See around Rs 150 cr rev from Indira Terminal: Gammon Infra

Gammon Infrastructure’s joint venture special purpose vehicle (SPV), Indira Container Terminal Pvt Ltd has accepted the Mumbai Port Trust (MbPT) proposal for alternative use of their Offshore Container Terminal for roll-on/roll-off operations, i.e. operations of providing facilities to the importers and exporters of automobiles and self propelled equipment, for a period of one year from the date of operation with revenue share of 45 percent to ICTPL and 55 percent to MbPT.Speaking on the above development, KK Mohanty, MD, Gammon Infrastructure told CNBC-TV18 that this was a temporary arrangement for an interim period because Rs 1500 crore has already been invested by both the sides and it is not that alternate use has been permanently granted to the company. He said the revenue potential from Indira Terminal is around Rs 150 crore, out of which 55 percent will go to MbPT and the rest will be with the company. The traffic growth of Indira Container terminal is likely to be around 15 percent, he added.

Below is the transcript of KK Mohanty’s interview with Latha Venkatesh and Reema Tendulkar on CNBC-TV18.Reema: Now that you have accepted Mumbai Port Trust proposal for alternate use of this offshore container, can you tell us what kind of revenues will you expect based on the current volumes and then therefore given your 45 percent stake in the joint venture (JV) what will be the revenues that will accrue to the company? A: Let me first clarify this is an alternative use till the final completion of the project till the commercial operations date (COD) time. So, this is a temporary arrangement for the interim period because nearly Rs 1,500 crore has been invested on this project by both the sides and the asset was lying idle. So, this is the first clarification. This is not a permanent alternative use that we have been granted, it is only for an alterative use till the COD which might take 2-2.5 years time further. Secondly, last year the roll-on roll-off (RORO) operations’ revenue was around Rs 100 crore in Mumbai Port. We are likely to enhance the tariff by 25-30 percent. So, it will take revenues to around Rs 135 crore. Plus the traffic growth expected is around 10-15 percent so the total potential for the revenue is Rs 150 crore out of which 55 percent will go to Mumbai Port and the balance 45 percent will remain with us if we are able to reach that level of operation.Latha: The asset was lying idle you said? A: Yes idle because we had completed the trestle and the berth almost three years back. It was not being used for various conditions like precedent not being complied and the equipment security clearance not being granted etc., and therefore the asset was just lying idle without any use. However, since the berth was there, some dredging was been done. The trestle and the berth have been ready to for last 2.5-3 years time.Latha: When do you expect all these clearances to come and you being able to use this asset?A: First thing is it is being used for a RORO operation now. So, the existing facility will be used for the RORO operation. The equipment ZPMC clearance has been given two weeks back, after a gap of nearly two years the security clearance has come. So, we are negotiating to place the order. When there is a more than a three year delay of the COD, then it goes as a technical non performing asset (NPA). However, we are requesting Reserve Bank of India (RBI) for a special dispensation and if the RBI grants a special dispensation, the project has to be re-uprised. Latha: Why special dispensation?A: There is a guideline by RBI that if completion of any project is delayed beyond three years, irrespective of the financial performance, it will be an NPA. So, this is falling into that category. So, we need to request RBI for a special dispensation on this then only bank can re-uprise it. The equipment delivery time will be nearly 1.5-2 years time so the final completion or operation of container terminal will take between 2-2.5 years time provided all the decisions quickly fall in place.Reema: Considering the COD is still sometime away, is there a provision for you to extend your current one-year agreement with Mumbai Port Trust by another year? A: Though the letter communicated is for one year, the understanding is it will continue till the COD.Latha: How long have you to wait for this RBI dispensation, when are you in danger of that loan falling into NPL? A: That already has happened; it has got delayed more than three years. Latha: At the moment that loan is NPL in the books; Gammon Infrastructure is an NPL holder?A: We are not NPL in that respect but on a technical ground, it will require a special dispensation. Reema: Coming to RORO facilities, what is the capex that you have to put in or is the required infrastructure already in place for this alternate use? A: The required infrastructure is already in place. Few small things like lighting, nsurance, cleaning and marking all those things has to be done; that is very negligible. Latha: It will start earning money from next quarter?A: Not next quarter, in next 15-20 days time we will start. Latha: What might it add -- in the last quarter you did Rs 48 crore of revenue, can we say that it can become Rs 55 crore this year because of this?A: This will add more than Rs 10 crore to the revenues. Latha: In the current year itself because you are not getting the full year?A: No full year we will have at least, I don’t know if Rs 100 crore nearly we do then we can earn around 45 crore.Latha: You can earn in the year? A: Yes, this will partially service the interest of the existing loan. Latha: You expect that you may be in the black in the current year? A: We were already in black last quarter. Latha: I meant annual basis.A: Annual basis we will be in black. Latha: When does your year end, your year doesn’t end on March 31?A: There is a slight technicality on that. We being a subsidiary of Gammon India we need to follow their financial year. So, presently the year ending might technically be 18 months because there is another guideline that all has to fall back to March 31 financial year ending. So, if you go to March 31 it will become 18 months because the last year ending was September 30.