jnpt final volume1v2

0© 2006 KPMG Advisory Services Private Limited, an Indian private limited company and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved.

PORTS AND SHIPPING

ADVISORY

JNPT Business Plan -Final Report Volume 1


Introduction

The real growth that Indian GDP has (greater than 7.5% in 2005) is reflected in its international trade and consequently in the traffic growth that ports have been witnessing over the past few years. This trend in growth is expected to continue, with international trade expected to grow at a rate even higher than at present.

The ability of Indian port infrastructure to meet these increasing demands will be critical to the growth of the economy. In this context, it has been recognized that a national plan needs to be developed which would identify in a structured manner, the required investments in port and related infrastructure, while at the same time reducing dependence on government funds. In order to meet this objective, the planning commission and the ministry of shipping, road transport and highways has initiated this business planning exercise for major ports.

JNPT has an important place amongst Indian ports due to the kind of traffic that it serves as well as being a pioneer in involving large-scale private sector participation. It is also one of the first ports to initiate this exercise. The KPMG consortium is glad to be associated with JNPT in this important activity.

As part of the business planning exercise, which is being coordinated by the IPA and the Port of Rotterdam, the first and second milestones were the development of the inception and interim report. The same were submitted to the port.

As part of the third milestone of the planning exercise, we had submitted the draft final report, which included an introduction to the port, its connectivity and competitive position. A detailed set of traffic forecasts are used to identify the vision, goals and strategy for the port. It also identifies a plan of action to achieve these goals both at an overall level as well as for individual projects. Based on these action plans and projects, a detailed set of financials had been developed for the business plan including investment outlay , profit and loss account, balance sheet and cash flows.

Inputs were provided by the Port of Rotterdam, the Indian ports association and JNPT, which have been taken into account. The draft final report was appropriately revised and the same is now being submitted as the final report. This marks the conclusion of KPMG’s involvement in the business planning exercise for JNPT.

The final report contains two volumes (Vol 1 & 2). Volume 1 contains chapters 1-7 with volume 2 having chapters 7-14.


Table of Contents

130Strategy to achieve goals4.3

115Identification of goals4.2

87Development of JNPT Vision4.1

78Captive and non-captive market3.2

80Unique selling proposition3.3

73Competitive position3.1

70Intermodal facilities2.3

66Road connectivity2.2

56Introduction2.0

58Rail connectivity2.1

48JNPT Organization & staffing1.2

37General description1.1

Volume I of report

86Vision, Goals and Strategy4

72Competitive position3

55Hinterland connectivity2

3Executive Summary

PageNo.TopicSection

No.

36General Port description1

204Internal infrastructure requirements6.1

234Identified projects6.2

196Vessel forecast5.3

167Liquid traffic projections5.2

149Container traffic projections5.1

147Traffic projections – introduction5.0

246External connectivity requirements7

203Internal infrastructure assessment and project identification6

146Trade & Traffic forecasts5

Volume I of report

PageNo.TopicSection

No.


Executive SummaryThe business plan for JNPT consisted of 3 phases

• Inception stage – “As-is” assessment of the port

• Interim stage – Traffic forecast, vision development & projects

• Draft final stage – Action plan and financial model

The as-is assessment identified general port operations, hinterland connectivity and competitive position.

Vision Development

Following the as-is assessment, the vision of the port was developed. The first step was an understanding of the business environment of JNPT. Constraints and drivers of change in the environment were identified as part of this exercise. An important constraint that emerged was the limited space for terminal side expansion at the current location .This understanding of the business environment was used as the basis to identify strengths, weaknesses, opportunities and threats for JNPT. Key strengths that emerged for JNPT were the frequency of services, available port infrastructure and strong financial position. Weaknesses at JNPT include distance from major shipping routes, limited draft and shortage of staff in key areas. The most significant threat for JNPT is the increasing pressure on road and rail connectivity. Other threats for JNPT include developments by private competitors.

For the purpose of assessing opportunities, they were divided into 3 broad categories-

• Opportunities in export-import traffic (where the origin or destination is within JNPT's hinterland)

• Opportunities from trans-shipment and

• Other value added opportunities

An analysis of potential cargo types for export import (EXIM) traffic on the basis of two parameters, market attractiveness and alignment to capabilities, indicated that container and liquid cargo were attractive opportunities worth pursuing (Exhibit i).

On analyzing the coastal trans-shipment opportunity, it was found that certain factors impacted its attractiveness, including distances from major shipping routes, other competing ports being developed and draft. As a result, the port could look at this option opportunistically rather than as a key focus area. Aligned to the export import traffic focus, other potential value added services were examined which could strengthen JNPT's positioning. Potential value added opportunities taken up for assessment included distribution, logistics and free trade areas. An opportunity assessment for JNPT was conducted by analyzing opportunities based on four key parameters -

• Strength/Weakness of port with respect to the opportunity

• Revenue potential

• Growth potential

• Sustainability/ Stability of revenues

In the opportunity landscape for JNPT, export-import container traffic, free trade zone, distribution/logistics emerged as attractive opportunities. In addition, Ro-Ro could be a potential opportunity area for the port, which it could pursue opportunistically. Based on the assessment as well as the SWOT analysis, the vision was developed through a visioning workshop carried out with port stakeholders as outlined in Exhibit ii.


