Essar Ports Ltd as a part of it strategic move to increase its potential on the east coast has won the

contract for the modernisation of 3 ports at Visakhapatnam

• Essar Ports Ltd., a leading port operator, plans to build a port in Gujarat with investments worth

US$1.49 billion. For the same, the company has signed a MoU with Gujarat Maritime Board (GMB)

• Geographic diversification as in the case of Adani group acquiring coal mines (Australia & Indonesia)

& setting up coal terminal in Australia to take the benefit of increasing coal imports in India

• As of April 2017, Adani Ports is planning to expand & open a multi purpose port on Carey Island in

Malaysia, as an extension of the Port Klang. A MoU was signed between APSEZ & MMC Port

Holdings Sdn Bhd, a wholly-owned unit of MMC Corporation Berhad

• Adani group, largest private port operator in India, is now venturing into providing allied services like

dredging. Its dredgers which were being used only at its own ports in the past have now started taking

work from other ports

• Adani group has also ventured into the container railway business becoming the largest private link in

the country. It conducts operations on a pan-india basis operating 6 container rakes

Pan-India presence

Geographic

diversification

Allied activities

Container train

operations

• Port authorities are modernizing & upgrading port facilities to meet the needs of the port users in

competitive environmentModernising

Source: Company website, TechSci Research


PORTS

GROWTH DRIVERS

PORTS



Note: NMDP - National Maritime Development Programme

SECTOR BENEFITS FROM STRONG DEMAND, PRIVATE PARTICIPATION

PORTS

Growing demand

Growing demand

Increasing trade

activities resulting

in container traffic

Rising demand for

coal & other

commodities

Growing crude

imports by the

country

Policy support

National Maritime

Development

Programme &

National Maritime

Agenda

FDI of up to 100

per cent under the

automatic route

Various sops &

incentives for

private players to

build ports

Increasing

investments

Increasing

investments in

building ports &

related activities

Private equity

supporting private

port developers

Increasing

investments by

foreign players

Innovation

Expanding port

development &

distribution

facilities in India

Use of modern

technology

Providing support

to global projects

from India

Resulting DrivingInviting


India’s external trade flows (USD billion)

Source: Directorate General of Foreign Trade, TechSci Research

India’s total external trade have grown to US$ 660.59 billion

in FY17, implying a CAGR of 3.83 per cent done since

FY09

Ports handle almost 95 per cent of trade volumes; thus

rising trade has contributed significantly to cargo traffic

INDIA’S PORTS ARE BENEFITTING FROM STRONG GROWTH IN EXTERNAL TRADE … (1/2)

PORTS

CAGR: 3.83%

185 179

250306 300 314 310

262 276.28304 288

370

489 491450 448

381 384.31

FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17Exports Imports


Container traffic at major ports (MMT)

Source: Indian Ports Association, TechSci Research

Note: MMT – Million Metric Tonnes

FY171: Data available for April - December 2016

Increasing trade is translating into higher demand for

containerisation due to their efficiency

During FY07–17, container traffic rose to 123.2 MMT,

implying a CAGR of 5.9 per cent

During FY171, container traffic stood at 92.13 MMT

INDIA’S PORTS ARE BENEFITTING FROM STRONG GROWTH IN EXTERNAL TRADE … (2/2)

PORTS

CAGR:

2.30%

1

73.4

92.3 93.1101.2

114.1120.1 119.8

114.6119.4 123.2

92.13



Crude imports (MMT)

Source: Handbook of Indian Statistics (RBI),

Petroleum Planning and Analysis Cell, TechSci Research

Notes: MMT – Million Metric Tonnes,

FY171 – Data available for April – November 2016

A consequence of strong GDP growth has been rising

energy demand; the country currently meets about 75

per cent of total crude oil demand by imports

India’s crude imports touched 202.85 MMT in FY16,

implying a CAGR of 6.9 per cent over FY07–16. The

crude imports From April – November 2016 stood at

14.81 MMT.

PORTS TO BENEFIT FROM GROWING CRUDE IMPORTS … (1/2)

