JSW buys Chettinad Group port business for ₹1,000 cr

P Manoj Mumbai | Updated on November 18, 2020 Published on November 18, 2020

JSW Infrastructure Ltd has acquired Chettinad Builders Pvt Ltd, the ports business of Chennai-based Chettinad Group. 

The  over ₹1,000-crore deal gives it ownership and control over a deep draft coal terminal and a bulk cargo terminal at Kamarajar Port Ltd, and a coal and bulk commodity terminal at New Mangalore Port Trust. The three terminals have a combined cargo handling capacity of 17 million tonnes (mt) a year. 

BusinessLine was the first to report the acquisition, on August 15 and November 11. 

“The acquisition of these port assets consolidates our strategic presence across the South-East and West coast of India,” said Arun Maheshwari, Joint MD and CEO, JSW Infrastructure. “It allows us greater access to the hinterland trading hubs with promising growth potential. These assets also fit into our strategic direction to achieve 200 mt per annum cargo handling capacity over the next couple of years.”

The terminals will have business synergies with JSW’s upcoming 30 mt coal export terminal at Paradip Port, which is scheduled to commence operations during the first half of calendar 2021, Maheshwari added. 

“The newly acquired terminals are strategic assets for JSW Infrastructure,” said Devki Nandan, Senior Vice-President and Head of M&A, JSW Infrastructure. “Their addition enables us to service higher volume of third-party cargo. We intend to modernise these terminals to further enhance their operational efficiency.”

The deal, initiated by i-maritime Consultancy and HDFC Bank, will help JSW Group cut its dependence on Krishnapatnam Port, which was acquired by Adani Ports and Special Economic Zone Ltd in October. 

JSW started using Krishnapatnam Port a few years ago to ship about 4.1 mt of coal and 1.9 mt of limestone after environment concerns forced regulators to trim the cargo volumes handled at its terminal in Mormugao Port Trust, the preferred gateway for its captive needs. 

The newly acquired terminals will also give JSW better pricing power while negotiating rates with Krishnapatnam Port.

Consolidation trend

“The port industry is going through consolidation, where sub-optimal assets will change hands from standalone, mid-size port owners to large port owners such as Adani, JSW Infrastructure, Essar Ports and possibly Shapoorji Pallonji Group, with each working to create 100-500 mt port capacity business,” said Ramesh Singhal, Director, i-maritime Consultancy.

“These large port owners will cut operating costs, expand port capacity with minimal investments and bring additional group captive cargo to increase throughput of the acquired terminals. There are more port assets such as Karaikal port, Kakinada deep-water port, Gangavaram port and port terminals, owned by Gammon, Star Ports and Vedanta, which may see a change in ownership,” Singhal added. 

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Published on November 18, 2020
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