Mechanization of Magdalla Port

Port, Port Services and Logistics Government of Gujarat Contents

Project Concept 3 Market Potential 7 Growth Drivers 9 Gujarat – Competitive Advantage 10 Project Information 12 - Location/ Size - Infrastructure Availability/ Connectivity - Manpower - Potential Collaboration / Key Maritime Clusters - Key Players/Stakeholders - Key Considerations Project Financials 18 Approvals & Incentives 19 Key Department Contacts 20

Page 2 Project Concept Port Scenario

Ports in India

► The port sector of India is one of the important and prominent sector as it has coastline spanning about ~7,516.6 km, forming one of the biggest peninsulas in the world. ► Around 70% of India’s trading by value and 95% by volume is done through maritime transport. ► By FY17, cargo capacity of India is expected to increase to 2,493.1 MMT from 1,806.8 MMT in FY15. ► By FY17, cargo traffic at major ports is expected to rise to 943.1 MMT from 581.3 MMT in FY15. By FY17 cargo traffic at non- major ports in India is expected to grow to 815.2 MMT from 471.2 MMT in FY15. ► India is strategically in prime location well connected and benefited by more than 200 ports across the coastline as most cargo ships sails between East Asia, America, Europe, Australia and Africa.

Major Ports

12 Major ports: India has about 12 major ports in the country, 6 on the Eastern coast and 6 on Western coast. Major ports are under jurisdiction of the Government of India.

Non-Major Ports

200 Non-major ports: India has about 200 non-major ports of which one-third are operational. Non-major ports come under the jurisdiction of the respective states.

Source: IBEF, GMB, Shipping ministry. *MMT- million metric tonne, FY- financial year, km- kilo meter,

Page 3 Project Concept Port Scenario

Gujarat Scenario

► Gujarat has coastline of 1,615 km, about 1/6th of total Indian coastline. ► The state has 45 ports of which 44 are non-major and 1 major port (Kandla). ► Traffic at ports under GMB, i.e., non major ports is 339.77 MMTPA ► During the FY 07-16, total cargo traffic in Gujarat increased at CAGR of 10.17% to reach 440 MMT in FY 16. ► The cargo traffic at non-major port of Gujarat is envisaged to reach 864 MMT by FY20. ► Share of GMB ports in the national traffic is 32%.

“From meagre 3% in 1982-83, traffic at GMB Capacity : 3 MMT ports have consistently increased and Capacity : 466 MMT Traffic : 3 MMTcurrently non major ports of Gujarat handle Traffic : 340 MMT about 32% of total national traffic.” 1982-83 2015-16

Cargo handled at major and non-major ports of Gujarat (MMT)

428 440 382 397

342 340 313 336

286 310 288 259 231 206 100 94 92 87 83 82 80

FY 10 FY 11 FY 12 FY 13 FY 14 FY 15 FY 16

Major ports Non-major ports Total

Page 4 Project Concept

Mechanization Imperative to meet Demand

► Gujarat with its favourable location and availability of a long coastline is a prime destination for executing maritime economic activities. The increasing importance attached to maritime economic activities has further led to the development of many container terminals. ► Constantly increasing volume of global trade and the inflow of economic activities towards India and the State have reinforced the need for advanced and efficient infrastructure facilities at the State’s ports. The traffic at Gujarat ports have increased at a brisk rate as compared to the national port traffic in the last decade. ► Apart from creating new ports to handle more cargo, mechanization and modernization of the existing capacities is the need of hour in order to become more efficient and remain at par with international benchmarks.

Magdalla Port: Brief Overview

► Magdalla port is a non-major port which includes 2 GMB operated jetties (GMB RCC Jetty No. 2 has been leased to NCCL) and 7 captive jetties. ► It is located on the Southern bank of the Tapti river, in the southern part of the Gujarat state. Latitude: 21° 06′ 48″ N Longitude: 72° 44’ 08″ E Port Area: 312 hectares Magdalla ► The port primarily imports coal, iron ore, naphtha, cement and para-xylene ► GMB Jetty at Magdalla Port primarily handles Coal What is Mechanized Handling?

Efficient handling of dry-bulk cargo through the use of mechanized equipment’s such as ship un- loaders/ loaders, conveyor belts, stackers, reclaimers, wagon loaders & tipplers, which effectively eliminates the conventional and less efficient method of unloading of dry bulk cargo at jetty and from jetty to stacking yard or wagon transported via dumpers.

