Installation of Mechanized Handling at Navlakhi Port

Ports, Ports Services and Logistics Government of Contents

Project Concept 3 Market Potential 4 Growth Drivers 5 Gujarat – Competitive Advantage 6 Project Information 7 - Location/ Size - Infrastructure Availability/ Connectivity - Raw Material/ Manpower - Potential collaboration opportunities - Key Considerations Project Financials 11 Approvals & Incentives 12 Key Department Contacts 13

Page 2 Project Concept

Navlakhi port: brief overview

► Navlakhi port is an all-weather, non-major intermediate port handling dry-bulk cargo, primarily coal, owned and managed by the Gujarat Maritime Board (GMB). ► It is located in the Peninsula in Gulf of Kutch, Maliya Thesil, district, Gujarat. ► Latitude: 22o 58’ 25” N Navlakhi ► Longitude: 70o 27’ 24” E ► Port area: 39.49 hectares ► The port primarily imports coal, coke, fluorite, pig iron and exports salt.

What is mechanized handling?

► Efficient handling of dry-bulk cargo through the use of mechanized equipment such as ship unloaders/loaders , conveyor belts, stackers, reclaimers and wagon tipplers.

Mechanization at Navlakhi port

► In 2014, the GMB devised a proposal to mechanize the existing facility and construct a new mechanized jetty of 870 meters. ► Till now majority of the cargo is being handled through conventional equipment, which adversely affect efficiency parameters such as average ship turnaround time, berth occupancy and output, and resulted in cargo contamination, pollution and fire hazards. ► Mechanized handling at Navlakhi Port will require the installation of the following equipment at various stages of the cargo handling value chain.

Ship To Barge Stacking Dust Jetty To Truck Barge To Jetty Area Suppression Floating Mobile Mobile Pipe/ Belt Stacker- Fog Crane Crane Hopper Conveyor reclaimer canon

► Apart from this a storage shed, truck and wagon loading systems would also required to be installed at the port.

Page 3 Note: Extent of mechanisation will be dependent on land availability on the backside of jetty Market Potential & Demand - Supply

Rapid growth in imported coal volumes present an attractive business potential of mechanized handling systems at Navlakhi port that primarily handles coal

Coal consumption in (MMTA) Coal Imports by India (MMTA)

CAGR: CAGR: 212.1 27.3% 9.7% 1,300 166.9 145.8 820 102.9

FY15 FY20F FY12 FY13 FY14 FY15 Source: Brookings India Source: Ministry of Coal

► Coal consumption and imports by India are expected to witness robust growth rates owing to greater demand from thermal power plants and industrial setups. This is expected to increase cargo traffic at various coal-handling ports. ► Numerous proposed and under construction power plants in Gujarat and other adjoining states will rely on ports, such as Navlakhi, for their fuel requirement and hence, all GMB operated ports, which handle ~20% of India’s coal imports, needs to be mechanized to increase efficiency. ► This presents an attractive business potential for installation of mechanized cargo handling system (especially for coal) at Navlakhi port.

Navlakhi port’s coal handling capacity expected to grow 4-5x to 20 MMTA by FY20 driven by mechanization and increased demand for coal

Coal volume handled at Navlakhi ports (MMTA) ► Coal comprised ~98% of the total cargo volume handled at Navlakhi port. CAGR: 6.6 13.0% 6.4 6.2 ► Coal volume declined in FY14 owing 5.5 5.0 to temporary closure of operations in 4.3 4.2 May 2013 ► 2.7 However, operations resumed in FY14 and coal handling volume is expected to reach 20MMTA by FY20.

FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16

Source: GMB

Page 4 Growth Drivers

Thriving export oriented industries in near-by cities such as Morbi is expected to drive cargo volumes at Navlakhi port

► Many export oriented industrial cities in and Surendranagar districts, such Kandla as Morbi, that produce sanitary wares, glazed tiles, vitreous tiles, wall clocks and Morbi (~50 kms) other electrical goods are located in close Surendranagar vicinity of Navlakhi port. (~160 kms) ► Navlakhi Currently the exporters use Mundra (~187 kms from Morbi) and Kandla (~142 Rajkot (~110 kms) kms from Morbi) ports, which are much farther from these cities as compared with Navlakhi port. ► Cargo volume will be generated from imported coal demanded by these facilities and also from export of various ceramic products. Navlakhi port is closer to key industrial cities, such as Morbi, ► Development of additional berthing as compared with other ports facilities and mechanized handling including Mundra and Kandla system is expected to divert cargo traffic to Navlakhi from these ports.

