PORTS
DECEMBER 2016 For updated information, please visit www.ibef.org 1 PORTS
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
DECEMBER 2016 For updated information, please visit www.ibef.org 2 PORTS
EXECUTIVE SUMMARY … (1/2)
Increasing trade activities and CAGR: 17.5% By FY17, cargo capacity in private participation in port 2493.0 India is expected to increase to 1806.8 infrastructure set to support 2,493.1 MMT from 1,806.8 port infrastructure activity MMT in FY15
FY15 FY17 MMT
CAGR: 55.53% By FY17, cargo traffic at major ports in India is expected to rise 943.1 India has 12 major ports 606.37 to 943.1 MMT from 606.37 MMT in FY16 at a YoY of 55.53 per cent
FY16 MMT FY17E
CAGR: 75% 815.2 By FY17, cargo traffic at non- India’s 200 non-major ports are major ports in India is expected strategically located on the 466.1 to grow to 815.2 MMT from world’s shipping routes 466.1 MMT in FY16
FY16 FY17E
Source: Ministry of Shipping, TechSci Research Notes: E – Estimates, MMT - Million Metric Tonnes DECEMBER 2016 For updated information, please visit www.ibef.org 3 PORTS
EXECUTIVE SUMMARY … (2/2)
21 CAGR: 156% By FY17, container demand in India (For major ports) is Trade to boost demand for 8.20 expected to increase to 21 containers million TEU from 8.2 million TEU in FY16 FY16 FY17E
228 CAGR: 128.7% By FY17, iron ore traffic (For Infrastructural development to Major & Minor ports) is increase demand for iron and expected to rise to 228 MMT steel 43.6 from 43.6 MMT in FY15
FY15 FY17(E) MMT
Source: Ministry of Shipping, TechSci Research Notes: FY17 (E) – Estimates, TEU – Twenty Foot Equivalent Unit, MMT - Million Metric Tonnes
DECEMBER 2016 For updated information, please visit www.ibef.org 4 PORTS
ADVANTAGE INDIA PORTS
ADVANTAGE INDIA
Robust demand FY16 Growing demand Attractive opportunities FY17E • Port traffic in India is set to rise at a CAGR of Cargo 29.2 per cent over FY15–17 • Non-major ports are set to benefit from Cargo traffic in • CAGR in traffic : strong growth in India’s external trade traffic in MMT: • Non-major ports: expected to increase MMT: 1072.47 by 140.5 per cent to 815 MMT by 2017 • Special Economic Zones are being 1,758.3 from March 2016 developed in close proximity to several • Major ports: expected to increase by ports – comprising coal-based power 55.5 per cent to reach 943 MMT by plants, steel plants and oil refineries 2017 from FY16 (April-December 2015) Advantage India Competitive advantages Policy support • India has a coastline which is more than • The government initiated NMDP, an 7,517 km long, interspersed with more initiative to develop the maritime sector; than 200 ports the planned outlay is USD11.8 billion
• Most cargo ships that sail between East • FDI of 100 per cent under the automatic Asia and America, Europe and Africa pass route and a ten year tax holiday for through Indian territorial waters enterprises engaged in ports
• Plans to create port capacity of around • India is the largest importer of thermal 3200 MMT to handle the expected coal in the world • traffic of about 2500 MMT by 2020
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 DECEMBER 2016 For updated information, please visit www.ibef.org 6 PORTS
MARKET OVERVIEW AND TRENDS PORTS
THERE ARE TWO BASIC CATEGORIES OF PORTS IN INDIA
Ports in India (2015)
Major Non-major (minor)
• There are 12 major ports in • India has about 200 non- the country; 6 on the major ports of which one- Eastern coast and 6 on the third are operational Western coast • Non-major ports come • Major ports are under the under the jurisdiction of the jurisdiction of the respective state Government of India and Governments’ Maritime are governed by the Major Boards (GMB) Port Trusts Act 1963, except Ennore port, which is administered under the Companies Act 1956
Source: Ministry of Shipping; TechSci Research DECEMBER 2016 For updated information, please visit www.ibef.org 8 PORTS
MAJOR PORTS IN INDIA
Kandla Kolkata
Paradip Mumbai
JNPT Visakhapatnam
Mormugao
New Mangalore Ennore Chennai
Cochin Tuticorin Note: JNPT – Jawaharlal Nehru Port Trust DECEMBER 2016 For updated information, please visit www.ibef.org 9 PORTS
CARGO TRAFFIC IS ON THE RISE … (1/2)
Cargo traffic at major ports in India – Cargo traffic at major ports (MMT) 943.1
Stood at 606.37 MMT in FY16 CAGR: 7.4% Increased at a CAGR of 7.4 per cent during FY07–17E 581.3 606.37 561 569.8 560.1 545.6 555.3 519.2 530.4 Cargo traffic in 2017 at major ports is expected to reach 463.6 943.1 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.
FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17E
Source: Ministry of Shipping, TechSci Research Notes: MMT – Million Metric Tonnes, CAGR – Compound Annual Growth Rate, FY – Indian Financial Year (April–March), E – Estimated
DECEMBER 2016 For updated information, please visit www.ibef.org 10 PORTS
CARGO TRAFFIC IS ON THE RISE … (2/2)
Non-major ports are evolving faster than major ports- Percentage share of ports
Non-major ports are gaining shares and a major chunk of
28.2% 28.6%
traffic has shifted from major ports to non-major ports 28.7%
34.0%
35.6%
38.7%
41.6%
42.9%
43.5%
44.8% 46.4% 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
71.8%
71.4%
71.3%
66.0%
64.4%
61.3%
58.4%
57.1%
56.5%
55.2% 53.6%
FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17E
Major Ports Non Major Ports
Cargo traffic at non-major ports – Cargo traffic at non-major ports (MMT) 815.2 Stood at 466.1 MMT in FY16 CAGR: 15.9%
Cargo traffic has expanded at a CAGR of 10.7 per cent 471.2 466.1 417.1 during FY07–16 and is expected to grow annually at 15.9 353.0 387.9 per cent during FY07-17 288.9 314.9 186.1 203.6 213.2 Cargo traffic in 2017 at non-major ports is expected to reach 815.2 MMT FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17E Source: Ministry of Shipping, TechSci Research Notes: MMT – Million Metric Tonnes, CAGR – Compound Annual Growth Rate, FY – Indian Financial Year (April–March); E – Estimate DECEMBER 2016 For updated information, please visit www.ibef.org 11 PORTS
CARGO PROFILE AT MAJOR PORTS IN INDIA … (1/2)
Cargo at major ports in FY15 Cargo at major ports in FY16
Solid Liquid Container Solid Liquid Container (petroleum, oil (petroleum, oil and lubricants) and lubricants) Share: 47.0% Share: 22.5% Share: 46.4% Share: 20.3% Share: 33.7% Share: 33.3%
Iron ore Share: 2.8% Iron ore Share: 2.1%
Coal Share: 20.4% Coal Share: 22.7%
Fertilizer Share: 2.8% Fertilizer Share: 2.6%
Other cargo Share: 20.9% Other cargo Share: 18.9%
Source: Ministry of Shipping; TechSci Research Note: Other cargo includes Fertiliser Raw Material (dry) and food-grains DECEMBER 2016 For updated information, please visit www.ibef.org 12 PORTS
CARGO PROFILE AT MAJOR PORTS IN INDIA … (2/2)
Between FY07– FY16, cargo traffic grew at CAGR 3 per Cargo traffic at major ports (MMT) cent
Over FY07–16, CAGR in the volume of different segments 123.18
was as follows– 119.4
114.1
101.2
120.1
114.6
93.1
119.8 92.3
Solid cargo was 2 per cent 73.2
202.3
175.1
188.9
179.1
179.1
176.1
187.2
168.7 185.9 Liquid cargo was 3.1 per cent 154.3
Container cargo was 6 per cent
273
284.7
276.6
261.2
260.9
281.18
258.2
253.5
239.9 235.9 Cargo traffic during FY16 for solid, liquid, and container cargo was 281.18, 202.3 and 123.18 MMT, respectively FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16
During April-October 2016, cargo traffic at 12 major ports in Solid Liqiud Container the country was reported at 370.04 MT, showing a growth of Source: Ministry of Shipping; Indian Ports Association (IPA), TechSci Research 6.27 per cent over the same period during the previous year Note: Other cargo in Solid includes fertiliser raw material (dry) and food-grains
DECEMBER 2016 For updated information, please visit www.ibef.org 13 PORTS
INCREASE IN CAPACITY OVER THE YEARS
Capacity and utilisation at major ports (MMT) Capacity at major ports grew to 965.36 MMT in FY16, 1200 120.00% implying a CAGR of 7.5 per cent since FY07 1000 100.00% Despite capacity increasing, utilisation rates have been gradually coming down post the global economic 800 80.00% meltdown in FY08 600 60.00% Utilisation rates of major ports in India are much above
400 965.36 40.00%
world’s average 871.52
800.52
744.9
689.8
670.1
616.7
574.8 532.1
200 504.8 20.00% As of November 2016, 12 Major Ports were identified under Sagarmala project, for cargo handling till 2035. 0 0.00% The objective of this project is to promote port led FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 development and to provide infrastructure to quickly Capacity Utilization (RHS) transport goods to and from ports, with higher efficiency and at lower cost. Source: Indian Port Association, Ministry of Shipping, Indian Port Rail Corporation Limited (IPRCL), plans to TechSci Research conduct rail infrastructure expansion and modernisation Note: MMT – Million Metric Tonnes work for Jawaharlal Nehru Port Trust (JNPT), Kandla Port and Haldia Dock Complex (HDC) from April 2017. Similar works have already started for Kolkata, Vishakhapatnam, Tuticorin, New Mangalore and Chennai ports.