Impact of Non Mechanization

► Deployment of conventional equipment like Excavator for handling bulk cargo adversely affects efficiency parameters like: Average Ship Turnaround Time Cargo Contamination Berth Occupancy and Output Environmental Issues

Page 5 Project Concept

Mechanization at Magdalla Port

► The current port operation involves dumping of coal on to the jetty by the excavators, where the height of the stock pile may go up to 3 m, the operators need to adjust the pile of coal also during the operation reducing the crucial unloading time available. ► The maximum evacuation rate achievable under present circumstances is 600 tonnes/hour while the unloading rate of excavators is around 1,680 tonnes/ hour leading to piling of coal and lowering efficiency of overall system. ► Mechanization of the existing facility at Magdalla Port to improve productivity, take environmental friendly measure and safe cargo handling. ► The GMB Jetty at Magdalla Port primarily handles Coal. The mechanized handling would not only improve the efficiency of the port but also address the environmental issues. ► 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 Magdalla Port will require the installation of the following equipment at various stages of the cargo handling value chain.

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

Page 6 Note: Extent of mechanisation will be dependent on land availability on the backside of jetty Market Potential Demand – Supply

Coal Demand – India Scenario

Cement: 19.5 MT

2020 2015 Sponge Iron: 24.3 MT 1200- 820 MT 1300 MT Steel/ Coking: 66.0 MT

Others: 87.9 MT

Power Domestic: (Utilities/ Captive): 622.9 MT 608.5 MT Import:rt: 212.1 MT

Source: Brookings

Traffic Handled at Non-Major Ports in Gujarat

Coal Imports by India (MMT) 212.1 166.9 145.8 102.9

FY12 FY13 FY14 FY15

Source: Ministry of Coal

► The coal imports in India registered more than two fold rise in last four years ► Coal consumption and imports by India are expected to witness robust growth rates owing to greater demand from thermal power plants and industrial setups.

► Numerous proposed and under construction power plants in Gujarat and other adjoining states rely on imported coal to suffice their fuel requirement.

► GMB operated ports handle ~20% of India’s coal imports.

Rapid growth in imported coal volumes present an attractive business potential of mechanized handling systems at Indian Ports

Page 7 Market Potential Demand – Supply

Traffic Handled at Non-Major Ports in Gujarat

Cargo handled at non major port of Gujarat (MMT)

CAGR: 11.2 % 336.0 339.7 310.0 288.0 259.0 231.0 206.0 151.0 153.0 131.0

FY 07 FY 08 FY 09 FY 10 FY 11 FY 12 FY 13 FY 14 FY 15 FY 16

Source: GMB

► The state has 1 major port and 44 non major ports, totalling to 45 ports. The state has the highest number of operational ports and commercial cargo ports. ► Gujarat is the first state in India to invite Private sector participation through competitive bidding. Gujarat ports account for 40.7% of traffic in the total national port traffic which is more than any other state. The non-major ports of Gujarat constitutes 32% share.

► Gujarat accounts for 74.1% of traffic for non-major ports of India in 2014-15. The traffic handled at non-major port in Gujarat has increased by CAGR 11.2% from FY 07 to FY 16 to reach 339.7 MMT.

Traffic handled at Magdalla Port (MMT) – GMB Jetty

4.7 3.6 3.8

FY14 FY15 FY16 Source: GMB

► The total import cargo volume handled at Magdalla port mainly comprises of Coal ► Coal is imported from GMB Jetty mainly by M/s. Bhatia Coal Industries, M/s. Adani Exports, M/s. GNFC and other traders.

► Steam Coal is imported mainly from Indonesia and to some extent from Australia & South Africa

Page 8 Source: GMB, MMT- million metric tonne, FY- financial year, km- kilo meter Growth Drivers

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

► Capacity Augmentation: Gujarat’s non-major ports capacity is expected to reach 864 MMTPA by FY20, which would require ~52% of the total capacity augmentation at all non-major ports of India. ► Development of Port Cities and Port based SEZs: Government of Gujarat (GoG) and GMB have planned to develop port cities and SEZs at Mundra and Pipavav. ► Maritime Cluster and Maritime University to promote positive synergies between participating entities (both port and non-port based), enhance competitiveness and grow the local maritime economy. ► Shipbuilding parks: Gujarat being hub for Shipbuilding in India and with the special incentives declared by GoI for Shipbuilding yards, many shipyards shall set their base in Gujarat.