Indian Ceramic Tiles Exports – by Value Indian Ceramic Tiles Exports - by Volume (INR millions) (000 tons) 282.1 CAGR: 3.6 CAGR: 38.2% 86.4%

1.5 96.6 1.4 1.4

43.6 31.8

FY13 FY14 FY15 FY16 FY13 FY14 FY15 FY16 Source: Department of Commerce

► Development of mechanized facilities for dry-bulk cargo, such as ceramic tiles, can generate additional revenue streams for Navlakhi port. ► Export volumes are expected to rise substantially from Morbi, which is located ~50 kms from Navlakhi port and accounts for 70-80% ceramic tiles production in India. ► Favourable government policies, such as imposition of high anti-dumping on Chinese products and a push for the Make in India initiative in the ceramics industry, will drive exports and present an attractive opportunity for Navlakhi port.

Page 5 Gujarat - Competitive Advantage

Location advantage of Gujarat

Gujarat acts as a gateway to West and to major states across India

► 44 non-major and 1 major port are strategically located across a 1600 kms coastline, which is the longest among the Maritime States of India ► Nearest maritime outlet to Middle East, Africa and Europe ► Highest number of commercial cargo ports ► Acts as a gateway to northern and central India; connecting them via road, rail and air - thereby providing immense trading opportunities ► Handled 40% of national maritime trade in FY15 Robust future development of ports in Gujarat

► Port capacity enhancement: Gujarat’s non-major ports capacity is expected to reach 864MMTPA by FY20, which will be 52% of the total capacity enhancement at all non-major ports of India. ► Development of port cities and port based SEZs: (GoG) and GMB have planned to develop port cities and SEZs at Mundra and Pipavav . ► Maritime cluster and university development to promote positive synergies between participating entities (both port and non-port based), enhance competitiveness and grow the local maritime economy. ► Shipbuilding parks: Gujarat contributes 89% of the total shipbuilding orders in India (in DWT terms). 10 shipbuilding yards are already operational and 9 have been approved with a proposed investment of ~INR 21 billion. Page 6 Project Information

Site image

Source: GMB

Location

► Navlakhi port is located at 22°58 ' 25" N and 70°27'24"E in the Saurashtra Peninsula, near the Hansthal creek in Gulf of Kutch, Maliya Thesil, Morbi district, Gujarat.

Area

► Total existing area of the facility including backup storage facility is ~42.93 hectares. ► 36.05 hectares is GMB Land, 5.72 hectares is owned by Indian Railways, while 1.16 is possessed by other owners. ► Additionally, it has been proposed to develop ~5.76 hectares of reclaimed area under the expansion project.

Page 7 Infrastructure Availability

Utilities

Water Power

► Navlakhi is permitted to utilize ~50 ► The power is supplied by Paschim KL/day (40 KL/day for industrial use and Gujarat Vij Company Ltd. (PGVCL) at 10 KL/day for domestic use) the yard. ► Total water demand for proposed project ► DG sets installed in yard may be used in is expected to be ~300 KLD that will be case of power failure. sourced from Gujarat Water Supply and Sewerage Board (GWSSB).

Logistics & Connectivity

Rail Road

► Directly connected with broad gauge ► State Highway (S-24) connects the port railway line to Morbi railway station, premises with the National Highway (NH which is ~50 kms away - 8A), which is ~55 kms away

Air Existing Infrastructure

► ~259 kms from international airport at ► Four existing jetties on either side of the coastal stretch of Navlakhi ► ~100 kms from domestic airport at ► Cumulative coal handling capacity of Rajkot 4-5 MMTPA

Page 8 Project Outline

Processes to be mechanized

► The following cargo handling processes will be mechanized ► Barge unloading ► Stacking ► Reclaiming and truck loading ► Reclaiming and wagon loading

Key equipment required and technical details ► Barge unloading: Mobile harbour cranes

Metric Description Crane Type Mobile Harbour Fixed Crane Maximum Capacity 84 Ton Maximum outreach 32 m Capacity of unloading 853 TPH Cycle time for operation 132 seconds Turn over per day per crane 13,680 Tons Hopper capacity 90 Tons Pedestal height 6 m Power requirement 670 KW No. of cranes required 2

► Along with two mobile harbour cranes, ancillaries, such as belt conveyor with hopper, electrical MCC & control system, dust suppression system and fire fighting system will also be required. ► Other equipment required include two stacker-reclaimers, one each for truck loading and wagon loading, and storage space frame shed.