PORTS

1

11

1.5

12

1.6

7

13

2.7

8

15

9.2

6

16

3.6

17

1.7

3

18

4.8

18

9.2

4

18

9.4

4

20

2.8

5

14

3.8

1



POL traffic (MMT)


Notes: POL – Petroleum, Oil, and Lubricants,

MMT – Million Metric Tonnes1 Figures from April – December 2016

Private ports have been especially good at attracting

crude import traffic

POL have been the major contributors to total traffic

at ports & contributed 33.3 per cent in FY16

POL traffic at both major & non-major ports added

up to 376.84 MMT in FY16, implying a CAGR of 5

per cent over FY07–15

POL traffic in FY17 reached 349.75 MMT

PORTS TO BENEFIT FROM GROWING CRUDE IMPORTS … (2/2)

PORTS

CAGR: 5%

15

4.3

16

8.7

17

6.1

17

5.1

17

9.1

17

9.1

185.9

18

7.2

18

1

19

5.9

4

15

8.2

5

81

.2 91

97

.8

13

7.7

14

5.4

15

6.3

168.6

16

9.8

16

7.3

18

0.9

19

1.5


Major Ports Minor Ports

1


Coal supply gap (import requirement) (MMT)

Source: Ministry of Coal, TechSci Research

Notes: The figures from FY9–14 in the above graph are as per the data

provided by Coal Ministry Annual Reports, and the figure for FY17 is

taken from the erstwhile Planning Commission Report data sourced

from Coal Ministry Annual Report,

India is the largest importer of thermal coal in the world

and this is expected to grow due to increased demand

for power as coal-based power stations were the

biggest contributors.

A major chunk of this import is transported by sea

With growing demand for power, coal imports are

expected to reach to be 160.16 MMT in FY17

INCREASING COAL IMPORTS SET TO DRIVE RISING CARGO TRAFFIC … (1/2)

PORTS

Notes:: GW – Gigawatt, MMT – Million Metric Tonnes

CAGR: 19.60%

1

60

83.5

132.2

160.9

192.5

168.5

212.1

156.38 160.16

FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17E


Coal cargo traffic (MMT)


Note: MMT – Million Metric Tonnes1Data for April – December 2016

Increasing coal imports are set to drive coal cargo traffic

upwards at both major and non-major ports

With private ports boosting their coal handling capacities,

non-major ports look set to handle majority of coal imports

in the future

Coal cargo traffic has grown at a CAGR of 13.90 per cent

over FY07–171 to reach 271.7 MMT.

Total coal handled by India’s 12 major ports jumped to

106.3 million tonnes in FY171 from 125.9 million tonnes in

FY16

Coal cargo traffic by minor ports crossed the total traffic of

major ports by 2013. In FY171, the coal traffic by minor ports

reached 165.4 MMT

INCREASING COAL IMPORTS SET TO DRIVE RISING CARGO TRAFFIC … (2/2)

PORTS

CAGR: 13.90%

59

.9

64

.9

70

.4

71

.7

72.7

78

.8

86

.6

10

4.7

11

8.7

12

5.9

10

6.314 15.4 21.5

41.3 58.579

109.3

126.3

158.7 144.2 165.4



1


Focus on increasing

capacity

• To create a port capacity of around 3,200 MT to handle the expected traffic of about 2,500 MT by

2020

Increasing investments• Proposed investments in major ports by 2020 are expected to total USD18.6 billion, while those in

non-major ports would be USD28.5 billion

PORTS

World-class

infrastructure• To implement full mechanisation of cargo handling & movement at ports, thereby bringing Indian

ports on par with the best international ports in terms of performance & capacity


Strategically building

ports

• To develop 2 major ports (1 each on East & West coast) to promote trade as well as 2 hub ports (1

each on the West coast & the East coast) – Mumbai (JNPT), Kochi, Chennai & Visakhapatnam

• India & Tajikistan to work closely on developing trade & transport links through the Chabahar Port

• In April 2017, Indian government has approved MoU on passenger cruise services on the coast &

protocol routes between India & Bangladesh to commence regular movement of tourists &

passengers in vessels between the 2 countries.