Executive Summary

Coal

Dry Bulk

Break Bulk

LNG

Crude & POL product

Chemicals & other liquids

RO-RO

Cruise

ContainerA

lignm

ent t

o ca

pabi

litie

s

Low

Med

ium

Hig

h

Do not enter the opportunity

Re Evaluate and decide

Enter/ Build the opportunity

Market attractiveness (incl. Growth and Stability)

Low Medium High

Exhibit i : Evaluation of Export import cargo opportunities


Executive Summary

“To be recognized as India's premier container port providing integrated logistics services to the best interest of trade and customers”

Focus Cargo types

Value Added Services

Other Guiding principles

• Container• National Export Import Trade

• Logistics• EPZ (Export processing zone)• Warehousing• Involvement in hinterland connectivity ventures

• Creation of value for customers through value added services• Enabling Indian trade through JNPT, efficiently and smoothly• Ensuring safety and security at the port and development in the area

around the port• Expanding capacity and upgrading equipment in line with customer

requirements

Other Cargos Serviced

• Coastal and regional transhipment• Ro-Ro• Liquid

Exhibit ii : Vision and Elements of Vision for JNPT


Executive SummaryGoals and StrategyDevelopment of action plans for the port requires the vision to be cascaded to a set of actionable goals with a timeframe attached to them. Goals were identified through an analysis of various elements of the vision. JNPT would need to undertake multiple goals to achieve its vision. The goals that were identified for the port are illustrated below:–

Achievement of 10Mn TEUs of traffic at JNPTImprove efficiency across the port To develop logistics capabilities and services at JNPTTo expand JNPT to new locationsInvest into hinterland connectivity ventures

Timeframe for GoalsGoals need to be prioritized to ensure planned development at a port. Prioritization of goals also provides timeframes within which the goals should be achieved. To ascertain the timeframe of the goals, KPMG followed a framework of “ease of implementation vs. criticality”, which was used to evaluate the goals. Based on this framework long and short term goals were identified as seen in exhibit ii. Role of the PortIt is envisaged that the port will increasingly play the role of a landlord with limited presence in port terminal operations (JNPCT). JNPT will evolve primarily into a landlord port facilitating services by terminal operating companies and other providers. The solitary terminal will be the responsibility of JNPT over the medium term horizon of the plan period

Vision

Goals

Capability

Short Term Goals

Trends

Forecasts SWOT

Action Plan

Long Term Goals

Operation Plan

Project 1 Project 2…

PERSPECTIVE PLAN

ACTION PLAN

Dev needsBarriers

Strategy


Executive Summary

Exhibit iii : Framework to identify long and short term goals

Criticality

Ease

of i

mpl

emen

tatio

n

High

Low

Long Term

Achievement of 10Mn TEUs of traffic at JNPT

Short Term

Improve efficiency across the port

To develop logistics capabilities and services at JNPT

Expand into new locations

Invest in rail freight business


Executive Summary

As part of the business plan development exercise an action plan for the port was developed for the next 7-8 years. This action plan was based on the short term goals identified –• Reaching 10Mn TEUs of traffic at JNPT by 2015-16• To offer logistic services at JNPT by 2011-12• To improve efficiency in port operations by 2009-10Strategy to achieve goalsA strategy to achieve the goals was outlined focussing on the following elements –

• Cost: JNPT would endeavour to reduce costs by improving efficiency and thereby ensure competitive services for user.

• Customers: JNPT would attract and retain customers through addition of core and value added services.

• Geographies: JNPT would focus on the northern and Maharashtra region and would enable traffic from the regions through planned development within and nearby the port.

• Services: JNPT would provide value added services and would capture a larger share of the logistics value chain.

The strategy for achieving the goals would need to be supported by a financial and commercial strategy.

• Commercial Strategy: The commercial strategy deals with the three levers of customer management, cost management and service offerings of the port. It is aimed at achieving commercial success within the operating business environment through effective management of customers and suppliers.

• Financial Strategy: The financial strategy of the port focuses on utilization of financial resources of the port. It delineates the sources of finance and expected costs. The likely financing options for various types of projects in alignment with the guiding principles are indicated in exhibit iii.

Contd.

Opportunity cost of capital

Reserves and Surplus

Equipment / expense for JN Port owned container terminal (JNPCT)

2

Exhibit iii : Project Financing Options

Dependant on financing arrangement

Cost of capital ~13% for a 10 year loan with D/E ratio of 1 and 100 basis points over Zero coupon

9-10% (exact cost dependant on % of finance from each source), Opportunity cost of capital

Approx. cost of capital

Critical external road/railway connections

Construction and operation of terminals, logistics, distribution and warehousing facilities, free trade zones

Common user infrastructure-Dredging, internal roads and vessel handling

Type of Projects

Partnership Finance

4

Public private partnerships such as BOT

3

Combination of reserves and surplus as well as bank loans, Reserves and surplus

1

Likely Source of Finance

Sr No.


Executive Summary

Trade and Traffic forecasts

In line with the vision, KPMG analyzed global trends, Indian macroeconomic trends, various industry trends to arrive at the traffic projections for liquid and container traffic in India. Using a bottom up approach, national traffic projections and JNPT specific traffic projections were obtained, which were used a base to arrive at an integrated port development plan.

KPMG applied a bottom up approach that mapped the major industries to locations of consumption and production to arrive at current state level exports and import volumes across industries. In order to estimate the future container traffic potential, key industries from a container perspective were analyzed through secondary research to arrive at future growth rates for the industry. These were further adjusted to take into account regional variations based on known plans, e.g. impact of approved SEZs. The estimated future traffic across industries and regions was aggregated to arrive at the future national traffic potential.

National level container traffic projections using this approach in 2026-27 are 71 million TEUs. This compares well with the GDP based projection of 85 million TEUs as seen in exhibit iv.

In addition to the industry and state wise traffic projections, JNPT's traffic projections also incorporated a qualitative gravity assessment model to estimate share of traffic from various hinterland regions for JNPT. This was primarily done to assess the impact of competition on JNPT's traffic.

The additional factors considered for assessing the share were-

a.Future plans of competitors

b.Current trends in ICD traffic indicating loss/share of traffic from regions with respect to JNPT

The proportion of traffic estimated to arrive at JNPT from various regions was arrived at using the gravity assessment model and discussion with port users. This was aggregated to assess future traffic potential at JNPT

The container traffic potential for the region around JNPT is expected to be around 25 Mn TEUs by 2026-27 as shown in exhibit v. However, JNPT faces expansion constraints and therefore the traffic potential at JNPT is limited by the realistic estimate of an overall capacity (under the current geographical and policy restrictions) at JNPT. The overall capacity (under the current geographical and policy restrictions) for JNPT is estimated to be around 10.90 Mn TEUs by 2016-17 at 70% occupancy. This may indicate the requirement of an additional port in Maharashtra to satisfy the potential traffic in the larger hinterland.