DECEMBER 2016 For updated information, please visit www.ibef.org 14 PORTS
DROP IN TURNAROUND TIME IN FY13
Average turnaround time is influenced by factors such as Average turnaround time for major ports (in days) type of cargo, parcel size and entrance channel 5.29
The average turnaround time improved to 2.04 days in 4.63 4.56 4.20 4.29 FY16 from 4.01 days in FY15 4.00 4.01 3.80 3.84
2.04
FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16
Source: Ministry of Shipping;, Indian Port Association TechSci Research Note: Turnaround time – Total time spent by a ship from entry into port until departure
DECEMBER 2016 For updated information, please visit www.ibef.org 15 PORTS
NOTABLE TRENDS IN THE PORTS SECTOR … (1/2)
• Strong growth potential, favourable investment climate, and sops provided by state governments have encouraged domestic and foreign private players to enter the Indian Increasing private ports sector. In addition to the development of ports and terminals – participation • The private sector has extensively participated in port logistics services • By March’15, around 99 Public Private Partnership (PPP) projects are operational with a total cost of around USD8813.8 million and capacity of 683.29 million tonnes per annum.
• SEZs are being developed in close proximity to several ports, thereby providing strategic advantage to industries within these zones. Plants being set up include – • Coal-based power plants to take advantage of imported coal Setting up of port- • Steel plants and edible oil refineries based SEZs • Development of SEZs in Mundra, Krishnapatnam, Rewas and few others is underway • Government has announced plans to develop 14 CEZs (coastal economic zones) in a phased manner for port-led development in all the nine maritime states by advancing efforts to develop one new port, each on the east and the west coast
• All the greenfield ports are being developed at shores with natural deep drafts and the Focus on draft depth existing ports are investing on improving their draft depth. • Higher draft depth is required to accommodate large sized vessels. Due to the cost and time advantage associated with the large sized vehicles, much of the traffic is shifting to large vessels from smaller ones, especially in coal transportation
Source: Ministry of Shipping, TechSci Research Notes: SEZ – Special Economic Zone, PPP – Public-Private Partnership DECEMBER 2016 For updated information, please visit www.ibef.org 16 PORTS
NOTABLE TRENDS IN THE PORTS SECTOR … (2/2)
• 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 Specialist terminal- equipment and hence high capital costs. Forming specialist terminals for such based ports cargo result in optimal use of resources and increased efficiencies • Examples of specialist terminals: ICTT in Cochin, LNG terminal in Dahej Port
• To promote private investments, the government has reformed the organisational model of seaports – • From: A ‘service port’ model where the port authority offers all the services ‘Landlord port’ model • To: A ‘landlord port’ model where the port authority acts as a regulator and landlord while port operations are carried out by private companies • Major ports following ‘landlord port’ model: JNPT, Chennai, Visakhapatnam and Tuticorin
• With the increasing private participation in establishing minor ports. Cargo traffic handled Rising traffic at non by the minor ports are outpacing cargo traffic at major ports, cargo traffic at non major port major ports has expanded at a CAGR of 31.5 per cent during FY07–15 • The cargo traffic at major ports was 606.37 MMT in FY16
Source: TechSci Research Notes: ICTT – International Container Transshipment Terminal, LNG – Liquefied Natural Gas, MMT – Million Metric Tonnes
DECEMBER 2016 For updated information, please visit www.ibef.org 17 PORTS
PORTER FIVE FORCES ANALYSIS PORTS
PORTER’S FIVE FORCES ANALYSIS
Competitive Rivalry
• Increasing trade activities brought by rising imports of commodities like coal and crude to generate higher business and limit overall competition as most ports handle specific geographies Threat of New Entrants • There have been instances of private managed ports attracting the (Medium) share of other ports (usually handled by government agencies) as in the case of JNPT and Mumbai Port Trust. However, demand expected to remain strong
Threat of New Entrants Substitute Products Bargaining Competitive Substitute • 100 per cent FDI under • With rising demand for port Power of Rivalry Products automatic route and income tax infrastructure due to growing Customers (Medium) (Low) exemption (10 years) is imports (crude, coal) and (Medium) attracting foreign players. containerisation, the threat of However, higher capital substitute products to remain expenditure acts as a barrier weak
