JSW apportions ₹6000 crore for acquisitions in port sector

“We have one of the strongest balance sheets in this infrastructure sector of this size and scale. So, the headroom is good enough to expand much more aggressively, provided the opportunity is value accretive…Today, our net debt/Ebitda is virtually zero and with the kind of Ebitda (earnings before interest, taxes, depreciation, and amortization) we have, I can safely spend ₹5,000-6,000 crore without blinking our eyes,” said Arun Maheswari, joint managing director and chief executive of JSW Infra.

JSW Group is evaluating all privatization prospects offered by the government, including the ambitious trans-shipment port project at Galathea Bay in the Great Nicobar Island. 

“The government still owns about 50% of the port capacities in India, which throws a big opportunity for private players like us who are big in terminal operations and Nicobar is one of them and we are assessing it. Once it comes into the block for bidding or offers, that time we will assess and we will see what all and how we can participate in that,” Maheshwari added. 

Last month, Sarbananda Sonowal, the minister of ports, shipping, and waterways, had announced that the government has received expressions of interest from 11 entities for the ₹41,000-crore international trans-shipment port project in Great Nicobar Island, Bay of Bengal. This initiative, expected to span 30 to 50 years, will attract investments through government and public-private partnerships based on the project’s phase requirements.

The proposed Andaman and Nicobar port, designed to handle 16 million containers annually, is set for a phased development. With an initial phase costing ₹18,000 crore and aiming for a 2028 completion, it will start with a capacity to manage four million containers. The strategic location near major trade routes positions it as a competitor to existing trans-shipment hubs like Singapore, Klang, and Colombo.

Adani Ports is the largest port operator in the country and is about three and a half times larger than JSW Infra with a capacity to handle to 580 million tonnes per annum, compared to JSW Infra’s 170 million tonnes.

“In the realm of port management and operation, substantial financial resources and a wealth of experience are imperative. (Only a) few entities in the domain are equipped with both and supported by their robust balance sheet. Despite the formidable presence of any one company, smaller players have ample expansion opportunities, fuelled by the government’s commitment to port privatization, ensuring a conducive environment for growth,” said Varun Gogia, vice-president and sector head at ratings agency Icra Ltd. 

Following the government’s announcement in the interim budget, presented on 1 February, to implement an economic corridor scheme to improve port connectivity, along with the enactment of the Major Ports Authority Bill, 2020, there’s a renewed push towards privatizing 12 state-owned ports.

Maheshwari said that the government’s infrastructure push in the budget provides ample incentive for private investment. Those with strong financial foundations see this as an opportune moment to invest in projects that promise attractive returns.

JSW Infra’s net profit for the December quarter doubled year-on-year to ₹250.66 crore, driven by increased cargo volumes and elevated tariffs. Revenue during the period rose 17.85% to hit ₹940.11 crore.