• In May 2017, Commerce and Transport Minister of Odisha announced construction of two new ports

in the state, one at Astarang in Puri district, and another at Subarnarekha in Balasore district. There

are 14 potential sites identified for developing these minor ports.

Bringing ports under

regulator• To establish a port regulator for all ports in order to set, monitor & regulate service levels, technical

& performance standards

NATIONAL MARITIME AGENDA 2010–2020 … (1/2)

Landlord ports• Major ports have been working towards implementing ‘Landlord port‘ concept duly limiting their role

to maintenance of channels & basic infrastructure leaving the development, operation, management,

of terminal & cargo handling facilities to the private sector



Note: EXIM - Export-Import,

MT – Million Tonne

National Maritime Agenda 2010–20 is aimed at all-round development of the Indian maritime sector

As per the National Maritime Agenda, the government is likely to create port capacity of 3200 MT for handling about 2500

MT of cargo, by 2020

Agenda involves investments in new projects at major ports of around USD18.6 billion, of which USD12.4 billion is expected

to come from private sector players & the remaining from budgetary allocation

The total traffic on the Indian ports is expected to grow from about 2229 in 2018 & reach to 3033 MT by the end of 2020

The government, through this policy, aims to increase the tonnage under the Indian flag & Indian control as well as the

share of Indian ships in EXIM trade

The government is also working to float a specialised Maritime Finance Corporation with the equity of ports & financial

institutions to fund the Port projects

To boost the state’s future maritime development, the Gujarat Maritime Board & the Port of Rotterdam inked a strategic tie-

up to seek expertise from the latter in a slew of projects including planning for new ports & churning out skilled professionals

in shipping & transport sectors.

PORTS

NATIONAL MARITIME AGENDA 2010–2020 … (2/2)


12TH FIVE-YEAR PLAN

Planned capacity 12th Five-Year Plan (MMT)

The 12th Five-Year Plan (2012–17) is focused on the development of major & non-major ports through public & private

investments

The proposed outlay for port sector in the plan, excluding private investment, is USD4.9 billion

The overall projected traffic of 1,758.3 million tonnes to be achieved by FY17, the total capacity of the port sector is

envisaged to be 2,289.04 million tonnes by the end of 2017

The government anticipates private sector investment of around USD28.8 billion during the 12th Plan Period.

As of March 2017, government is planning to sell 51 per cent of its 73.47 per cent stake in Dredging Corporation.

Projected traffic12th Five-Year Plan (MMT)

PORTS

689.9

544.7

1,229.2

1,059.8

Major Ports Non- Major Ports

FY12 FY17E

560.1

370.0

943.1

815.2

Major Ports Non- Major Ports

FY12 FY17E Source: E:Estimated


De-licensing and tax

holidays

• The government has allowed FDI of up to 100 per cent under the automatic route for projects related tothe construction and maintenance of ports & harbours

• A 10-year tax holiday to enterprises engaged in the business of developing, maintaining, & operatingports, inland waterways & inland ports

Source: Ministry of Shipping; TechSci Research;

Note: FDI – Foreign Direct Investment

FAVOURABLE POLICIES ASSISTING THE PRIVATE SECTOR

PORTS

Price flexibility• Private ports enjoy price flexibility, as the government allows non-major ports to determine their own

tariffs in consultation with the State Maritime Boards; at major ports, tariffs are regulated by the TariffAuthority for Major Ports (TAMP)

Model Concession

Agreement (MCA)

• An MCA has been finalised to bring transparency & uniformity to contractual agreements that majorports would enter into with selected bidders for projects under the Build, Operate & Transfer (BOT)model

• As on September 2016, the Ministry of Shipping proposed a new model concession agreement (MCA)to attract more private sector investments in the development of port infrastructure across the country.

