Monday, 11 July 2011

'Indian Ports Global' to promote overseas acquisitions

India will set up a $550 million company that will invest in terminals and ports abroad. The 25 billion rupee enterprise will be owned by the State, and will be modelled along the lines of Dubai's DP World and Singapore's PSA International, two entities that have invested considerably outside their home countries.

Although the Ministry of Shipping is tightlipped on the details, insiders say that 'Indian Ports Global,' the new company, will kick off this month. It is slated to promote trade and give Indian shipping companies a leg up by making access to foreign facilities easier. “It will no doubt help India increase its influence,” Mr. Anand Sharma of Mantrana Maritime Advisory Pvt. Ltd says. “The world is moving toward cross-border acquisitions to ease logistics bottlenecks.” The move comes even as SCI is on a scorching expansion spree, with more than a hundred ships slated to be purchased in the next ten years.

The first tranche of initial funding for the new company- about 2500 crores- will come from existing government run port trusts; this will be followed by the issuance of tax free bonds at a later date. About 5000 crores will be raised this way. JNPT, Mumbai Port Trust, Paradeep, Mangalore and Kandla are said to be sitting on large cash reserves, and the government feels that these can be utilised to leverage the new company. The setting up of a Maritime Finance Corporation was announced by the Ministry of Shipping a few months ago to help finance government port projects; its mandate can now be extended to provide seed capital for Indian Ports Global, observers say.

Private companies out of India have already set the ball rolling for overseas port acquisitions, with Ahmadabad based Adani Group acquiring a 50 million tonne Australian port for Rs 8700 crore recently. Analysts say that Indian Ports Global will look initially at the same broad region - Southeast Asia- particularly at the merits of investment in coal terminals in Indonesia. They expect that a dedicated body identifying and accomplishing overseas acquisitions will be able to sidestep problems individual port trusts face in similar ventures, since these lack individual economic cloud and, additionally, are diverted from their core operations.

India has been looking aggressively to expand its maritime footprint in recent times. Besides acquiring tonnage to service projected rising exports- to double by 2014- and to handle increasing international trade, the government wants to invest in ports that have significant connections with cargoes to or from India. Ninety percent of Indian trade moves by sea.

Indian Ports Global, once cabinet approved, is envisaged as a lean organisation staffed by diverse professionals, sources say. They admit, however, that special efforts will have to be made to overcome the presence- and long head start- of established players like Dubai Ports and PSA.


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