Bargaining Power of Suppliers Bargaining Power of Customers Bargaining Power of Suppliers • Considerable capacities to be • Imports to continue to remain (Medium) added going forward. However, strong led by strong demand. demand to continue to remain However considerable port strong capacities to be added going forward
Source: PricewaterhouseCoopers, Techopak, TechSci Research DECEMBER 2016 For updated information, please visit www.ibef.org 19 PORTS
STRATEGIES ADOPTED PORTS
STRATEGIES ADOPTED
• After having a strong advantage on India’s West coast, Adani Ports and 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 Pan-India presence acquired Dharma Port to replicate its development and growth on the eastern coast. • Essar Ports Limited as a part of it strategic move to increase its potential on the east coast has won the contract for modernizing three ports at Visakhapatnam
• Geographic diversification as in the case of Adani group acquiring coal mines(Australia Geographic and Indonesia) and setting up coal terminal in Australia to take the benefit of increasing diversification coal imports in India
• Adani group, largest private port operator in India, is now venturing into providing allied Allied activities 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 Container train private link in the country. It conducts operations on a pan-india basis operating 6 operations container rakes
• Port authorities are modernizing and upgrading port facilities to meet the needs of the port Modernising users in competitive environment
Source: Company website, TechSci Research
DECEMBER 2016 For updated information, please visit www.ibef.org 21 PORTS
GROWTH DRIVERS PORTS
SECTOR BENEFITS FROM STRONG DEMAND, PRIVATE PARTICIPATION
Increasing GrowingGrowing demand Policy support Innovation demand investments
National Maritime Expanding port Increasing trade Development Increasing development and activities resulting Programme and investments in distribution in container traffic National Maritime building ports and Agenda facilities in India related activities Inviting Driving Resulting
Rising demand for FDI of up to 100 Private equity Use of modern coal and other per cent under the supporting private technology commodities automatic route port developers
Various sops and Growing crude Providing support Increasing incentives for imports by the to global projects investments by private players to country from India foreign players build ports
Source: Ministry of Shipping, TechSci Research Note: NMDP - National Maritime Development Programme
DECEMBER 2016 For updated information, please visit www.ibef.org 23 PORTS
INDIA’S PORTS ARE BENEFITTING FROM STRONG GROWTH IN EXTERNAL TRADE … (1/2)
India’s total external trade have grown to USD643 billion in India’s external trade flows (USD billion) FY16, implying a CAGR of 4 per cent since FY09
Ports handle almost 95 per cent of trade volumes; thus CAGR: 4%
rising trade has contributed significantly to cargo traffic
491
489
450
448
381
370
314
310
306
304
300
288
262
250
185
179
54 43
FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY171 Export Import
Source: Ministry of Commerce, TechSci Research CAGR: For Imports from FY09-15 FY171: Data available for April - May 2016
DECEMBER 2016 For updated information, please visit www.ibef.org 24 PORTS
INDIA’S PORTS ARE BENEFITTING FROM STRONG GROWTH IN EXTERNAL TRADE … (2/2)
Increasing trade is translating into higher demand for Container traffic at major ports (MMT) containerisation due to their efficiency
During FY07–16, container traffic rose to 123.2 MMT, CAGR: 5.9% implying a CAGR of 5.9 per cent
120.1 123.2 119.8 114.6 119.4 During FY171, container traffic stood at 31.1 MMT 114.1 101.2 92.3 93.1 73.4
31.1
FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY171
Source: Indian Ports Association, TechSci Research Note: MMT – Million Metric Tonnes FY171: Data available for April - May 2016
DECEMBER 2016 For updated information, please visit www.ibef.org 25 PORTS
PORTS TO BENEFIT FROM GROWING CRUDE IMPORTS … (1/2)
A consequence of strong GDP growth has been rising Crude imports (MMT) energy demand; the country currently meets about 75 per
cent of total crude oil demand by imports
202.85
189.44
189.24 184.8
India’s crude imports touched 202.85 MMT in FY16, 171.73 163.6
implying a CAGR of 6.9 per cent over FY07–16 159.26
132.78
121.67
111.5 53.15
FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY171
Source: Handbook of Indian Statistics (RBI), Petroleum Planning and Analysis Cell, TechSci Research Notes: MMT – Million Metric Tonnes, FY171 – Data available for April – June 2016
DECEMBER 2016 For updated information, please visit www.ibef.org 26 PORTS
PORTS TO BENEFIT FROM GROWING CRUDE IMPORTS … (2/2)
Private ports have been especially good at attracting POL traffic (MMT) crude import traffic
POL have been the major contributors to total traffic CAGR: 5% at ports and contributed 33.3 per cent in FY16
