ESSAR PORTS

Essar Ports, the cargo handling division of Essar Group, currently has three ports in the west coast and two terminals in the east coast. Its current capacity is 88 mtpa, which is being scaled up to 158 mtpa by 2014. Its revenues jumped 25% (YoY) in Q2FY13 at Rs.348.29 crore and net profit rose 97% at Rs.80.53 crore. Its interest outgo atrs.123 crore is much higher than the total operating cost at Rs.120 crore. Clearly, debt remains one of its biggest bone of contention. Net profit at end of H1FY13 was at Rs.149 crore which is already over 2.3 times the 12MFY12 net profit of Rs.64 crore.

As on September 30, Essar Ports had a total debt of Rs5,601 crore, out of which project debt was Rs1,957 crore and operating debt Rs3,645 crore. It is planning to raise $400 million in the next few months to part-retire its debt and develop one of its ports. While $300 million will be used to refinance a part of debt, the remaining will be utilised for the expansion of Paradip port in Orissa, to set up a 14 million tonne per annum (mtpa) coal terminal. It is also looking at the option of raising a combination of rupee and dollar loans of up to $100 million to fund the Phase II expansion of its Paradip port. After the completion of Phase II, the company will, by FY15, will raise the share of revenues from third-party business to 25% from the current 4% as third party get charged a higher tariff compared to the anchor customers - Essar Steel and Essar Oil.