JSW Infrastructure is making strides in establishing a greenfield port in Odisha with a cargo handling capacity of 52 million tonnes. This port will primarily serve the needs of the group company, JSW Steel, which plans to set up an 8 million-tonne pellet plant in the state.
The pellet plant is expected to become operational in approximately three years, coinciding with the completion of the port. Arun Maheshwari, Joint Managing Director and CEO of JSW Infrastructure, explained that the necessary capital for this venture would be derived from internal accruals and debt. Currently, the company generates around Rs 1300-1400 crore annually, and this figure is likely to increase as operations expand.
JSW Infrastructure is set to launch its initial public offering (IPO) on September 25, with a price band of ₹113-119 per share. This IPO marks the third listing within the JSW Group, following JSW Steel and JSW Energy. Of the ₹2800 crore raised through the IPO, ₹1200 crore is earmarked for capital expenditure, including the expansion of Jaigarh Port and Mangalore Container Terminal. The company’s current cargo handling capacity stands at just over 158 million tonnes.
JSW Infrastructure boasts a portfolio of seven terminals and two ports. It operates two greenfield ports, Jaigarh and Dharamtar, while the remaining facilities are terminals acquired through government concessions. The company’s expansion strategy primarily focuses on bidding for additional port concessions. Maheshwari highlighted that terminals have a shorter gestation period, ranging from 6 months to a year, compared to the longer and more capital-intensive process of establishing a greenfield port. Terminals provide the advantage of an existing customer base and infrastructure, requiring only expansion and modernization to meet specific needs.
Port concession agreements involve royalty payments to the government, ranging from 18% to 56%, depending on factors such as location, cargo type, growth potential, and other related variables. JSW Infrastructure is currently bidding for around three more port concessions. Additionally, the company is evaluating the acquisition of two ports, one on the east coast and one on the west, although details are yet to be disclosed due to ongoing negotiations.
Over 80% of the company’s cargo comprises coal and iron ore. Maheshwari emphasized that coal and iron ore are significant drivers of India’s energy growth for the next three decades, until alternative fuels become more commercially viable. He noted that there is currently no viable alternative to coal, making it crucial for port operators due to the volumes it generates. While the company is expanding its capacities in LPG, LNG, container cargo, and urea, these segments still constitute a smaller share of the total cargo volume.
Prasanta Patnaik