POL traffic at both major and non-major ports added
180.9
169.8
168.6
167.3 156.3
up to 376.7 MMT in FY15, implying a CAGR of 5 per 145.4
137.7 91
cent over FY07–15 97.8 81.2
POL traffic in FY16 is expected to reach 376.7 MMT
181
195.8
187.2
185.9
179.1 179.1
176.1
175.1
168.7 154.3
FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16(P) Major Ports Minor Ports
Source: Ministry of Shipping, TechSci Research Notes: POL – Petroleum, Oil, and Lubricants, MMT – Million Metric Tonnes P – Provisional
DECEMBER 2016 For updated information, please visit www.ibef.org 27 PORTS
INCREASING COAL IMPORTS SET TO DRIVE RISING CARGO TRAFFIC … (1/2)
India is the largest importer of thermal coal in the world and Coal supply gap (import requirement) (MMT) this is expected to grow due to increased demand for power as coal-based power stations were the biggest contributors. CAGR: 19.60% A major chunk of this import is transported by sea 212.1 192.5 Coal imports (both thermal and cooking) are estimated to 160.9 168.5 have fallen to 168.5 in FY14 due to the increase in the coal 132.2 production in the country. Further, the government has 111.68 given the target of 143.28 million tonnes of coal supply gap which would be filled by import. 83.5 60 With growing demand for power, coal imports reached to be 111.68 MMT in FY161
1 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 Notes:: GW – Gigawatt, MMT – Million Metric Tonnes 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, FY161 – Data available till October 2015
DECEMBER 2016 For updated information, please visit www.ibef.org 28 PORTS
INCREASING COAL IMPORTS SET TO DRIVE RISING CARGO TRAFFIC … (2/2)
Increasing coal imports are set to drive coal cargo traffic Coal cargo traffic (MMT) 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 CAGR: 15.5% 158.7 144.2 Coal cargo traffic has grown at a CAGR of 15.5 per cent 126.3 over FY07–16 to reach 270.3 MMT. 109.3 79 41.3 58.5 21.5
Total coal handled by India’s 12 major ports jumped to 14 15.4
126.1
118.7 104.1
126.1 million tonnes in FY16 from 118.7 million tonnes in 86.6
78.8
72.7
71.7
70.4 64.9 FY15 59.9 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16
Thermal coal imports through the ports leaped 13.3 per cent Major Ports Minor Ports to 98.7 million tonnes, while shipments of coking coal, used in making steel, reached to 27.35 million tonnes Source: Ministry of Shipping; TechSci Research Note: MMT – Million Metric Tonnes Coal cargo traffic by minor ports crossed the total traffic of major ports by 2013. In FY16, the coal traffic by minor ports reached 144.23 MMT
DECEMBER 2016 For updated information, please visit www.ibef.org 29 PORTS
NATIONAL MARITIME AGENDA 2010–2020 … (1/2)
Focus on increasing • To create a port capacity of around 3,200 MT to handle the expected traffic of about 2,500 capacity MT by 2020
• Proposed investments in major ports by 2020 are expected to total USD18.6 billion, while Increasing investments those in non-major ports would be USD28.5 billion
World-class • To implement full mechanisation of cargo handling and movement at ports, thereby bringing Indian ports on par with the best international ports in terms of performance and infrastructure capacity
• Major ports have been working towards implementing ‘Landlord port‘ concept duly limiting Landlord ports their role to maintenance of channels and basic infrastructure leaving the development, operation, management, of terminal and cargo handling facilities to the private sector
• To develop two major ports (one each on East and West coast) to promote trade as well Strategically building as two hub ports (one each on the West coast and the East coast) – Mumbai (JNPT), ports Kochi, Chennai, and Visakhapatnam
Bringing ports under • To establish a port regulator for all ports in order to set, monitor, and regulate service regulator levels, technical and performance standards
Source: Ministry of Shipping, TechSci Research DECEMBER 2016 For updated information, please visit www.ibef.org 30 PORTS
NATIONAL MARITIME AGENDA 2010–2020 … (2/2)
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 and the remaining from budgetary allocation
The total traffic on the Indian ports is expected to grow from about 2229 in 2018 and reach to 3033 MT by the end of 2020
The government, through this policy, aims to increase the tonnage under the Indian flag and 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 and financial institutions to fund the Port projects
Source: Ministry of Shipping, TechSci Research Note: EXIM - Export-Import, MT – Million Tonne
DECEMBER 2016 For updated information, please visit www.ibef.org 31 PORTS
12TH FIVE-YEAR PLAN
The 12th Five-Year Plan (2012–17) is focused on the development of major and non-major ports through public and 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.