Executive Summary

4.81 5.67 6.67 7.849.17

10.7712.41

14.3016.49

19.0121.92

25.28

29.15

32.85

37.018

41.719

47.019

85.529

4.87 5.84 7.028.45

10.1611.89

13.8616.17

18.7921.85

24.6927.77

31.22

35.00

38.50

43.83

47.56

71.6675.88

67.32

59.728

52.993

66.01

60.81

56.02

51.62

0.00

10.00

20.00

30.00

40.00

50.00

60.00

70.00

80.00

90.00

2005

-06

2006

-07

2007

-08

2008

-09

2009

-10

2010

-11

2011

-12

2012

-13

2013

-14

2014

-15

2015

-16

2016

-17

2017

-18

2018

-19

2019

-20

2020

-21

2021

-22

2022

-23

2023

-24

2024

-25

2025

-26

2026

-27

Mn

TEU

s

Projected GDP Projected Bottom Up

Exhibit iv : National Container Traffic Projections using bottom up approach


Executive Summary

2.68 3.22 3.77 4.435.19 5.93

6.757.70

8.759.95

11.0012.11

13.34

16.3217.63

18.76

25.4524.21

22.7021.29

19.98

14.65

0.00

5.00

10.00

15.00

20.00

25.00

30.00

2005

-06

2006

-07

2007

-08

2008

-09

2009

-10

2010

-11

2011

-12

2012

-13

2013

-14

2014

-15

2015

-16

2016

-17

2017

-18

2018

-19

2019

-20

2020

-21

2021

-22

2022

-23

2023

-24

2024

-25

2025

-26

2026

-27

Mn

TEU

s

Exhibit v : JNPTs Container traffic projections

10.90 Million TEU’s

Capacity of the port would be 11.67 Million TEUs at 75% berth occupancy in 2015-16 and 2016-17. At 70% berth occupancy the overall capacity (under the current geographical and policy restrictions) of the port would be 10.9 Million TEUs by 2015-16.


Executive Summary

As liquid cargo handled by ports consists of products from various industries, the key industries impacting growth of liquid cargo were studied. The forecast for the traffic was arrived at 2 levels

a. National level forecasts for the commodity

b. JNPT forecasts for the commodity

JNPT liquid cargo traffic was estimated for the categories of crude, POL product, chemicals and other liquids. JNPT has no crude linkages with existing refineries and does not service crude traffic at present. The crude traffic forecast for JNPT was based on ONGC plans to ship a part of its offshore crude production at Bombay High via JNPT to the coastal refinery of Mangalore. JNPT POL product traffic is largely coastal based traffic which follows national trends of coastal traffic. Exports growth from the increase in refining capacity in Mumbai region was factored into the forecast. Since the port can handle certain liquid chemicals these were studied and grown at appropriate growth rates to arrive at liquid chemical forecast. JNPT's edible oil/molasses traffic is a significant portion of national traffic and this traffic is expected to continue.

The overall forecast of liquid traffic through JNPT reaches 15.4 Mn tonnes by 2024-25 as seen in exhibit vi.

Exhibit vi : Liquid Traffic at JNPT

7.7610.42

13.14 13.53 13.9515.39

3.26 3.510

5

10

15

20

2005-06

2006-07

2011-12

2016-17

2021-22

2022-23

2023-24

2024-25

MTP

A


Executive Summary

Vessel forecasts

Using the traffic projections for container and liquid cargo, a vessel forecast was carried out for JNPT. A number of factors impacted this forecast, including the change in profile of ships on the Europe Asia route as well as the gradual increase expected in parcel sizes. The expected vessel calls at JNPT are tabulated in exhibit viii. As seen the number of vessel calls at JNPT reach a peak of 5734 vessels in 2015-16 and then start gradually decreasing. This is largely due to the expected continued increase in parcel sizes.

Exhibit vii : Future Vessel Calls at JNPT

Total vessel calls

Liquid Vessel Calls

Container Vessel Calls Year

358865229362026-27 372363030932025-26 386860932592024-25 401858434342023-24 419657836182022-23 438457238122021-22 4583567 40162020-21 477154042312019-20 499253444582018-19 522652946972017-18 547352449492016-17 573452052142015-16 545949049692014-15 508648546012013-14 474648042662012-13 440846739412011-12 404539836472010-11 375438733672009-10 339937630232008-09 307836427142007-08 2768327 24412006-07


Executive Summary

Identification of projects through an integrated capacity assessment Model

As traffic at JNPT increases, various elements across the chain of a port might act as constraints. These constraints could be in the area of wharf capacity, terminal capacity, hinterland connectivity, sea side infrastructure or other supporting infrastructure. KPMG developed an integrated capacity assessment model that, on the basis of traffic projections, evaluated constraints that might arise at various points of time across the ports processes from terminal capacity to hinterland connectivity and indicated projects that need to be undertaken to overcome the constraints.

Broadly the capacity assessment model examined capacity through the following modules

• Container Handling Capacity assessment: This included assessment of capacity available across various equipments, infrastructure and land availability to arrive at the capacity gaps which JNPT is likely to face in the handling of containers in the future.

• Liquid Handling capacity Assessment: This included assessment of capacity available across various equipments, infrastructure and land availability to arrive at the capacity gaps which JNPT is likely to face in handling of liquid cargo in the future.

• Sea Side Capacity Assessment – This module assessed the capacity requirement that will arise due to increasing traffic in the future for sea side infrastructure and processes

• Hinterland Capacity Assessment – This module assessed the capacity requirement that will arise due to increasing traffic on road and rail infrastructure

• Capacity Assessment for other opportunities: This included assessment of infrastructure requirements for pursuing other related opportunities like FTZ,SEZ etcThe various projects identified through the capacity model were integrated in the form of an overall master plan covering the development of

− Terminals− Related infrastructure− Hinterland connectivity− Related projects

A chronological snapshot of evolution of JNPT till 2020-21 has been described through maps (exhibit viii-xi) over the next few pages. It is important to note that the years indicated are for completion of projects and not for their initiation.