Page 9 Gujarat - Competitive Advantage

Flourishing Economy: State contributes 7.2% of the Nation GDP and shows leadership in many areas of manufacturing and infrastructure sectors. Gujarat’s SDP (State Domestic Product) at current price registered a growth of 11% during the year 2014-15.

Gujarat contributes around 17.2 % to the country’s industrial output whereas the value of output registered is about 18.5%.

Ease of Doing Business: Only state which comply “Gujarat ranked first 100% with Environmental procedures. Gujarat fares in ease of doing highly when it comes to setting up a business, business as per allotment of land and obtaining a construction permit DIPP report 2015”

Geographical advantage due to location on the west coast of India. The state is well connected to the major cities of the world by air and sea routes. The state has 45 operational ports, 12 domestic airports and 1 International airport in addition to an extensive rail and road network.

Gujarat contributes around 19.1 per cent to India’s total exports of goods in 2014-15.

DMIC & DFC Corridor ► 38% of the entire length of the Dedicated Freight Corridor (DFC) passes through Gujarat

► Four of the nine junctions planned as interchange stations with the existing rail network are in Gujarat. Industries and ports can leverage on this opportunity. ► The project influence area (DMIC) covers nearly 62% of the area of the State, providing an opportunity for creating an economic area that provides a globally competitive environment for manufacturing and services industries.

Gujarat is one of the leading Industrialized States in India and the State has attracted cumulative FDI worth US$ 12 billion from April 2000 to March 2015

Key Industries: Gujarat is the leader in key industrial sectors such as chemical, petrochemical, auto and its allied sector, pharmaceuticals, engineering, textile, jewellery etc.

'Petro Capital' of India, contributing significantly to the country's production of Petrochemicals (62%), Chemicals (53%) and pharmaceuticals (45%).

Page 10 Source: Socio Economic Review of Gujarat 2015-16, DIPP, RBI Gujarat - Competitive Advantage

► Gujarat has 45 ports and both Gujarat and Maharashtra constitute 47% of the total national port numbers. ► The total national traffic volumes of non- major ports continued their upward trajectory with 45% share in traffic handled at Indian ports in 2014-15. ► Traffic at GMB ports have increased at CAGR of 13% from 2003-04, while for Major ports, the traffic has increased at a CAGR of only 4.9%. ► Contrary to the sluggish pace of economic development during 2014-15 in India and around the world, GMB has achieved a fair increase of 8.5% in the traffic, while the traffic at Major Ports has grown by 4.7 % during the year 2014-15.

Share of GMB in Total Maritime Share of GMB in Total Traffic at traffic in India Non-Major Ports

Traffic at GMB Ports 32% 26% Traffic at GMB Ports National Traffic at Non- maritime traffic Major Ports excluding GMB 68% 74%

► Gujarat ports account for 40.7% of traffic in the total national port traffic – more than any other State. Out of this, the Non-Major ports of Gujarat constitutes 32% share. ► With 336.1 MMT, Gujarat accounts for 71.4 % of traffic for non-major ports of India in 2014-15. ► India’s most advanced VTMS unveiled in the Gulf of Khambhat ► The traffic at private ports under GMB has grown at an impressive CAGR of 24% during past five years ► Number of projects have been planned to be taken up under the Sagarmala initiative for port led development in Gujarat. ► Marquee projects like Maritime Cluster and Maritime University have been planned in Gujarat. Source: GMB

Page 11 Project Information Location

Location

► Magdalla is a lighterage port situated on the western coast of India in Southern Gujarat, on the southern bank of River Tapi about 16 km upstream the river. Magdalla Latitude: 21° 06′ 48″ N Surat Longitude: 72° 44’ 08″ E Port Area: 312 hectares Sachin ► The coal from Jetty is transferred to import yards of importers in Sachin GIDC which is then distributed to various textile mills. Site Image

Port Details

► Anchorage: The Deep Water Anchorage is 15 nautical miles southwest from Magdalla Port. The approach channel is 16,000 meter in length and 150 meter in width. ► Magdalla port is a non-major port which includes 2 GMB operated jetties (GMB RCC Jetty No. 2 has been leased to NCCL) and 7 captive jetties..