Planned capacity 12th Five-Year Plan (MMT) Projected traffic12th Five-Year Plan (MMT)
943.1 1,229.2 815.2 1,059.8
560.1 689.9 544.7 370.0
Major Ports Non- Major Ports Major Ports Non- Major Ports
FY12 FY17E FY12 FY17E
Source: E:Estimated
DECEMBER 2016 For updated information, please visit www.ibef.org 32 PORTS
FAVOURABLE POLICIES ASSISTING THE PRIVATE SECTOR
• The government has allowed FDI of up to 100 per cent under the automatic route for De-licensing and tax projects related to the construction and maintenance of ports and harbours holidays • A 10-year tax holiday to enterprises engaged in the business of developing, maintaining, and operating ports, inland waterways, and inland ports
• Private ports enjoy price flexibility, as the government allows non-major ports to determine Price flexibility their own tariffs in consultation with the State Maritime Boards; at major ports, tariffs are regulated by the Tariff Authority for Major Ports (TAMP)
• An MCA has been finalised to bring transparency and uniformity to contractual agreements that major ports would enter into with selected bidders for projects under the Model Concession Build, Operate and Transfer (BOT) model Agreement (MCA) • 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 • Primary focus of the scheme is to allow future public-private partnership operators to fix Act, 2016 tariffs. With the implementation of this policy, port authorities will get the power to lease land for port-related use for up to 40 years and for non-port related use up to 20 years
• The system for security clearance for ports being streamline and made faster Favourable system • Expansion of existing framework to attract participation from the private sector for development of infrastructure facilities such as dredging, road infrastructure, creation of SEZ and development of integrated parking zones in the port area
DECEMBER 2016 Source: Ministry of Shipping; TechSci Research; For updated information, please visit www.ibef.org 33 Note: FDI – Foreign Direct Investment PORTS
STRONG PRIVATE SECTOR PARTICIPATION IN PORTS PROJECTS … (1/3)
Greenfield projects
Private investment
Private terminals
39 Public Private Partnership (PPP) projects are operational at a cost of around USD2219.4 Million and capacity of 240.72 Million Tonnes Per Annum (MTPA).
32 PPP projects at an estimated cost of around USD3917.6 Million and capacity 264.77 Million Tonnes Per Annum (MTPA) awarded and are under implementation.
Total 91 projects with involving capacity of 521.45 MMPA have been awarded during 2012-16 (Upto 30th June, 2015)
15 PPP projects with an estimated cost of about USD1210.6 Million and capacity 69.47 Million Tonnes Per Annum (MTPA) have been awarded/approved and 13 projects at an estimated cost of about USD1466.2 Million and Capacity 108.35 Million Tonnes Per Annum (MTPA) are likely to be awarded/approved by 31.03.2015.
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 and Dahanu in Maharashtra with an initial investment of USD2.3 billion has been introduced and 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.
Source: Ministry of Shipping; TechSci Research; Notes: PPP –PublicPrivate Partnership DECEMBER 2016 For updated information, please visit www.ibef.org 34 PORTS
STRONG PRIVATE SECTOR PARTICIPATION IN PORTS PROJECTS … (2/3)
Terminals in major ports Port agency Estimated cost Key private sector Ports they with private sector (USD million) companies developed involvement Maersk JNPT (Mumbai) Container terminal, Ennore Ennore 293.1 JNPT, P&O Ports LNG terminal, Cochin Cochin Port Trust 729.1 (Mumbai and Chennai) (Cochin and Container terminal, NSICT JNPT 156.3 Dubai Ports International Vishakhapatnam) Oil jetty related facilities Kandla Port Trust 156.3 (Vadinar) PSA Singapore Tuticorin
Third container terminal JNPT 187.5 Adani Mundra (Mumbai) Maersk Pipavav Crude oil handling facility Cochin Port Trust 146.5 (Cochin) Navyuga Engineering Krishnapatnam Company Ltd ICTT at Vallarpadam Cochin Port Trust 262.9 (Cochin) DVS Raju group Gangavaram
Construction of SPM captive Paradip Port Trust 104.2 JSW Jaigarh berth (Paradip) Marg Karaikal Development of second Chennai Port Trust 103.1 container terminal (Chennai)
As on 2015 Source: Indian Ports Association, TechSci Research Notes: NSICT – Nhava Sheva International Container Terminal, Mumbai, ICTT – International Container Transshipment Terminal, SPM – Single Point Mooring DECEMBER 2016 For updated information, please visit www.ibef.org 35 PORTS
STRONG PRIVATE SECTOR PARTICIPATION IN PORTS PROJECTS … (3/3)
Terminals in major ports with private sector Port agency Capacity Estimated cost involvement (FY15) (Million tonnes) (USD million)
Development & Operation of 12.5 to 40 MMT in International Container Transshipment Terminal (ICTT) Cochin Port 353 Phases at Vallar-padam Setting up of LNG Port & ReGasification Terminal at Cochin Port 5 MMPTA 691.1 Puthuvypeen by Cochin. / Cochin Port Trust Multi-User Liquid Terminal (MULT) at Puthuvypeen SEZ (International Cochin Port 4.10 MMTPA 38.4 Bunkering Terminal at Cochin) Conversion of berth No. 8 as container Tuticorin 7.2 MTPA 52.03 terminal on
Development of North Cargo Berth – II Tuticorin 7.0 MTPA 55.36 on DBFOT basis. Enhancement of Cargo Handling capacity by installing rapid in motion Mormugao Port Trust 2.50 MTPA 7.5 wagon loading facility by SWPL Development of Container Kamarajar Port 16.8MT 210.68 Terminal on DBFOT basis Ltd
Development of Multi Cargo Kamarajar Port 2.00 25.05 Terminal on DBFOT basis Ltd
As on FY15 Source: Indian Ports Association, TechSci Research Notes: NSICT – Nhava Sheva International Container Terminal, Mumbai, ICTT – International Container Transshipment Terminal, SPM – Single Point Mooring DECEMBER 2016 For updated information, please visit www.ibef.org 36 PORTS
Projects Completed and Awarded During FY15 & FY16
A PPP project worth USD220 million for redevelopment of berths 8, 9 and barge berths at the Port of Mormugao, Goa has been awarded in September 2016
Kamarajar Port Marine Liquid Terminal-II PPP project and 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)
Development of WQ6 berth for 225m length and 22.5m width for handling dry bulk cargo on DBOFT basis (6.00) at VPT.