Major Port Authorities

Act, 2016

• Primary focus of the scheme is to allow future public-private partnership operators to fix tariffs. With theimplementation of this policy, port authorities will get the power to lease land for port-related use for upto 40 years & for non-port related use up to 20 years

Favourable system

• The system for security clearance for ports being streamline & made faster

• Expansion of existing framework to attract participation from the private sector for development ofinfrastructure facilities such as dredging, road infrastructure, creation of SEZ & development ofintegrated parking zones in the port area


STRONG PRIVATE SECTOR PARTICIPATION IN PORTS PROJECTS … (1/3)

39 Public Private Partnership (PPP) projects are operational at a cost of around USD2219.4 Million & capacity of 240.72 Million

Tonnes Per Annum (MTPA). 32 PPP projects at an estimated cost of around USD3917.6 Million & capacity 264.77 Million Tonnes Per

Annum (MTPA) awarded & are under implementation.

As of September 2016, the National Green Tribunal has given nod for construction of multi-crore ‘Vizhinjam International Seaport Ltd

(VISL)’. The port is being developed by Adani Group in collaboration with Kerala Government.

2 mega port projects in Colachel in Tamil Nadu & Dahanu in Maharashtra with an initial investment of USD2.3 billion has been

introduced & are being awaited for approval under PPP model in FY16.

As of October 2016, Central Government is planning to setup logistic hubs near seaports with the help of private sector players, to

augment exports from the country.

In January 2017, a new container service, operated by K Line, commenced operations between CITPL (Chennai International

Container Terminals Pvt. Ltd) at Chennai port & the Far East.

In May 2017, DP World has agreed to develop Indian port projects & plans to sign an MoU with the National Investment &

Infrastructure Fund (NIIF), the Indian wealth fund. The projects worth US$ 1.3 billion include the development of Sagarmala &

Bharatmala projects.

PORTS

Source: Ministry of Shipping; TechSci Research; Notes: PPP –PublicPrivate Partnership

Private investment

Greenfield projects

Private terminals



Notes: NSICT – Nhava Sheva International Container Terminal, Mumbai,

ICTT – International Container Transshipment Terminal, SPM – Single Point Mooring

PORTS

Terminals in major ports

with private sector

involvement

Port agency Estimated cost

(USD million)

Container terminal, Ennore Ennore 293.1

LNG terminal, Cochin Cochin Port Trust 729.1

Container terminal, NSICT JNPT 156.3

Oil jetty related facilities

(Vadinar)Kandla Port Trust 156.3

Third container terminal

(Mumbai)JNPT 187.5

Crude oil handling facility

(Cochin)Cochin Port Trust 146.5

ICTT at Vallarpadam

(Cochin)Cochin Port Trust 262.9

Construction of SPM captive

berth (Paradip)Paradip Port Trust 104.2

Development of second

container terminal (Chennai)Chennai Port Trust 103.1

Key private sector

companies

Ports they

developed

Maersk JNPT (Mumbai)

P&O Ports JNPT,

(Mumbai & Chennai)

Dubai Ports International (Cochin and

Vishakhapatnam)

PSA Singapore Tuticorin

Adani Mundra

Maersk Pipavav

Navyuga Engineering

Company LtdKrishnapatnam

DVS Raju group Gangavaram

JSW Jaigarh

Marg Karaikal


As on 2015



Notes: NSICT – Nhava Sheva International Container Terminal, Mumbai,

ICTT – International Container Transshipment Terminal, SPM – Single Point Mooring

PORTS

Terminals in major ports with private sector

involvement (FY15)

Port agency Capacity

(Million tonnes)

Estimated cost

(USD million)

