Gujarat Pipavav Port bullish on car exports
  • Posted on : Saturday , 17th June 2017

 Gujarat Pipavav Port Ltd (GPPL) plans to double its roll-on roll-off (RoRo) business over the next two years on the back of strong car exports from India, a top company official has said.
A RoRo is a vessel with built-in or shore-based ramps that allow four-wheeled cargo like cars, to be rolled on and off the vessel, when it is in port.
 
“In May this year, the board approved plans for further expansion and land preparation at the Pipavav port to support Pipavav’s ambition to double RoRo business over the next two years,” managing director Keld Pederson said in an interview last week.
 
Pederson said volume will be fuelled by the export of passenger vehicles. The Gujarat-based port and shipping firm, managed by the Netherlands-based port operator APM Terminals, a unit of AP Moller-Maersk Group, accounts for a 10% share of the car export business.
 
Passenger vehicles exports from India—the second largest category after two wheelers—have been advancing at a compounded annual rate of 8.9% over the last six years.
 
Exports grew 10% to 758,830 units in fiscal 2016-17, the fastest in six years, according to Society of Indian Automobile Manufacturer (Siam).
 
The growth was primarily led by Ford India Pvt. Ltd, the second largest in the pecking order after Hyundai Motor India Pvt. Ltd. Ford’s overseas shipment jumped 43% to 158,469 units over a year ago period, according to Siam.
 
Pipavav is looking to ship around 100,000 units by the turn of the current fiscal, Pederson said, compared to 83,000 passenger vehicles shipped in FY 2017.
 
While Pipavav Port is working closely with carmakers such as Ford, it is also in talks with the local arms of others that have big export plans, he said. Pederson said his firm is in talks with passenger vehicle makers such as Honda Cars India Ltd and Maruti Suzuki India Ltd, among others.
 
“We are working closely with both existing and potential new OEMs (original equipment manufacturers),” he said.
 
Pipavav Port is also looking to tap into the opportunity of transporting cars from one city to another within the country through waterways and has commissioned a study to assess the potential.
 
Despite its huge coastline, India’s logistics system is skewed towards roads and rail, which account for 55% and 22% of the transportation market respectively.
 
The contribution of pipelines and waterways is 7% and 6%, respectively. This is so despite the cost/tonne-km by road being Rs2.3, by rail Rs1.2-1.5, by waterways Re0.2-0.3 and by pipelines Re0.1-0.15, he said.
 
On 7 June, Mint reported that Gautam Adani’s Adani Ports and Special Economic Zone Ltd (APSEZ) had initiated talks to buy APM Terminals Management BV’s 43.01% stake in GPPL. APM had hired HSBC Holdings Plc. to advise it on the deal, the report said.
 
“I can’t comment on speculation. It’s very important to understand that we work for our shareholders and the question should be answered by them. We are fairly convinced that we will get information if there’s anything,” Pederson said.
 
An analyst at a domestic brokerage, who declined to be identified, said though the RoRo business is a lucrative one in terms of margins, its contribution to overall revenue is only 5%. Therefore, even a 20% growth in volume will not have an impact on the company’s earnings.
 
“Structurally, we remain negative of Pipavav’s assets,” he said, pointing out that the ratio of import to export is 60:40, meaning vessels remain under-utilised on their return.

Source : http://www.livemint.com

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