The projects identified were assessed to identify land requirements and to develop a land use plan for the port. Currently the port has 1200 hectares of developable land of which 670 Hectares is available for expansion as operational land. As per the projects identified the port would require 546 hectares of land for short to medium term development of CFS,EPZ/FTZ(Free Trade Zone) and other supporting infrastructure. The remaining land of 124 hectares would be required for future expansion opportunities. The land usage has been indicated in a map in exhibit xii.

U:\Admin\975\SCI ADMIN ONLY\Graphics\Graphics

Admin\Templates\Templates\KPM

15

330 M extension (2008-09)

32 Hectares of CFS land (2007-08)

Empties yard 50 hectares (2008-09)

EPZ (2009-10)

Two tugs and seven pilots (2007-08)

Three pilots and two launches(2008-09)

Dredging Phase 1 (2009-10)

GTI to be fully operational (2006-

07)

RMQC moves increased to 24/hr

(2009-10)


(2009-10)

Shallow berth moves increased to 16

moves/hr (2008-09)

Common user pipeline creation

(2007-08)

Dronagiri Link road(2009-10)

Evacuation (EPZ) Road

(2009-10)

Additional Link Road (2009-10)

SH54 4-laning (2007-08)

Grade Seperators at Karal and Gwaan Phata (2008-09)

Conversion of railway tracks to fully operational railway sidings (2006-07)

Exhibit viii : JNPT developments between 2006-

07 and 2009-10

Land already occupiedNot to scale



16

Exhibit ix : JNPT developments between 2010-11 and 2012-13

3 tugs and 5 pilots (2010-11)

2 pilot launches (2011-12)

3 pilots (2012-13)

4th Terminal Ph 1 & BPCL Relocation

2010-11

MCT Phase 1(2011-12)

Construction of emergency berth

(2011-12)Road for 4th

Container Terminal(2010-11)

Rail ICD 4th Terminal (2010-11)

Link to 4th

container terminal

(2010-11)

56 Hectares CFS(2012-13)


Sorting Yard (2011-12)

40 Hectares of Empties yard (2012-

13)

Additional Road Linking Port to highway

(2010-11)

6 Laning of NH 4B(2010-11)




17

Exhibit x : JNPT developments between 2013-

14 and 2015-16

2 tugs and 3 pilots(2013-14)

1 launch,1 tug and 1 pilot (2015-16)


4th Terminal Ph 2 (2014-15)

Rail ICD for 4th Terminal Ph 2 (2014-15)

Gate Capacity(2013-14)

Additional Railway track(2014-15)

RMGC Moves increasedto 20/hr (2013-14)

CFS 49 Hectares(2015-16)


Empties 28 hectares(2015-16)





18

Marine Berth(2020-21)

Addition of 3 RMGCS (2016-17)

POL tankage construction (2018-19)

Connection to Additional Link road

(2017-18)

Exhibit xi : JNPT developments between 2016-

17 and 2020-21




19

124 Hectares *Available Land

* This land can be used for EPZ/FTZ expansion, Ro-Ro yard and activities such as parking etc that the port may require.

91 HectaresCommon User & Other Infra @ 20%

455 HectaresTotal used

200 HectaresUsed for EPZ

118 HectaresUsed for Empty container yards

137 HectaresUsed for CFS

670 HectaresLand Available

EPZ

Empty container yard

CFS

Exhibit xii : Proposed land usage for port operational area

of 670 hectares

Land already occupied

Not to scale


Executive Summary

Classification of identified projects

The capacity assessment model identified an integrated master plan for the port. The master plan includes various projects that the port has to undertake to service the expected traffic potential. These projects can broadly be classified into three major categories

• Client Related Investment Projects: This would include projects that would be funded through investments made by private players. The mode of financing these projects would primarily be a BOT arrangement wherein the private player would share revenue with JNPT.

• Planned public investment projects: This would include projects that would be financed by JNPT and/or by public agencies. The mode of finance for these projects could be directly by public agencies. Alternatively an SPV could be formed by the port and other agencies or through the port internal resources.

• Planned organizational improvement projects: This would include process improvement projects that would be financed by JNPT. The financing for such projects would be done through internal resources of the port or through debts taken from banks.

A listing of all projects identified within each of the above mentioned categories along with their mode of coverage is provided in exhibit xiii-xv. Some of these projects have been covered in detail in the report while summary information for the others has been provided.. Taking a long term view projects have been identified beyond the 7 year action plan period of 2014-15 and these have been highlighted in blue.

Major projects to be undertaken via client related investments are

• Construction of 1st phase of 4th container terminal (2010-11)

• Relocation of BPCL jetty to new marine chemical terminal (2010-11)

• Addition of a 300 metre berth for handling liquid cargo(2011-12)

• Construction of 2nd phase of 4th container terminal (2014-15)

Major projects to be undertaken via public investments are

• Development of an additional road linking the port to highways (2009-10)

• Dredging to enable fully loaded 6000 TEU ships and 7500 TEUs partially laden ships during tidal window (2009-10)

• Increase in RMQC moves at JNPT to 24 moves per hour (2009-10)

Major organizational improvements to be undertaken are

• Automation between gate and terminal operators(2009-10)

• Development of Maintenance Service level agreement for roads (2013-14)


Executive SummaryExhibit xiii : Client Related Investments

8.1.8Detailed CoverageBOT (infrastructure by port, development by pvt. Operator)

Development of 40 Hectares of land for empties operations2012-13

Detailed coverage

Summary Coverage (within 4th container terminal)



Detailed Coverage

Detailed Coverage

Summary Coverage

Detailed Coverage

Summary Coverage

Summary Coverage

Level of Detail

8.1.5BOTEPZ setup on port land2009-10

8.1.6BOTDevelopment of Rail terminal for the 4th terminal phase one2010-11

8.1.6BOTAdditional road to be constructed for 4th container terminal2010-11

8.1.6 BOTBPCL Relocation to new terminal2010-11

8.1.7BOTMarine Chemical Terminal - 1 new berth of 300 m 2011- 12

8.1.4BOT (infrastructure by port, development by pvt. Operator)



Development of 32 Hectares of land for CFS operations2007-08

BOT

BOT

BOT

Mode of Financing

8.1.6

8.1.3

8.1.1

Section No.

