India’s Essar Ports group has achieved exceptionally strong results for the first three months of the 2019-2020 financial year. Overall, the company’s network of four terminals – at Vizag, Hazira, Salaya and Paradip – handled 13.5 million tonnes of cargo, 17.4% more than in the first three months of the preceding financial year.
Rajiv Agarwal, Managing Director and Chief Executive of Essar Ports, says, “We have had a very positive start to this year, and I am confident the rate of growth will accelerate further over the next few months. We are forecasting total traffic of around 60 million tonnes for this financial year, which would be about 50% higher than we delivered last year.”
One of the key factors behind the strong double-digit growth rates being achieved is a continued upturn in third party cargo volumes. These accounted for over 27% of Essar Ports’ throughput in the first quarter of 2019-20, compared with 17% in the whole of 2018-19.
Essar’s Vizag Terminal achieved especially strong growth in the first quarter, handling 3.2 million tonnes, up from 2.2 million tonnes in the first quarter of the previous financial year, a rise of 45%. The share of third-party cargo within the total shot up by 225%, from 0.4 million tonnes to 1.1 million tonnes.
Similarly, while the Essar Bulk Terminal in Hazira achieved more modest growth rate overall in the first quarter, with volumes rising 2.9% to 7 million tonnes, third party cargo volumes moving through the terminal jumped by 22.2%
The new Salaya Terminal commissioned last year is making good progress, handling around 160% more than in the first quarter of the last financial year, with cargo volumes up to 1.3 million tonnes, from 0.5 million. Traffic at Paradip meanwhile is reported to be relatively stable.
Essar Ports has invested heavily to develop its network over the past few years and is now largely looking to consolidate and reap the rewards of its strategy. Total investment to date in India alone has been around RS11,000 crores (US$ 1.55 billion). Further modular investment is underway at Hazira to boost capacity to keep pace with demand.
No further port projects in India are underway, or planned at present, although the company is now working to develop a bulk facility in Beira, Mozambique. Agarwal says, “We are of course always looking out for opportunities. But our strategy going forward is to continue to deliver high rates of growth to capitalise on the investments that we have made, and which are now delivering such positive results. We are also looking to further boost third party cargo flows, taking it above 50% of the total, and also to diversify the range of cargo types we handle. In particular we have plans to develop liquid bulk and LNG handling facilities in Hazira, as well as possibly a new ro-ro cargo terminal.”
As well as higher cargo throughput figures, Essar Ports is also delivering very positive financial results, with EBITDA margins in the first quarter up by around 27%. The company is forecasting that for the full year 2019/2020, EBITDA performance will be around 68% higher than in 2018/19.
Essar Port’s four facilities currently have a combined annual throughout capacity of 110 million tonnes, which is around 5% of India’s total ports capacity. The company is primarily focused on non-container operations, including coal, iron ore, limestone, pet coke and break-bulk cargoes. Key customers include steel, cement and power plant customers on both coasts of India.