Development & Operation of International Container

Transshipment Terminal (ICTT) at Vallar-padamCochin Port

12.5 to 40 MMT in

Phases353

Setting up of LNG Port & ReGasification Terminal at

Puthuvypeen by Cochin. / Cochin Port TrustCochin Port 5 MMPTA 691.1

Multi-User Liquid Terminal (MULT) at Puthuvypeen

SEZ (International Bunkering Terminal at Cochin)Cochin Port 4.10 MMTPA 38.4

Conversion of berth No. 8 as container

terminal onTuticorin 7.2 MTPA 52.03

Development of North Cargo Berth – II

on DBFOT basis.Tuticorin 7.0 MTPA 55.36

Enhancement of Cargo Handling capacity by installing

rapid in motion wagon loading facility by SWPLMormugao Port Trust 2.50 MTPA 7.5

Development of Container Terminal on DBFOT basisKamarajar Port

Ltd16.8MT 210.68

Development of Multi Cargo Terminal on DBFOT basisKamarajar Port

Ltd2.00 25.05


As on FY15


PORTS

Projects Completed and Awarded During FY15 & FY16

A PPP project worth USD220 million for redevelopment of berths 8, 9 & barge berths at the Port of Mormugao, Goa has been

awarded in September 2016

Kamarajar Port Marine Liquid Terminal-II PPP project & Chidambaranar Port PPP Project (shallow draught berth) for handling

general cargo, was introduced in 2016

Increase in capacity due to productivity of CBI & CBII (1.00 MTPA) Metric tonnes per annum

Development of WQ6 berth for 225m length & 22.5m width for handling dry bulk cargo on DBOFT basis (6.00) at VPT

(Visakhapatnam Port Trust).

Development of EQ-10 berth in inner harbor for handling liquid cargoes & chemicals on DBOFT basis (1.84 MTPA) at VPT.

Increase in capacity at CICTPL coal berth due to productivity (1.00 MTPA) at KPL (Kamarajar Port Ltd.)

Increase in capacity at ETTPL berth due to productivity (1.00 MTPA) at KPL.

Increase in capacity at General Cargo berth (2.00 MTPA) at KPL.

Installation of floating cranes for handling the cargo vessels (2.49 MTPA) at VoCPT (V.O.Chidambaranar Port Trust)

Construction of Mooring Dolphins at Liquid Cargo Jetty (1.00 MTPA) at JNPT (Jawaharlal Nehru Port Trust))

Increase in capacity due to deepening & widening of channel (10.20 MTPA) at JNPT.

In February 2017, at an estimated cost of US$1.37 million, construction of fishing harbor at Tirmulliavasal was completed on

schedule, under the Rural Infrastructure Development Fund (RIDF).


PPP: Public Private Partnership; MTPS: Million Tonnes per Annum; JNPT: Jawaharlal

Nehru Port Trust


PRIVATE EQUITY INTEREST IN INDIAN PORTS/SHIPPING REMAINS HEALTHY

PORTS

Target Acquirer Value (USD million) Year

Saurashtra Freight Fairfax India Holdings Corporation 30.0 2017

LCL Logistix CMA CGM Group - 2015

Kattupalli port Adani Ports and Special Economic Zone Ltd - 2015

The Dhamra Port Co Ltd Adani Ports and Special Economic Zone 926.0 2014

Samson Maritime Ltd Kotak Private Equity Group 126.0 2014

Fourcee Infrastructure General Atlantic LLC 104.0 2012

Mundra Port 3I Group, GIC Real Estate 100.0 NA

Karaikal Port Pvt Ltd (2nd round) Ascent Capital 41.7 NA

Ocean Sparkle Ltd Standard Chartered PE 41.6 2012

Karaikal Port Pvt Ltd (1st round) IDFC Project Equity 32.6 NA

Gujarat Pipavav Port Ltd IDFC 28.5 NA

Karaikal Port Pvt Ltd Standard Chartered PE (Mauritius) II Ltd 27.1 2012

20Cube Logistics Zephyr Peacock India 17.0 2013

Continental Warehousing Nhava

ShevaAureos India Fund, Eplanet Venture 16.4 NA

PE Deals since 2014

Source: E&Y, Grant Thornton, Thompson ONE Banker, TechSci Research

OPPORTUNITIES

PORTS


OPPORTUNITIES

PORTS

Increasing scope for private ports Ship repair facilities at ports Port support services

• With rising demand for port

infrastructure due to growing imports

(crude, coal) & containerisation, public

ports (major ports) will fall short of

meeting demand

• This provides private ports with an

opportunity to serve the spill-off demand

from major ports & increase their

capacities in line with forecasted new

demand.