Development of 4th Container Terminal

330 m Extension of berth

GTI to be made fully operational

Project

2010-11

2008-09

2006-07

Year


Executive Summary

Exhibit xiii : Client Related Investments (contd.)

8.1.9Summary CoverageBOT (infrastructure by port, development by pvt. Operator)


Summary Coverage

Summary Coverage

Summary Coverage

Summary Coverage

Summary Coverage

Detailed Coverage

Summary Coverage

Summary Coverage (within 4th container terminal phase 2)

Detailed Coverage

Level of Detail Section No.Mode of FinancingProjectYear

8.1.14BOT (existing player)Reduce pigging hours by 1 for each product 2019-20

8.1.10BOTDevelopment of 4th Container Terminal – 2nd phase2014-15

8.1.10BOTDevelopment of Rail terminal for the 4th terminal phase one2014-15

8.1.15BOTMarine Chemical Terminal - 1 new berth of 300 m 2020-21

8.1.16BOTReduce average POL tankage dwell time to 20 days 2021-22

8.1.17BOTReduce average chemical tankage dwell time to 25 days 2024-25







Executive Summary

9.1.1 and 9.1.2Summary CoveragePort InvestmentHiring of 2 tugs and 2 pilots2008-09

9.1.2Summary CoveragePort InvestmentHiring of two tugs2007-08

Exhibit xiv : Planned Public Investments

9.1.11Summary CoveragePort Investment Dronagiri Link road2009-10

9.1.10Summary CoveragePort InvestmentAdditional Evacuation road (EPZ Road)2009-10

Summary Coverage

Detailed Coverage

Summary Coverage

Summary Coverage

Summary Coverage

Detailed coverage

Summary Coverage

Level of Detail

9.1.9Public InvestmentDevelopment of an additional road linking the port to highways2009-10

9.1.6SPVSH54 to be converted to a four lane road2007-08

9.1.7SPVGrade separators to improve the efficiency of the approach road to the port

2008-09

9.1.4Port InvestmentConversion of one of the tracks to full operational railway siding. 2006-07

9.1.5Port Investment/ BOT financingAdditional pipelines for select products2007-08

9.1.8Port InvestmentIncrease shallow berth moves to 16 moves per hour2008-09

9.1.12Port Investment

Dredging to enable fully loaded 6000 TEU ships and 7500 TEUs partially laden ships during tidal window, channel deepened upto 12.5 m

2009-10

Mode of Financing Section No.ProjectYear


Executive Summary

9.1.2 Summary CoveragePort InvestmentHiring of two pilots2012-13

9.1.17Detailed coveragePort InvestmentReduce non discharging hours per vessel from 6 hrs to 4 hrs 2010-11

Exhibit xiv : Planned Public Investments (contd.)

9.1.17Summary CoveragePort Investment 4th container terminal link2010-11

9.1.24Detailed coveragePort InvestmentCreation of emergency berth2011-12

9.1.15Summary CoveragePort Investment Additional road linking port and highways2010-11

9.1.14Summary Coverage SPVSix Laning of NH4B2010-11

9.1.18

9.1.3

9.1.1 & 9.1.2

9.1.13

Section No.

Summary Coverage

Port Investment

Increase RMQC moves at JNPT to 24 moves per hour 2009-10

Summary CoveragePort InvestmentHiring of 3 tugs and hiring of 2 pilots2010-11

Level of DetailMode of FinancingProjectYear

Detailed CoveragePort InvestmentSorting Yard to Reduce Mixed trains and development of processes and systems between the port and the sorting yard

2011-12

Summary CoveragePort InvestmentHiring of 2 pilot launches2011-12


Executive Summary

9.1.22Summary CoveragePort Investment

Increase RMGC Capacity through addition of RMGCs2016-17


Road to be constructed to connect the Aamra Marg link road to the port

2017-18

Exhibit xiv : Planned Public Investments (contd.)

Summary Coverage

Detailed Coverage

Summary coverage

Summary Coverage

Level of Detail Section No.

Mode of FinancingProjectYear

9.1.1 & 9.1.2

Port InvestmentHiring of two tugs and two pilots2013-14


Dredging to enable fully loaded 6000 TEU ships at all times, channel deepened upto 14 m

2015-16

9.1.20Public Investment

New rail track to be laid outside the port2014-15


Increase in productivity of RMGCs by increasing the moves per hour

2013-14


Executive Summary

10.1.6Detailed coverage Port investmentStrengthening of project

management capabilities2009-10

Exhibit xv : Organizational Improvement project

10.1.3Detailed CoveragePort InvestmentTraining for double moves

(twin lift)2011-12

10.1.3Detailed CoveragePort Investment Training for managerial staff2011-12

Summary Coverage

Summary Coverage

Detailed Coverage

Detailed coverage

Level of Detail

Port Investment

Port Investment

Port Investment

Port Investment

Mode of Financing

10.1.1Strengthening of the marketing Department2009-10

10.1.5Development of Maintenance SLAs for the roads2013-14

10.1.4Automation between sorting yard and port operators2013-14

10.1.2Automation between gate and terminal operators2009-10

Section No.ProjectYear


Executive Summary

Plan of action to implement Strategy

A detailed plan of action was developed to implement the strategy for the port over the next 7 years (between 2007-08 and 2014-15). The action plan attempts to cover the set of projects/ initiatives to be undertaken by the port in the plan period across the following areas -

Creation of new infrastructure

Efficiency improvement

Organizational improvements

The major aspects covered in action plan were as follows

Time Lines: An estimate of the timeframe of each project

Dependencies: Indicates linkages and dependencies between projects highlighting need for focus on parallel development where needed

Critical success factors: This highlights key elements need to be addressed to ensure success of the strategies. It consists of factors which are within/beyond the control of the port

An overall implementation schedule for the various projects has been outlined for the 3 categories of projects in exhibit xvi, xvii, and xviii. Individual plans have also been developed for each of the projects in Section 14.

