Looking at ECB route to raise funds: Essar Ports

Essar Ports reported a profit of Rs 92 crore in its fourth quarter. The company plans to pare its interest costs this year, says Rajiv Agarwal, managing director & CEO Essar Ports in an interview to CNBC-TV118.
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Apr 19, 2013, 12.39 PM | Source: CNBC-TV18

Looking at ECB route to raise funds: Essar Ports

Essar Ports reported a profit of Rs 92 crore in its fourth quarter. The company plans to pare its interest costs this year, says Rajiv Agarwal, managing director & CEO Essar Ports in an interview to CNBC-TV118.

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Looking at ECB route to raise funds: Essar Ports

Essar Ports reported a profit of Rs 92 crore in its fourth quarter. The company plans to pare its interest costs this year, says Rajiv Agarwal, managing director & CEO Essar Ports in an interview to CNBC-TV118.

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Most of our borrowing is rupee borrowing, which is at an average rate of about 12-12.5 percent, which is extremely high for infrastructure projects.

- Rajiv Agarwal (CEO)

Essar Ports reported a profit of Rs 92 crore in its fourth quarter . The company plans to pare its interest costs this year, says Rajiv Agarwal, managing director & CEO Essar Ports in an interview to CNBC-TV118.

The company has been reeling under interest cost burden. For this quarter, it came in at Rs 510 crore. Agarwal said his company has been pitching for raising money via external commercial borrowings (ECB), which will allow it to invest more in new projects. 

Here is the edited transcript of his interview with CNBC-TV18

Q: For this quarter in particular, how exactly was the liquid terminal in Gujarat in terms of volumes which you all clocked and what can you all expect in terms of the coming quarters as well?

A: In Gujarat, the liquid terminal which is basically supporting the refinery. We did volumes of about 10.5 million tonne for the quarter, which takes us to annualised volume of about 42 million tonne. For the full year, we did about 39.5 million tonne, which shows that the refinery was operating full stream.

Q: It has been a good quarter for you. But can you take us through the finance cost this quarter for the company and what exactly would the trajectory possibly look like going forward?

A: The finance cost has been almost consistent in the last four quarters, and this year we had total interest cost of about Rs 510 crore and almost about Rs 130 crore in the last quarter. So, definitely there is huge scope for reduction, because most of our borrowing is rupee borrowing, which is at an average rate of about 12-12.5 percent, which is extremely high for infrastructure projects.

We have been requesting the government to see if they can allow us to take ECBs because that will reduce our interest cost and it will help the infrastructure projects and help us to make more investments in newer projects.

So, we will attempt this year to see how we can pare this interest cost. Along with that, we expect the interest rate cost regime will soften this year and we could look at a reduction of maybe a percentage point on that account itself. So, definitely, a lot of work to be done on the interest cost.

Q: What kind of margins have you delivered this quarter and what kind of a sustainable run rate do you see in your EBITDA performance?

A: Our EBITDA performance is pretty good. This year, we had almost 80-81 percent EBITDA margin for the quarter. The EBITDA margin was about 80 percent and we had EBITDA of about Rs 300 crore for the quarter. We expect to continue with this kind of a trend.

Eventually I would say as we set up all our projects, we should be at around 75 percent EBITDA margins in overall terms, because there are some projects where there is a high revenue share with the port authorities.

So we would be around 75 percent on the long-term basis. At the moment, we continue at about 80 percent.

Q: For this quarter in particular, how exactly was the liquid terminal in Gujarat in terms of volumes which you all clocked and what can you all expect in terms of the coming quarters as well?

A: In Gujarat, the liquid terminal which is basically supporting the refinery. We did volumes of about 10.5 million tonne for the quarter, which takes us to annualised volume of about 42 million tonne.

For the full year, we did about 39.5 million tonne, which shows that the refinery was operating full stream. We expect that even with more supply of Mangala crude, which is not coming through the sea from Cairn, we could still see about 42-43 million tonne of annualised cargo next year at our terminal. So, the refinery is operating at full stream.

 

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