• Cochin Port Trust (CPT) announced

measures to increase its revenue by

generating higher container traffic &

increasing the number of passenger

liners. CPT is also planning to setup a

small industrial port at the southern end

of Willingdon Island to boost business.

• Dry docks are necessary to provide ship

repair facilities. Out of all major ports,

Kolkata has 5 dry docks, Mumbai &

Visakhapatnam have 2; the rest have 1

or no dock at all

• Given the positive outlook for cargo

traffic & the resulting increase in number

of vessels visiting ports, demand for

ship repair services will go up. This will

provide opportunities to build new dry

docks & setup ancillary repair facilities.

• Operation & maintenance services such

as pilotage, dredging, harbouring &

provision of marine assets such as

barges & dredgers are expected to

increase in coming years

• Increasing investments & cargo traffic

point to a healthy outlook for port

support services

• These include Operation & Maintenance

(O&M) services like pilotage, harbouring

& provision of marine assets like barges

& dredgers.

• JNPT in Navi Mumbai signed an

agreement with Development Bank of

Singapore & State Bank of India, for

external commercial borrowing worth

USD400 million for expansion of road

network connecting the port.


Note: O&M – Operations & Maintenance

SUCCESS STORIES

PORTS

4242JUNE 2017

202.9255.7

300.7

439.5

575.4658.6

801.2

1020.6

1213.1

FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16


Net sales (USD million)

Source: Company sources, including Annual Reports and news

items; Assorted news articles; TechSci Research

Notes: POL – Petroleum, Oil and Lubricants,

MTPA – Million Tonnes Per Annum,

MMT – Million Metric Tonnes

Mundra Port and Special Economic Zone Ltd was renamed as

Adani Ports & Special Economic Zone Ltd

It is the largest private port in India in terms of volume

Net Sales (FY16): USD1213.1 million

Operating profit (FY16): USD710.5 million

Adani’s Mundra Port crosses 100 MMT mark of cargo handling

in FY16. The only commercial port in India to achieve 100

MMT traffic. Further, cargo traffic of the company touched

109.02 MMT in FY16

Container traffic contributed the most, followed by coal

and edible oil, chemicals and POL

Has the world’s largest fully mechanised coal terminal with a

capacity of 60 MTPA

Handles the 2nd highest container traffic in India

During FY08–16, total revenue rose to USD1213.1 million,

implying a CAGR of 25 per cent

MUNDRA: THE LARGEST PRIVATE PORT IN INDIA … (1/2)

PORTS

Adani Group plans to convert the Dhamra Port, in Odisha,

into country's biggest seaport with industrial park, and set

up LNG and LPG terminals there by 2021.

Dhamra Port is expected to have 35 berths having 315

million tonnes capacity.


Jawaharlal Nehru Port Trust (JNPT) has the 3rd highest cargo traffic & the highest container traffic in the country

It is a container-focused port & having container traffic of 37.64 MMT in FY16

Handled 63.8 million tonnes of cargo in FY15

Poised to handle 3 million TEUs of containers by the year FY16

Traffic handled at JNPT for FY16 was 42.6 MMT

Distribution of JNPT’s container traffic for FY16 across its various terminals was a s follows –

Jawaharlal Nehru Port Container Terminal (JNPCT): 1.43 million TEUs

Nhava Sheva International Container Terminal (NSICT): 1 MMT

APM Terminals: 16.1 MMT

PORTS

Notes: TEU – Twenty-Foot Equivalent Unit,

MMT – Million Metric Tonnes

JNPT: MAJOR PORT WITH THE LARGEST CONTAINER CAPACITY … (1/2)


Cargo profile of JNPT (FY17)