Key Players and Potential collaboration opportunities

Ports Developers Chemical Terminal, Dahej Gujarat Chemical Port Terminal Company Ltd. LNG, Dahej Petronet LNG Ltd. Solid Cargo Port Adani Petrnonet LNG Ltd. Pipavav Gujarat Pipavav Port Ltd. Mundra Port Adani Port & SEZ Ltd. LNG Terminal, Hazira Shell Hazira Ltd. Bulk General Cargo Terminal Adani Hazira Port Pvt. Ltd.

Page 9 Project Outline

Manpower requirement

Responsibility Number

Floating crane Handler 2

Mobile Hopper Machine Handler 2

Conveyor belt surveyor 1

Stacker & Reclaimer handling 2

On Shore supervisor 1

General Manager 1

Material handling 4

Executive supervisor 3

Clerical Staff 3

Other staff (Guard & Peon) 4

Total 23

Key Consideration

► Success of the project depends on prevailing market dynamics and International trade. ► Project execution depends on necessary approvals from regulators. ► The cost for the project is based on assumptions & benchmarking of similar project, subject to variation with change in any criteria. ► Port development depends on the existing type of industries, conducive environment for the investors, social infrastructure, etc.

Page 10 Project Financials

Project structure & implementation models

► Port mechanization projects are usually funded through a PPP model, in which private players can charge operating charges per ton of cargo handled.

Project cost

► The GMB has outlined a cost estimate of ~INR 100 crores for the mechanization of existing jetties, below is a detailed break down of the equipment to be procured.

Metric Total Estimated Cost (INR million) Mobile Harbour crane – Two (2) Nos 425.0 Stacker and reclaimer -2 Nos each including 380.0 the belt conveyors Space frame shed 130.0 Rapid wagon loading system – One (1) No. 29.7 Static Truck loading system including steel 27.5 structure and bins – One (1) No. Total cost INR ~1,000 million or ~100 crores

Benchmark financial data for a similar project

► Mechanization and expansion of a solid cargo terminal at Dahej port ► In 2014, Adani Petronet (Dahej) Port Private Ltd. (APPPL) proposed Phase III expansion involving mechanization of south berth and facilitating backup storage yards. Below is a broad level breakdown of the key cost components.

APPPL mechanization and expansion cost estimates (INR million, % of total cost 2014) Civil Works 1,247.5 27% Mechanical Handling System (Equipment) 2,170.2 47% Electrical & IT Work 358.6 8% Utilities & Others 245.6 5% Miscellaneous &Contingency 621.3 13% Total 4,643.2 100%

Page 11 Approvals & Incentives

Approvals required

► Entry & Exit Procedure: Port mechanization projects are usually funded through a PPP model, in which private players are invited via competitive bidding. ► Setting up of Business: The mechanized facility can be operated by the private player through a built-operate-transfer (BOT) model. ► Land Acquisition: The port is primarily owned by the GMB and can be rented or lease from them. ► Power & Water Connection: Additional power for the project can be procured from the existing supplier – Paschim Gujarat Vij Company Ltd. (PGVCL). Similarly, water for the project can be procured from the Gujarat Water Supply and Sewerage Board. ► Environmental Clearance: CRZ Clearance (Coastal Clearance) needs to be obtained from Gujarat Coastal Zone Management Authority (GCZMA). Additionally, pollution clearance from Gujarat Pollution Control Board (GPCB) is also required.

Incentives

► Tax holidays: The benefits of tax holidays as provided under Section 80 (I) (A) of the Income Tax Act for development, operation and maintenance of power plants, airports, ports, waste management facilities, water treatment plants, etc. is available to the developer.

Page 12 Industries and Mines Department, Gujarat www.imd-gujarat.gov.in/

Gujarat Maritime Board www.gmbports.org iNDEXTb - Industrial Extension Bureau www.indextb.com Indian Maritime University http://www.imu.tn.nic.in/ Ministry of shipping, Govt. of India http://shipping.gov.in/

This project profile is based on preliminary study to facilitate prospective entrepreneurs to assess a prima facie scope. It is, however, advisable to get a detailed feasibility study prepared before taking a final investment decision.

‘SAGAR BHAVAN’ Sector 10-A, - 382010. Gujarat (India) Phone: +91 79 23238346 +91 79 23238347 Fax: +91 79 23234703 Email: [email protected] www.gmbports.org