Essar Ports To Invest $500 Million In Mozambique, Local Expansion

Ports arm of the embattled Essar Group today said it will invest $500 million over the next 30 months to expand capacities at its two existing domestic projects and also build a new coal terminal in Mozambique.

"We'll be investing $500 million to increase our capacity at Hazira and Salaya, and also build a new coal handling terminal in Mozambique," Essar Ports chief executive and managing director Rajiv Agarwal told reporters.

He said the investment will be completed over the next two-and-a-half years and will take its cargo capacity to around 110 mtpa that it will be ending FY18 with.

For coal exports, Mozambique has built a rail network of 550 km till an existing port, where Essar Ports will be building the new terminal, he said, adding this will be its only facility outside the country.

The port currently operates four assets-at Hazira and Salaya on the West Coast, and Vishakhapatnam and Paradip on the East Coast.

The company is aiming to close FY18 with a net profit Rs 320 crore on an income of Rs 1,350 crore, he said.

Agarwal said the balance sheet of the company will he healthy with a net debt of Rs 2,600 crore by the year to March, but will increase to Rs 4,000 crore by FY19, which will be 2.5 times the targeted pretax profit of Rs 1,300 crore.

It is also negotiating with the Gujarat Maritime Board for adding a large capacity addition at the Salaya Port, which may entail investments of over Rs 10,000 crore to raise the dry bulk potential and a few berths for liquefied natural gas (LNG) and liquid cargo handling, he said.

Agarwal reiterated that the company is looking at a multi-location LNG handling capacity and named Hazira as one of the other locations where it can have it.

The company will close FY18 with a cargo handling of 42 mtpa and aims to increase to 60 mtpa in FY19.

At present, 22 per cent of revenue come from third- parties, which will go up to 40 per cent by GY19, he said.

It can be noted that the diversified Essar Group had sold its cash-cow oil assets in a $13 billion to the Russian government-controlled energy giant Rosneft last November primarily to pay off lenders and had since then retired over Rs 75,000 crore of debt.

The group's steel business, which as over Rs 44,000 crore debt, is also facing the spectre of a change in ownership as banks have initiated insolvency proceedings against it.

Essar Ports said it will be completing a six-year-old capex programme of investing Rs 2,800 crore in its Salaya and Vizag facilities soon.