Page 12 Project Information Port Details

Facilities & Equipment's

G.B.Tug (Twin Screw) 470 BHP Floating Units Work Barge (Dumb) 100 MT Crawler Crane 16 MT and boom length 40 feets

Weighbridge 100 MT capacity

Open Plots 6 nos. with an area of 29644 sq.m.

Godown 1 no. (Used for departmental stores/workshop etc.)

The only Minor Port in the country to have developed its own Vessel Traffic and Port Management System for safe navigation in the long Vessel Traffic and Port navigational channel of River Tapi. VTPMS station is provided with Radar Management System System, A.I.S, Weather Station, V.H.F., H.F. Sets., Telephone/Fax, Computers and Electronic Charts.

Harbour Structure

GMB Jetties Captive Jetties Private Shipyards Private Ports

►KRIBHCO ►Essar Steel Limited ►Essar Sponge Iron Jetty ►GMB RCC Jetty No.1 ►Reliance Industries ►ABG Shipyard Ltd. ►GMB RCC Jetty No.2 Limited (RIL) ►Hazira Port Pvt. Ltd. ►L & T Shipyard (Used by NCCL) ►Larson & Toubro Ltd. ►Gujarat Ambuja Cement Ltd. ►Single Buoy Mooring -RIL

►Jetty Length : 210 m GMB Jetty No. 1 ►Jetty Breadth : 21 m ►Commodity Handled : Coal

Source: GMB

Page 13 Project Information

Logistics & Connectivity

Road

Ahmedabad

► The Magdalla Port is well connected with Mumbai and Delhi via National Highway, NH 8is15kmawayfromthe

Magdalla Port.. Magdalla ► State highway is 2 km away from the Magdalla Port

N

Rail

► The Surat railway station is 16 km away from Magdalla Port. ► The nearest Railway Broad Gauge line is 15 km away from the Magdalla Port (Sachin Yard)

Air Existing Infrastructure

► ~300 km from international airport ► Magdalla is a lighterage port situated at Ahmedabad. on the southern bank of River Tapi about 16 km upstream the river. ► ~15 km from domestic airport at Surat. ► Magdalla port is a non-major port which includes 2 GMB operated jetties (GMB RCC Jetty No. 2 has been leased to NCCL) and 7 captive jetties *Source: GMB

Page 14 Project Information

Current Handling Process Mechanized Handling Process

Barge 1 Barge

Excavator 2 Grab Crane

Jetty 3 Hopper

4 Conveyor Dozer

5 Stacker Loading Area Truck

Multiple Handling Handling in open 6 Conveyor Stack Yard in all stages Creation of Dust Dusty Area 7 Wagon/ Truck Loading Creation of Excavator for Pollution Stacking

Final Destination Dozer

Single Handling Handling by Closed System Truck No Dust Wagon Loading No Pollution Area

Excavator

Final Destination

Page 15 Source: GMB Project Information

Key Processes to be Mechanized and its Benefits

Equipment's Description Advantage Mobile Harbour Grab Material from Barge and Crane feed to Hopper 1. Speedy Handling 2. No Spillage Hoppers with Dust Received Material from Crane 3. Less Pollution Suppression System and feed to Conveyor 4. Ship Turnaround Time Reduced 5. Less Manpower Closed Type Belt Receive Material from Hopper Conveyor System and transfer to Stack yard. Stacking and Reclaiming of Cargo in Stack Yard and 1. Stacking and Reclaiming can be possible in Stacker/ Reclaimer transfer to Truck/Wagon environment friendly manner. Loading System. 1. Storage of Cargo up to height of 12 to 14 Pre-Engineering Mtr. Storage of Cargo Build Shed 2. Zero effect of Wind hence less Air Pollution. 1. Easy and rapid transfer of cargo from Truck and Wagon Rapid Loading of Truck and Stack Yard to Truck/Wagon. Loading System Wagon 2. Fast evacuation from Stack Yard

Manpower

Floating Crane Handler No. 2

Mobile Hopper Machine Handler No. 2

Conveyor Belt Surveyor No. 1

Stacker & Reclaimer Handling No. 2

Material Handling No. 4

Administrative Staff No. 5

On-shore and Executive Supervisor No. 4

Other staff (Guard & Peon) No. 4

Total 24

Page 16 Project Information

Project Structure & Implementation Model

Port mechanization projects are usually funded through a PPP model, in which private players can charge operating charges per ton of cargo handled. Gujarat Maritime Board (GMB) is contemplating to develop the mechanization project at Magdalla Port on a stand alone basis.

