“Our future growth would be largely targeted towards liquid, gas, containers and not only ports, we can also explore getting into railway lines, slurry pipelines, alternate mode of transports which feeds into the ports and which help giving door-to-door solutions to customers.”
Let me begin by asking you, now we are into the 9th month of Covid. So, how are things now. They look normal on the path to recovery. How is the cargo handling scenario now at JSW?
There were turbulent times for 8 to 10 weeks and thereafter things started getting normal. But we did not face any challenges in terms of volumes and growth. We did have some challenges in terms of labour and availability of manpower, but volume-wise, we were pretty okay. Our volumes dropped by 5 to 7% in the entire 9 months. So, all in all, from the port’s perspective of JSW this pandemic was not a challenge. We had certain challenges in our other business verticals but everything is now normal or above normal.
During the pandemic a lot of corporates and business houses started re-looking at their business strategies, going back to their drawing board because it also gave an opportunity to have an inward thinking and then re-think a little bit about their strategies. So, recently in news, Chettinad Group’s bulk terminal acquisition has been making rounds. Can you share a bit about how does this fit into your strategy and what would be the future scenario after these acquisitions?
This acquisition of Chettinad Group’s terminals in Mangalore was essentially to make our presence in south east and south west India. In these two places we wanted to have some kind of presence and this particular acquisition was fitting perfectly into that bill. It has a very wide hinterland, variety of customers, and by acquiring these assets we will be able to cater to a wide variety of customers. Having our own consumption in the backyard is an added advantage but that was not the only rationale to acquire these assets. So, I think with these acquisitions we are having presence in Paradeep, Ennore, Mangalore, Goa, Jaigarh, Dharamtar.
What would be the cargo handling capacity after this acquisition?
The total capacity we have under control is close to150 million tonnes today, and the total cargo we are likely to handle in the next year would be close to about 85 million tonnes. So, it amounts to about 55% to 60% of capacity utilization.
You have a target of reaching about 200 million metric tonnes per annum. How close are you to it and will you be revising your targets because with the speed and growth that you are moving, what would be the future targets?
We would like to grow our total capacity to 200 million tonnes in another two to three years’ time or so. By 2023, I am hoping that we should be a 200 million tonnes of capacity. And that capacity would be largely coming from brownfield expansions and some through acquisitions.
What is the current capacity utilization? Is there a plan to increase it?
As of now, the capacity utilization is very low because we had made certain investments which just came about 6 – 7 months back and the utilization will start happening by first quarter next financial year. So, this year, our capacity utilization would be close to about 45% to 50%. Next year, with the increased capacities, we will still be able to achieve 60% of the utilization, which is a fairly good benchmark in the industry.
As part of your growth strategy, are you limiting yourself to only bulk cargo handling or are you looking at other cargos as well?
The port company JSW was essentially to feed the captive usage, which is all about bulk terminal, so that’s how all the investments were planned. But if you see we changed our strategy sometime back wherein we acquired a container terminal in Mangalore in early part of this calendar year. That was a part of the strategy to diversify into containers. Then, very soon, we will be starting an LPG terminal. Our L&T terminal at one of the ports by H-energy will be starting in another 2 to 3 months’ time. So, we will have a bouquet of commodities including urea, sugar, molasses, and edible oil. So, if we see, the basket is still very bulk heavy, but then our future growth would be largely targeted towards liquid, gas, containers and not only ports, we can also explore getting into railway lines, getting into slurry pipelines, alternate mode of transports which feeds into the ports and which can help retain the customers and giving them door-to-door solutions.
Out of the total cargo volume handled, how much is captive and third party? Will there be any shift in the mix?
Certainly yes, because if you look at the container terminal acquisition that was largely targeted towards third party – there is absolutely no containerised cargo in captive use. Similarly, LPG, LNG, urea or sugar, everything is third party. The acquisition of Chettinad Group’s terminal is again targeted towards third party cargo. Then, our cold terminal with 30 million tonne capacity coming up at Paradeep is again non-captive. So, if you see, we were captive heavy. Our captive cargo was close to about 95%. This year, we would be almost 75% captive. Next year, I am hoping that we will be 65% captive, and as we move forward, and as our investments start showing results, our captive cargo percentage will drop in our total cargo handling. No doubt, our captive cargo is also increasing, but with that increased captive still the share will come down, which is a good sign.