Development of EQ-10 berth in inner harbour for handling liquid cargoes and chemicals on DBOFT basis (1.84 MTPA) at VPT.
Increase in capacity at CICTPL coal berth due to productivity (1.00 MTPA) at KPL.
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.
Construction of Mooring Dolphins at Liquid Cargo Jetty (1.00 MTPA) at JNPT
Increase in capacity due to deepening and widening of channel (10.20 MTPA) at JNPT.
Source: Indian Ports Association, TechSci Research DECEMBER 2016 For updated information, please visit www.ibef.org 37 PORTS
PRIVATE EQUITY INTEREST IN INDIAN PORTS/SHIPPING REMAINS HEALTHY
PE deals since 2014
Target Acquirer Value (USD million) Year
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 (Second round) Ascent Capital 41.7 NA Ocean Sparkle Ltd Standard Chartered PE 41.6 2012 Karaikal Port Pvt Ltd (First 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 Aureos India Fund, 16.4 NA Sheva Eplanet Venture
Source: E&Y, Grant Thornton, Thompson ONE Banker, TechSci Research DECEMBER 2016 For updated information, please visit www.ibef.org 38 PORTS
OPPORTUNITIES PORTS
OPPORTUNITIES
Increasing scope for private ports Ship repair facilities at ports Port support services
• With rising demand for port • Dry docks are necessary to provide ship • Operation and maintenance services infrastructure due to growing imports repair facilities. Out of all major ports, such as pilotage, dredging, harbouring (crude, coal) and containerisation, Kolkata has five dry docks, Mumbai and and provision of marine assets such as public ports (major ports) will fall short of Visakhapatnam have two; the rest have barges and dredgers are expected to meeting demand one or no dock at all increase in coming years
• This provides private ports with an • Given the positive outlook for cargo • Increasing investments and cargo traffic opportunity to serve the spill-off demand traffic, and the resulting increase in point to a healthy outlook for port from major ports and increase their number of vessels visiting ports, support services capacities in line with forecasted new demand for ship repair services will go demand up. This will provide opportunities to • These include Operation and build new dry docks and setup ancillary Maintenance (O&M) services like repair facilities pilotage, harbouring and provision of marine assets like barges and dredgers
Source: Ministry of Shipping, TechSci Research Note: O&M – Operations & Maintenance
DECEMBER 2016 For updated information, please visit www.ibef.org 40 PORTS
SUCCESS STORIES PORTS
MUNDRA: THE LARGEST PRIVATE PORT IN INDIA … (1/2)
Mundra Port and Special Economic Zone Ltd was renamed Net sales (USD million) as Adani Ports & Special Economic Zone Ltd 1213.1
It is the largest private port in India in terms of volume 1020.6
Net Sales (FY16): USD1213.1 million 801.2 658.6 575.4 Operating profit (FY16): USD710.5 million 439.5 Adani’s Mundra Port crosses 100 MMT mark of cargo 300.7 255.7 handling in FY16. The only commercial port in India to 202.9 achieve 100 MMT traffic. Further, cargo traffic of the company touched 109.02 MMT in FY16
FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 Container traffic contributed the most, followed by coal and edible oil, chemicals and POL Source: Company sources, including Annual Reports and news items; Assorted news articles; TechSci Research Notes: POL – Petroleum, Oil and Lubricants, Has the world’s largest fully mechanised coal terminal with MTPA – Million Tonnes Per Annum, a capacity of 60 MTPA MMT – Million Metric Tonnes Adani Group plans to convert Dhamra Port, in Odisha, Handles the second highest container traffic in India into country's biggest seaport with industrial park, and set up LNG and LPG terminals, by 2021. During FY08–16, total revenue rose to USD1213.1 million, implying a CAGR of 25 per cent Dhamra Port is expected to have 35 berths having 315 million tonnes capacity.