Source: JNPT’s website, Indian Ports Association,

Ministry of Shipping, TechSci Research

Notes: POL – Petroleum, Oil, and Lubricants,

MMT – Million Metric Tonnes,

TEU – Twenty-Foot Equivalent Unit,

MTPA – Million Tonnes Per Annum

JNPT was developed to relieve the pressure of Mumbai port

and was commissioned in 1989

It serves most of North India & has good hinterland

connectivity through road & rail networks

JNPT, with a capacity of 4.76 million TEU, handles over 58

per cent of India’s container traffic, as of FY16

JNPT is a pioneer in involving private sector participation in

major ports & operates under a landlord model; NSCIT is

the 1st private terminal in the country

The port is poised to handle 5.03 million TEUs of containers

by 2016–17

Proposed capacity additions by FY17 –

Marine chemical: 30 MTPA

Container terminal: 58 MTPA

PORTS

JNPT: MAJOR PORT WITH THE LARGEST CONTAINER CAPACITY … (2/2)

87.74%

10.91%

1.35%

Container

POL

Others


Cargo handled at major and non-major port of

Gujarat (MMT)

Source: Shipping Ministry, TechSci Research

1Data for April – December 2016

Gujarat is endowed with 1,215 kilo meters of coastline i.e.

1/6th of total Indian coastline

The state has 42 ports of which 41 are non major, while

Kandla is the sole major port

During FY07–16, cargo traffic in Gujarat increased at a

CAGR of 10.17 per cent, with the cargo volume handled

reaching 440 MMT in FY16.

Favourable policies of the Gujarat government helped the

state in gaining private investors interest in port related

activities

Kandla port handled 499.68 million tonnes of cargo traffic,

during April 2016 to January 2017. Overall India’s cargo

traffic increased by 7.14 per cent.

GUJARAT: PORT HUB OF INDIA ... (1/2)

PORTS

CAGR: 10.17%

5365 72 80 82 83 94 97 92 100 100

131151 153

206231

259288

310336 340

269.9



1


In FY16, Gujarat Maritime Board (GMB) handled 339.77 MMT of cargo, with a capacity addition of 466 MMT in the same year.

During the 12th Five-Year Plan, the government estimates investment of about USD9.4 billion in the port sector by private players

in Gujarat

With 7 ports under construction & 5 proposed ports, Gujarat has the highest number of privately operated greenfield ports in India

As of October 2016, Ministry of Shipping has sanctioned Capital Dredging Project for Ro Pax Ferry Services between Gogha &

Dahej, in Gulf of Cambay in Gujarat. The total project cost is US$ 35.75 million, of which 50 per cent will be funded by Centre

Government under the Sagarmala programme

As of November 2016, Ministry of Shipping sanctioned sum of USD1.49 million to Gujarat Maritime Board for capacity building &

safety training of workers involved in ship recycling activities under Sagarmala

In June 2017, Adani Ports and Special Economic Zone Ltd. (ASPEZ) voiced plans to acquire a major stake in Gujarat Pipavav Port

Ltd. (GPPL). The company has initiated talks to acquire APM Terminals Management B.V.’s 43.01% stake in GPPL.

PORTS

Source: Shipping Ministry,

TechSci Research

GUJARAT: PORT HUB OF INDIA ... (2/2)

Greenfield ports Developer

Port of Pipavav GMB and Gujarat Pipavav Port Ltd

Mundra Port Gujarat Adani Port Ltd

Dahej Port Petronet LNG Ltd and GMB

Hazira Port Shell Gas B.V.