Investment plan

Based on the identification of projects and action plan, a detailed set of projects were identified for JNPT through the means of an capacity assessment model. The total investment outlay for these projects is expected to be approximately Rs. 14556 crores by 2017-18. Of this JNPT would need to invest approximately Rs 4530 crores through its own resources as identified through the business plan. The investment figure of Rs 14556 crores also includes Rs 1398 crore of investment identified as part of XI 5 year plan. The investment outlay each likely source of finance is indicated in exhibit xix.


Executive Summary

Exhibit xvi : Overall implementation schedule for infrastructure creation projects

Action Plan

Capacity Creation


Org Improvements

Dependencies Timeline Projects already under implementation

Infrastucture Creation project Apr-Sep 2007 Oct-Mar 2008 Apr-Sep 2008 Oct-Mar 2009 Apr-Sep 2009 Oct-Mar 2010 Apr-Sep 2010 Oct-Mar 2011

32 hectares of CFS

Common user pipelines

330 m extension

Grade separators

50 Hectares of empty yards

Free trade zone

Additional link road via Belpada

Additional evacuation road

Dredging first phase

Dronagiri Link road

Fourth terminal phase 1

Road linking port and highway

Link to 4th container terminal

Six laning NH4b


Executive Summary

Action Plan

Capacity Creation


Org Improvements


Exhibit xvi : Overall implementation schedule for infrastructure creation projects

Infrastucture Creation project Apr-Sep 2008 Oct-Mar 2009 Apr-Sep 2009 Oct-Mar 2010 Apr-Sep 2010 Oct-Mar 2011 Apr-Sep 2011 Oct-Mar 2012 Apr-Sep 2012 Oct-Mar 2013 Apr- Sep 2013 Oct-Mar 2014

Sorting yard

Marine chemical terminal berth

40 hectares of empty yards

56 hectares of CFS

Rail track outside JNPT

Fourth terminal phase 2


Executive Summary

Process improvement Apr-Sep 2007 Oct-Mar 2008 Apr-Sep 2008 Oct-Mar 2009 Apr-Sep 2009 Oct-Mar 2010

Increasing shallow berth moves to 16 per hr

Increase RMQC moves to 24 per hour

Automation between gate and terminal operators

Process improvement Apr-Sep 2010 Oct-Mar 2011 Apr-Sep 2011 Oct-Mar 2012 Apr-Sep 2012 Oct-Mar 2013

Increase RMGC moves to 20 per hour

Automation between sorting yard and port operators

Exhibit xvii : Overall implementation schedule for process improvement projects


Action Plan

Capacity Creation


Org Improvements


Executive Summary

Organizational improvement Apr-Sep 2007 Oct-Mar 2008 Apr-Sep 2008 Oct-Mar 2009 Apr-Sep 2009 Oct-Mar 2010

Strengthening of marketing dept.

Strengthening of project mgmt. capabilities

Organizational improvement Apr-Sep 2010 Oct-Mar 2011 Apr-Sep 2011 Oct-Mar 2012 Apr-Sep 2012 Oct-Mar 2013 Apr- Sep 2013 Oct-Mar 2014 Apr- Sep 2014

Training for double moves

Training for managerial staff

Development of Maintanence SLAs

Continuous efforts Timeline Projects with some action underway

Action Plan

Capacity Creation


Org Improvements

Exhibit xviii : Overall implementation schedule for organizational improvement initiatives


Executive Summary

1398Other investments ( as part of XI plan outlay)

Exhibit xix : Investment outlay by mode of finance till 2017-18

* Apart from this there would be regular recurring investments for hired equipment such as pilot launches, tugs etc, which have not been included. These figures factor in annual inflation of 4%

207Other public investments

14556Total investments

231.7Public participative financing/SPV (excluding ports contribution)

8190BOT/PPP route

4530Port resources (Includes internal port resources as well as external financing like bank loans, as also the port’s expected contribution to projects undertaken through Special Purpose Vehicles)

Investment outlay (in Rs crores)*Mode of finance


Executive Summary

Financials

The financials for the port were developed through an comprehensive analysis of all revenue and expense sources of the port.. The various sources that were considered while developing the plan for the port are as follows:

Revenue:

BOT Income

Estate Rentals

Marine Income

JNPCT Income

Misc and Financial Income

Expenses

Container handling costs

Marine Costs

BOT Expense

Financial Expense

Salaries

Liabilities:

Social expense

Deferred liabilities (deferred tax liability reduced to zero post the current adjustments)

Pensions

Loans (short and long)

Assets

Fixed Assets

− Replacement

− Acquisitions

Current Asset

The projections of the above streams were used to develop the Profit & Loss account, Cash flow statement and the balance sheet for the port.

Analysis of the projected statement of accounts indicate the following:

Profitability

JNPT is expected to maintain a high profitability. JNPT would have a operating profit margin of around 70% due to the fact that JNPT would earn significant profits from revenue share from BOT projects which do not involve a corresponding operating expense.

Revenues

JNPT’s revenue profile over the years is expected to change and a significant portion of the revenues would come from concession fee in the latter years. This is representative of the fact that JNPT would increasingly act as a landlord.

Expenses

The growth in expenses indicate that there would be an increase in expenditure at JNPT. The largest increase would be in salaries followed by the increase in BOT expense


Executive Summary

Return on Capital

Return on Capital Employed at JNPT is expected to remain in the region of 25-30% over the medium to long term. This indicates that investments in JNPT infrastructure are expected to provide attractive returns.

Coverage

JNPT is adequately covered with respect to debt repayments. JNPT earns dollar income for marine services and therefore is naturally hedged with respect to foreign exchange fluctuations. This provides an opportunity for JNPT to explore the foreign capital markets for raising debts.

Investments

JNPTs investments would grow at a significant pace through the years. The nature of investments however is expected to undergo a change. It is expected that a large portion of investments in the early years would be used for building assets (CFS, Empties, Roads etc) while the latter years could witness a large portion of investments being used in securities etc (assuming no other investments once the maximum capacity has been reached except replacements).