You have been growing the seaside infrastructure. Are there any plans to get into landside infrastructure as well?
As I said, we are exploring all the possibilities, getting into the railways. How do we connect to our customers’ site by fitting them dedicated railway lines or slurry pipelines or some kind of warehousing? So, giving them value addition a step further, so that the customers are very satisfied with the one-stop solutions for all their needs. And last mile deliveries are happening. So that is a second wave of thought we are already having and are working on it as well.
JSW is one of the early entrants into coastal shipping. Now with coastal shipping is on the increase and also government of India has lot of thrust on coastal shipping. So, what are your plans on coastal shipping?
Other than the coal companies, the power plants which have been using coal taking it from Paradeep, Dhamra and Haldia, we are the ones who do close to 15 million tonnes of coastal shipping and our intention is to take it to 25 million tonne within the next two years, maybe it will go to 30 million tonnes, considering the way we are progress on the coastal side because we are investing a huge effort, time and money onto the coastal side. It is the best way of transporting bulk material, it is very cost-efficient, green in terms of moving the material and it helps keep the entire supply chain under control. We are not dependent on many of the other variables when we transport through land route so we are quite aggressive on the coastal side.
In 2016, you signed an agreement with Port of Fujairah for management of mechanized bulk cargo terminal. So, how is it going and any further plans on overseas expansion?
Port of Fujairah operations are doing perfectly well and we could prove what exactly we meant when we took over this terminal for operations and authorities are very much satisfied with our performances over there. It took some setback last year because of Qatar issue with Middle East. So, but then now everything is getting back to normal, the other markets are opening up and that performance is really good, so we are going to stay there for sure, and on top of it we have acquired some mines and set up a cement plant over there, so I think our presence in Fujairah is for long-term investment. As far as overseas expansion are considered, I would say India has a vast and variety of coastline. It offers a huge opportunity; it is quite underutilized. So, if I have 100 rupees, I would prefer to invest in India, but that we are not averse to any idea of overseas acquisitions or presence if the opportunity is very compelling and very lucrative and it has to be within the known territory. So, that would help us to grow, but personally I still feel that India offers a great opportunity even today.
Though it is only a year and a half that you took as CEO of this JSW Infrastructure, a lot is happening. So, what is the vision you have for JSW Infrastructure?
First and foremost, my vision was to demarcate it from a captive company to a full-fledged port company. So, all the efforts are directed towards that. Making it more green, lot of efficiencies need to brought in, in terms of energy, sustainability. Safety is on top of my mind.
The vision is ideally I would like it to be a 300 million tonne company. But going back to the drawing board after achieving 200 million tonne, we will draw whether it should be 300 million tonne or 400 million tonne, that time will tell. But I am a firm believer that India offers a great opportunity and even if we put 300 or 400 million tonne as our next target, I think we will have to go back to the drawing board to re-rewrite the targets after couple of years again. So, I think we will come back whether it will be 300 or 400 million tonne but then maybe after 6 to 8 months or 1 year.
Excellent. Such a positive outlook. Let me ask you before ending this interview, what are the lessons that you have learnt during this COVID-19 pandemic, as an individual, as CEO of a group company?
As an individual, I have learnt that we have many unnecessary possessions, which really doesn’t matter to us even if it is not there. And I believe same happens for the company also. We have too many unnecessary jargons or attachments to the company, which are not very much required or the companies can run equally efficiently if those things are not there. And one would think physical presence is not as critical as what we thought. The efficiency, the output, everything helped in equally good when we were doing from remote. If you see the Chettinad Group of Terminals takeover, everything happened during the pandemic. Looking at 3 terminals, 2 government ports, getting it done from the governments, from Delhi, all the concessioners, our own financing, banking, everything happened on a virtual platform. So, the proof of the pudding is in its eating and we could exhibit, demonstrate, deliver this particular case. So, I think going forward, we would enhance those skills, we would ensure those kinds of platforms are available, we will ensure that kind of infrastructure is available to all our employees wherein we are able to deliver with the same efficiencies wherever we are. So, the place of stay won’t matter much in few of the cases, other than operations which is hardcore on the ground. So, more digitalization and more electronics we would get into.
As Winston Churchill said, “You have not wasted the bad times and this is a fine example that how you put the time to the best utilization for charting the growth of the company.”
