Essar Ports suffers from high interest cost

High interest cost is affecting the profitability of Essar Ports, which runs Vadinar and Hazira ports in Gujarat.

The company faces high interest cost of around 12-14 percent which is eroding its profit. Port operators including Essar have appealed to the shipping ministry to raise the bar on external commercial borrowings (ECBs) from the current 25 percent.

The company, meanwhile, hopes to restructure over Rs 5,000 crore debt through ECB in 2013-14 to reduce finance cost.

The company also hopes to keep its costs in control and ensure continue to post better performance in the forthcoming quarters.

Essar Oil completed expansion of 20 million tonne refinery in mid 2012 and accordingly our Vadinar terminal is now operating at an enhanced run-rate of 10.5 mn t per quarter.

Also, it saw cargo shifting to modern and efficient ports and this has helped Essar to handle record high cargo during March 2013 quarter. During 2012-13, its terminals handled a record 683 ships, as against 514 ships handled during the previous year.

Essar Ports handled 54.52 metric tonne cargo in 2012-13 as against 43.23 in the year-ago period. This is despite other ports witnessing de-growth during the period. The firm got a boost from captive cargo from Essar Steel and Essar Oil.

Meanwhile, the company plans to raise share of non-Essar Group companiesÂ’ cargo to 25 percent in next two years.