The Dubai-based container terminal company will look at locations to set up more free trade zones, expand its coast shipping footprint and also look at opportunities to expand its private rail segment, CEO Rizwan Soomar told ET in an interview.
DP World aims to expand its multimodal cargo services and infrastructure footprint in India as the country shrugs off Covid-19 woes and gears up for growth, said its CEO for the Indian subcontinent.
The Dubai-based container terminal company will look at locations to set up more free trade zones, expand its coast shipping footprint and also look at opportunities to expand its private rail segment, CEO Rizwan Soomar told ET in an interview.
“We have set the foundation for an extremely good multimodal network,” said Soomar, who also heads DP World’s business in sub-Saharan Africa.
The company is into contract logistics, cold chain business, express logistics and has also entered the private rail business, said Soomar. “We are one of the largest private rail operators and all of that has been built within the last 4-5 years. We have got a 60-70% market share in coastal shipping right now. We have got into short sea trades connecting Southeast Asia with India, India-Middle East Africa because these are the trades that will grow,” he said.
In 2016, DP World announced a $1 billion investment into Indian projects. In 2018, it announced with the state-run National Investment and Infrastructure Fund (NIIF) that it will invest $3 billion in infrastructure projects. In July, NIIF purchased a 22.5% stake in DP World’s India subsidiary, Hindustan Ports, for about $300 million.
Soomar said with a slowdown in Europe and China, demand is shifting to India which gives DP world an impetus to set up free trade zones. A free-trade zone is an area where goods can be imported, exported, stored and manufactured without being subject to customs duty. DP World’s profit after tax in the Asia Pacific and India more than doubled to $509 million in 2021, according to its latest annual report. Its containerised volume in the region grew nearly 23% mainly because of a demand push from India. Its capital expenditure last year was $137 million, mainly focused on Pusan (South Korea) and India. “There’s more being manufactured here in India. We are getting a lot of enquiries,” said Soomar, adding that this gave the company the fillip to set up free trade warehousing zones. “We are building an FTZ in Nhava Sheva (Jawaharlal Nehru Port Trust). We are setting up one in Chennai, which is almost 124 acres. We are setting up one in Cochin as well.”
Sourcing patterns are shifting from China and India is in the forefront among the alternative locations, he said. The firm will help micro, small and medium enterprises (MSMEs) with financing, underwriting the risk, he said.
“So, the lenders can lend directly to the MSMEs, cutting out that risk, and we will only deliver the goods if the buyer pays up,” said Soomar.
In 2018, DP World bought cold chain company Winter Logistics. The following year, it bought integrated multi-modal logistics operator KRIBHCO Infrastructure. In February this year, it sold 26% stake in Visakha Container Terminals to JM Baxi.
Soomar said DP World keeps looking at inorganic growth but hasn’t zeroed in on any particular company for its next acquisition.