DECEMBER 2016 For updated information, please visit www.ibef.org 42 PORTS
JNPT: MAJOR PORT WITH THE LARGEST CONTAINER CAPACITY … (1/2)
Jawaharlal Nehru Port Trust (JNPT) has the third highest cargo traffic and the highest container traffic in the country
It is a container-focused port and 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
Notes: TEU – Twenty-Foot Equivalent Unit, MMT – Million Metric Tonnes
DECEMBER 2016 For updated information, please visit www.ibef.org 43 PORTS
JNPT: MAJOR PORT WITH THE LARGEST CONTAINER CAPACITY … (2/2)
JNPT was developed to relieve the pressure of Mumbai port Cargo profile of JNPT (FY16) and was commissioned in 1989 1.1% It serves most of North India and has good hinterland connectivity through road and rail networks 10.5%
JNPT, with a capacity of 4.76 million TEU, handles over 58 Container per cent of India’s container traffic, as of FY16 POL JNPT is a pioneer in involving private sector participation in major ports and operates under a landlord model; NSCIT is Others the first private terminal in the country 88.5% The port is poised to handle 5.03 million TEUs of containers by 2016–17
Proposed capacity additions by FY17 – Source: JNPT’s website, Indian Ports Association, Ministry of Shipping, TechSci Research Notes: POL – Petroleum, Oil, and Lubricants, Marine chemical: 30 MTPA MMT – Million Metric Tonnes, TEU – Twenty-Foot Equivalent Unit, MTPA – Million Tonnes Per Annum Container terminal: 58 MTPA
DECEMBER 2016 For updated information, please visit www.ibef.org 44 PORTS
GUJARAT: PORT HUB OF INDIA ... (1/2)
Gujarat is endowed with 1,215 kilo meters of coastline i.e. Cargo handled at major and non-major port of 1/6th of total Indian coastline Gujarat (MMT)
The state has 42 ports of which 41 are non major, while Kandla is the sole major port CAGR: 10.17% 336 340 310 288 During FY07–16, cargo traffic in Gujarat increased at a 259 231 CAGR of 10.17 per cent, with the cargo volume handled 206 reaching 440 MMT in FY16. 151 153 131 Favourable policies of the Gujarat government helped the 100 94 87 92 state in gaining private investors interest in port related 72 80 82 83 53 65 activities
FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16
Major Ports Minor Ports
Source: Shipping Ministry, TechSci Research
DECEMBER 2016 For updated information, please visit www.ibef.org 45 PORTS
GUJARAT: PORT HUB OF INDIA ... (2/2) During FY15, Gujarat added 35 million tonnes of capacity at non-major ports, augmenting the capacity of non-major ports to 422 million tonnes
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 seven ports under construction and five 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 USD 1.49 million to Gujarat Maritime Board for capacity building and safety training of workers involved in ship recycling activities under Sagarmala
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.
Source: Shipping Ministry, TechSci Research DECEMBER 2016 For updated information, please visit www.ibef.org 46 PORTS
USEFUL INFORMATION PORTS
INDUSTRY ASSOCIATIONS
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]
DECEMBER 2016 For updated information, please visit www.ibef.org 48 PORTS
NOTES
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
DECEMBER 2016 For updated information, please visit www.ibef.org 49 PORTS
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
DECEMBER 2016 For updated information, please visit www.ibef.org 50 PORTS
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
DECEMBER 2016 For updated information, please visit www.ibef.org 51 PORTS
EXCHANGE RATES
Exchange rates (Fiscal Year) Exchange rates (Calendar Year)
Year INR equivalent of one USD Year INR equivalent of one USD 2004–05 44.81 2005 43.98 2005–06 44.14 2006 45.18 2006–07 45.14 2007 41.34 2007–08 40.27 2008 43.62 2008–09 46.14 2009 48.42 2009–10 47.42 2010 2010–11 45.62 45.72
2011–12 46.88 2011 46.85
2012–13 54.31 2012 53.46
2013–14 60.28 2013 58.44
2014-15 61.06 2014 61.03
2015-16 65.46 2015 64.15
2016-17 (E) 66.95 2016 (Expected) 67.22 Source: Reserve bank of India, Average for the year DECEMBER 2016 For updated information, please visit www.ibef.org 52 PORTS
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DECEMBER 2016 For updated information, please visit www.ibef.org 53