USEFUL INFORMATION

PORTS

4848JUNE 2017

INDUSTRY ASSOCIATIONS


PORTS

Indian Ports Association (IPA)

1st floor, South Tower, NBCC Place

Bhishma Pitamah Marg, Lodi Road

New Delhi – 110 003

Phone: 91-11-24369061, 24369063, 24368334

Fax: 91-11-24365866

E-mail: [email protected], [email protected]

Indian Private Ports & Terminals Association

Darabshaw House, Level-1, N.M. Marg,

Ballard Estate, Mumbai 400 001, India

Tel. No: 022-22610599

Fax. No: 022-22621405

Email: [email protected]


Major and non-major ports do not have a strict association with traffic volumes. The classification has more of an

administrative significance

Cargo traffic includes both loading (export) and unloading (imports) of goods

Containerisation is the increased use of container for transporting non-bulk goods. It leads to increased efficiency (both

time and money)

Turnaround time is the total time spent by a ship from entry into port till departure

Twenty Equivalent Units (TEU) is a standard measure of containers which are 20 feet in length and 8 feet in width; the

height can vary

Draft is the vertical distance between waterline and the bottom of the ship. It determines the depth of water a ship or boat

can safely navigate. Higher capacity ships will need higher draft, hence ports with higher natural draft will attract bigger

ships

Waterfront availability is the length of the water line on the coast where ships can rest and the goods are unloaded. Longer

waterfront lengths reduce waiting time and help raise capacity

Terminals are certain sections of the ports where different types of cargo are unloaded

Single Point Mooring (SPM) is a loading buoy anchored offshore that serves as a mooring point and interconnect for

tankers loading or offloading gas or fluid product

A dry dock is a narrow basin that can be flooded to allow a ship to be floated in, then drained to allow that ship to come to

rest on a dry platform. Dry docks are used for construction, maintenance and repair of ships

PORTS

NOTES

5050JUNE 2017

GLOSSARY … (1/2)


FY: Indian Financial Year (April to March) – So FY11 implies April 2010 to March 2011

USD: US Dollar

FDI: Foreign Direct Investment

IPA: Indian Ports Association

NMDP: National Maritime Development Programme

POL: Petroleum, Oil & Lubricants

SEZ: Special Economic Zone

CAGR: Compounded Annual Growth Rate

ICTT: International Container Transshipment Terminal

TEU: Twenty-Foot Equivalent Unit

MMTPA: Million Metric Tonnes Per Annum

MMT: Million Metric Tonnes

PORTS

5151JUNE 2017

GLOSSARY … (2/2)


GOI: Government of India

NSICT: Nhava Sheva International Container Terminal, Mumbai

O&M: Operation and Maintenance services

LNG: Liquefied Natural Gas

Wherever applicable, numbers have been rounded off to the nearest whole number

PORTS

5252JUNE 2017

Year INR equivalent of one USD

2004–05 44.81

2005–06 44.14

2006–07 45.14

2007–08 40.27

2008–09 46.14

2009–10 47.42

2010–11 45.62

2011–12 46.88

2012–13 54.31

2013–14 60.28

2014-15 61.06

2015-16 65.46

2016-17 (E) 66.95

Year INR equivalent of one USD

2005 43.98

2006 45.18

2007 41.34

2008 43.62

2009 48.42

2010 45.72

2011 46.85

2012 53.46

2013 58.44

2014 61.03

2015 64.15

2016 (Expected) 67.22

Exchange rates (Fiscal Year)


EXCHANGE RATES

Exchange rates (Calendar Year)

PORTS

Source: Reserve bank of India,

Average for the year

5353JUNE 2017

India Brand Equity Foundation (“IBEF”) engaged TechSci to prepare this presentation and the same has been

prepared by TechSci in consultation with IBEF.

All rights reserved. All copyright in this presentation and related works is solely and exclusively owned by IBEF. The

same may not be reproduced, wholly or in part in any material form (including photocopying or storing it in any

medium by electronic means and whether or not transiently or incidentally to some other use of this presentation),

modified or in any manner communicated to any third party except with the written approval of IBEF.

This presentation is for information purposes only. While due care has been taken during the compilation of this

presentation to ensure that the information is accurate to the best of TechSci and IBEF’s knowledge and belief, the

content is not to be construed in any manner whatsoever as a substitute for professional advice.

TechSci and IBEF neither recommend nor endorse any specific products or services that may have been mentioned in

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Neither TechSci nor IBEF shall be liable for any direct or indirect damages that may arise due to any act or omission

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DISCLAIMER

PORTS

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