Possible Collaboration

Key Technology / Machinery Suppliers / Material Handling System Suppliers Murata Machinery Limited Godrej Efacec Automation & Robotics Limited Schaefer Holding International GmbH Voith Turbo GmbH & Co. KG Beumer Group GmbH ABB Crane Systems Elecon Engineering Company Limited Craneports Limited Aegis Eng. Co. Private Limited Konecranes Transflex Conveyors Private Limited Shree Techno Engineers

Port Operations and Management

JSW Infrastructure TM International Logistic limited (TMILL) Sical logistics limited Essar Logistic Ltd (ELL) PSTS Logistics Private Limited Elecon EPC Projects Limited Boxco Logistics India Private Limited LD Ports and Logistics

Key Considerations

► The project viability is subject to availability of natural resources vis-à-vis coal.

► Key project variables such as demand and supply of the minerals, national and international economic conditions, international trade, Indian exports and imports are subject to variation and change.

► The execution of the project is subject to necessary approvals from regulators.

► The cost for the project is indicative only and based on assumption & benchmarking the project with similar project and subject to change with alteration in any criteria.

► Potential attractiveness of the region depends on regional development which includes following parameters: conducive environment for the investors, talent attractiveness for the region, social infrastructure

Page 17 Project Financials

Project Cost

► The total cost for the mechanization of existing jetty is estimated to be ~INR 120 crores, below is a detailed break down of the equipment to be procured as well as estimated project cost.

Total Estimated Cost (INR million)

Mobile Harbour Crane – Two (2) Nos 425.0 Stacker and reclaimer -2 Nos each including 400.0 the belt conveyors Dust Suppression System 30.0 Space Frame Shed 100.0 Rapid Wagon Loading System – One (1) No. 30.0 Static Truck Loading System including Steel 30.0 Structure and Bins – One (1) No. Civil Works 120.0 Utilities & Others 10.0 Contingencies (5%) 57.0 Total cost INR ~1,202 million

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 % of Total Cost (INR million, 2014-15) 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 18 INR 68 = 1 USD Approvals & Incentives

Approvals

Approval from the Board Members of the Gujarat Maritime Board Approval Procedure and approval from the Port & Transport Department, Government of Gujarat.

License for implementation of Mechanized Handling System for License handling and evacuating the cargo.

Additional power can be procured from the existing supplier – Power & Water Paschim Gujarat Vij Company Ltd. (PGVCL). Similarly, water for Connection can be procured from the Gujarat Water Supply and Sewerage Board

CRZ Clearance (Coastal Clearance) needs to be obtained from Environmental Gujarat Coastal Zone Management Authority (GCZMA). Clearance Additionally, pollution clearance from Gujarat Pollution Control Board (GPCB) is also required

Approval to be availed by forwarding a copy of the Performance Performance Standard Standards to the concerned users/ organization bodies

Approval for the upfront tariff for mechanical handling of different Tariff cargoes

Incentives

► GOI has allowed foreign direct investment of up to 100 per cent under the automatic route for projects related to construction and maintenance of ports and harbours; ► Permission granted for formation of joint ventures between Major Ports and foreign ports, Major Ports and Non-Major Ports, and Major Ports and companies; ► Various incentives, such as, ten year tax holiday for enterprises engaged in development of Port sector ► 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. ► Reduced service tax incidence on coastal shipping

Page 19 Ports & Transportation Department, Government of Gujarat

www.pnt.gujarat.gov.in Gujarat Maritime Board www.gmbports.org Industries & Mines Department www.imd-gujarat.gov.in Office of Industries Commissioner www.ic.gujarat.gov.in

Industrial Extension Bureau www.indextb.com Gujarat Infrastructure Development Board www.gidb.org

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, Gandhinagar - 382010. Gujarat (India) Phone: +91 79 23238346 +91 79 23238347 Fax: +91 79 23234703 Email: [email protected] www.gmbports.org