A detailed financial model has been attached.


Executive Summary

Evolution of JNPT

Based on the financials from the business planning exercise, it is clear that JNPT will evolve primarily into a landlord port facilitating services by terminal operating companies and other providers. The revenue profile of the port will be dominated by concession fee and estate income. The container terminal revenue as a proportion of total revenue will reduce. Nevertheless the container terminal will remain a part of JNPT operations over the medium term horizon of the plan period.


Chapter 1

General Port Description


1.1 General Description

Ports in India

Globalization has led to an increase in world trade highlighting the importance of ports as a trade gateway. About 95% by volume and 70% by value of India’s international trade is carried out through its port. India’s coast line of 7517 km is dotted with 12 Major Ports and 187 non-major ports. The Major Ports are under the control of the Central Government and the Non-major Ports are under the respective State Governments.

Major Ports

The total volume of the traffic handled by all the Indian ports during 2005-06 was around 576 million tonnes, of which 423 million tonnes i.e. around 74 percent was handled by Major Ports and remaining 153 million tonnes by the Non-major ports.

Exhibit 1.1.1 : Major ports of India

19%Miscellaneous

15%Container

14%Coal

19%Iron Ore

33%Crude and Petroleum Products

Percentage Share

Cargo

Exhibit 1.1.2 Composition of Cargo at Major Ports (2005-06)


1.1 General Description

Inception of JNPT

India’s increasing international trade necessitated the development of additional facilities to decongest the traffic at the Mumbai Port. The need of an alternative port in the region to handle the increasing traffic led to the development of JNPT in 1989.

With its vast back up area JNPT was believed to have a strong potential for the development of additional facilities as per demand and was ideally suited for future maritime requirements.

JNPT Profile

JNPT is the second youngest port after Ennore. JNPT is located at the eastern end of Mumbai in the Nhava Sheva area and situated at latitude 18º 56’ 43” N and longitude 72º 56’ 24” E. JNPT’s approach channel is an extension of the Mumbai Harbour main channel (See Exhibit 2.1) from a location south of Jawahar Dweep Island. In the Nhava Sheva area at the eastern end of Mumbai Bay is located Jawaharlal Nehru Port, approx 33 km inland of the Mumbai Harbour Channel entrance point at sea. The Elephanta Island is on one side, facing the port and Nhava and Sheva Islands are on the other end. JNPT lies towards the east of the Bombay Port.

Current designed channel depth of JNPT is 11 metres and depth at berths is 13.5 metres. JNPT can take in vessels having laden draft upto 12.5 metres. A map of JNPT has been included overleaf.

The width of the channel is 400 metres at entry point and 460 metres off the berths. Port cargo handling facilities include container terminals, a liquid handling terminal and a shallow water berth which can handle break-bulk and container traffic both.

Port Highlights

Accredited with ISO 9001-2000 Certification

Ranks 31st among the top 100 Container Ports in the world

Handles 56% of India’s total containerized cargo

Highly automated and computerized operations with Single Window System

Recipient of Indira Priyadarshini Vrikshamitra Award – 1996 for the Greenest Port in India

Equipped with the latest Vessel Traffic Management System (VTMS) to track/monitor vessel movements ensuring safe navigation

Spread over a land area of 2,584 hectares

Served by 16 Container Freight Stations and over 23 Inland Container Depots

Well connected by National Rail/Road network

FOURTH CONTAINERTERMINAL (Proposed)

MARINE CHEMICAL TERMINAL(Proposed)

G.T.I.P.L (3RD C.T.)

J.N.PORT

NSICT (2ND C.T.)

PROPOSED330 M.

EXTENSIONOF

BERTH


1.1 General Description1.1.1 History

1989

1997

1999-00

2002

2004-05

JNPT commenced operations with one Container Terminal i.e.

JNPCT

A consortium led by P&O Ports, Australia won the

bid for the second terminal

The JNPT Bulk Fertilizer Terminal tendered to be

converted into a CT through Gateway Terminals of India

Private Limited (GTIPL a consortium of AP Moeller-

Maersk and CONCOR), on a BOT basis

A fourth container with a berth length of 2000

meters was planned as an extension of BPCL jetty on

a BOT basis

2000-01

JNPT became the first Indian port to handle to handle more

than 1 million TEUs

Nhava Sheva International Container Terminal (NSICT) started operations

under the management of P&O

Two Liquid Cargo Berths developed by

BPCL and IOC on BOT basis

started operations

An additional Marine Chemical

Terminal was planned on BOT basis to enhance

bulk liquid handling

capacity (5.5 MT)

2003-04

JNPT crossed the 2 million TEU mark

GTI starts operations of the third Container

terminal on a BOT basis

2006


1.1 General Description1.1.2 Existing Port Facilities

Navigational Facilities

The JNPT access channel which is an extension of Mumbai Harbour channel has a depth of 11 m below Chart Datum (CD). The water depths in front of the berths at JNPT are maintained at 13.5 m to CD.

The common main harbour and JNPT channel sectors are presently maintained at depths 10.8 m - 11.1 m below CD. The total length of the dredged channel upto the end of Elephanta deep is about 15.21 Nautical Miles.

At present, large size vessels up to 6,000 TEUs and having a draft up to 12.5 m, navigate through Mumbai Harbour and JNPT Channels, making use of the tidal window, which occurs twice in 24 hours. Currently the channel is used for two way navigation of ships.

There are 2 mooring launches and 5 pilot launches to pilot the ships with 7 tugs for towing the ships.Channel Limitations

At present, container vessels carrying up to 6000 TEUs having a draft upto 12.5 m, navigate through Mumbai Harbour and JNPT channels, making use of the tidal window. Ships having draft larger than this cannot be serviced at JNPT. During monsoon ships with draft upto 11.8 m can be serviced.

