Private investment (PPP) in port projects in India. Report by Standard Chartered
Date
July 29, 2011
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So far, we have not written much about investment in Indian ports. If you want to discover more about this sector in India, Standard Chartered has released a fantastic report where it explains the positive outlook for the performance of port companies.The Indian port sector is presently characterized by 12 major ports and 187 minor ports, along its 7,517 km long coastline.The ports in India are the gateways to India's international trade by sea and handle more than 90% of the country's foreign trade by volume and 70% by value. The major ports are governed by the Major Port Trusts Act 1963, whereas the minor ports come under the purview of the respective state governments.
According to Standard Chartered's report, unlike other infra segments, private ports has such a strong outlook because:
- They operate within a benign regulatory environment
- There is weak competition
- They have supportive tariff flexibility
- There are no high entry barriers
- They have healthy cash flows and
- They also have strong cargo growth drivers
Standard Chartered's report explains that demand for port infrastructure is driven by the 3Cs: coal, containers and crude.
- Coal: coastal coalfired power plants and new cement/steel units will require coal imports of 358m tonnes per year (20% CAGR expected over FY11-17)
- Container: Container infra demand is rising as usage increases and current ports reach capacity (13% CAGR expected over FY11-17)
- Crude: crude demand is fuelled by rising economic growth (6% CAGR expected over FY11-17)
The report identifies four publicly traded companies as its top picks:
- Mundra Ports and Special Economic Zone, (MPSEZ) Adani Group (Market capitalization of Rs303,615m (US$6,325m))
- Essar Ports (Market capitalization of Rs44,362m (US$991m))
- Gujarat Pipavav Ports (GPPL) (Market capitalization of Rs27,637m (US$617m))
- MARG Group (Karaikal Ports) (Market capitalization of Rs3,666m (US$82m))
Following you can see a detailed list fo upcoming PPP port projects and their status:
InfraPPP India is interested in knowing your opinion on the port sector in India. What do you think?
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