Source : CES Report on Feasibility of Marine chemical terminal & 4th

container terminal, March 2003

Exhibit 1.1.3 Navigational Facilities – Mumbai Harbour and JNPT Approach Channel

15.211.52450-11.1Elephanta Deep

13.691.72400-10.8South Elephanta

JNPT Channel

11.972.41450-400-10.8Uran

9.563.56450-325-10.9Karanja

6.006.00450-350-11.1 to -10.9

Outer

Main Harbour Channel

Cumulative length (Nautical miles)

Channel length (Nautical miles)

Width (m)Maintained channel depth (MCD)

Name of Channel



Berthing Facilities

At present JNPT has three container terminals; JNPCT, NSICT and GTICT. Apart from this JNPT also has a shallow berth and two captive liquid cargo berths for BPCL.

JNPCT is operated by JNPT and NSICT (set up on BOT basis). The Bulk cargo terminal comprising the bulk berth and two multipurpose berths are under conversion as a Third Container Terminal (on BOT basis) by a consortium of MAERSK and CONCOR as GTICT.

Liquid Chemical Terminal - Bharat Petroleum Corporation Limited (BPCL) and Indian Oil Limited (IOL) are operating a liquid bulk terminal on BOT basis to handle bulk liquid chemicals, POL and edible oil.

Shallow Water berth - It can handle 165 m LoA for break bulk and container purposes

Liquid chemicals Edible oil and POL

45000180280 (Rear side of Berth 1)

12Liquid Berth 2

Source : CES Report on Feasibility of Marine chemical terminal & 4th

container terminal, March 2003

Exhibit 1.1.4 Existing Port Facilities

Container (under construction)71213.5GTI Container Terminal

Container and dry bulk300001654459Shallow

Water berth

Liquid chemicals Edible oil and POL

10000025030013.5Liquid Berth 1

Container10000030560013.5

NSI Container Terminal

Container8500030568013.5

JNP Container Terminal

Displacement

(tonnes)LOA (m)

Cargo Type

Maximum Vessel size that can be

accommodatedLength (m)

Depth

(m)Berth



Storage FacilitiesContainer freight stations are the hubs for import and export of more than 80% of the cargo handled by the port. Presently there are 16 Container Freight Stations (CFS) in operation outside the port premises; while necessary investments are being made by few more of them. The total capacity of CFS’s is sufficient to handle the present container traffic. There are around 20 empty container yards that have come up near the JNPT area to store empty containers.

The port had originally 6 Transit Sheds / Over Flow Sheds of area 1,10,780 sq. m. and open storage area of 1,48,850 sq. m. within the port. Most of these have been decommissioned / dismantled for conversion into container stack yards and other yard facilities.

Additional details on port facilities are in Section 6 of inception report.

Exhibit 1.1.5 Cargo Handling Equipment at JNPT

223Forklifts

504672320Reefer Points

040311 (2 Owned, 9 Hired)

Reach Stackers

15034 owned, 100 hired

130 (20 owned,110 hired)

Tractor Trailers

02 + 10204Railway Siding

522841Container Yard (Ha)

292918RTGC

030303RMGC

08Post Panamax –6 Super Post Panamax - 2

Post Panamax – 6 Super Post Panamax - 2

RMQC

712 m600 m680 mQuay Length

GTIPL (Proposed)

NSICTJNPCTFacility

123 tanks – 9,48,000 KL

Liquid Storage

100,875 Sq meters or 35,123 TEUs / month

Export Storage

6,00,000 Sq m or 42,000 TEUs

Import Storage

CapacityStorage Facility

Exhibit 1.1.6 Storage Facilities

Assumptions: 1 TEU per 50 sqm , 3.5 TEUs to a ground slot.; 35 TEU exports per month for 100 sq m of CFS space Assumptions and source: A diagnostic study of JNPT , B Raghuram, IIM Ahmedabad, April 2006



Limitations of terminal operation

Internationally container terminals focused on Origin destination traffic maintain an average ratio of number of RTGCs to each RMQC as 3:1. Unlike NSICT and GTI (planned) both of which have RTGC to RMQC ratios over 3:1,JNPCT has a ratio of 2.25:1. This may be hampering JNPCT crane moves per hour and overall productivity.

At the liquid chemical jetty, the limited discharge rate of a large number of pipelines owing to their small diameter vis-à-vis the achievable ship discharge rate is a restriction. This reduces the flow rate of liquid chemicals and increases ship turnaround time.


1.1 General Description1.1.3 Port Performance

Cargo Traffic break up at JNPT

Exhibit 1.1.7 shows that the Dry bulk and Break bulk cargo are showing a declining trend over the years whereas the container cargo is rapidly growing. The share of container cargo in the total cargo handled is also on the rise. Container traffic growth is currently approaching a plateau due to port capacity and hinterland constraints.

87% of the cargo handled by JNPT is containerized and with further investments in container terminals this share could increase further.

The share of imports in the total cargo handled at JNPT has gone up in the year 2004-05.

Exhibit 1.1.7 : Cargo traffic at JNPT

0

5

10

15

20

25

30

35

2000-01 2001-02 2002-03 2003-04 2004-05

Mill

ion

Tonn

es

Dry Bulk Break Bulk

Liquid Bulk and General Cargo Container Cargo

18.57

0.39

0.94

2.96

14.28

2000-01

22.52

0.36

0.83

2.85

18.48

2001-02

26.84

0.24

0.70

3.04

22.86

2002-03

31.19

0.15

0.58

2.68

27.78

2003-04

0.006Dry Bulk

2004-05

Exhibit 1.1.8 Cargo Traffic (In million tonnes)Cargo

Type / Year

28.75Container Cargo

3.49

Liquid Bulk (MT)& Gen cargo

32.81Total

0.57Break Bulk

Exhibit 1.1.9 Total Traffic (In million tonnes)

32.81

16.18

16.63

2004-2005

100

52.6

47.4

%

100

49.32

50.68

%

14.79Import

2003-2004

31.19Total

16.40Export

Source: Data From JNPT



56%4%2.378%4.232004-05

58%17%2.2615%3.902003-04

57%22%1.9216%3.362002-03

54%32%1.5717%2.882001-02

48%33%1.1913%2.462000-01

41%33%0.8913%2.181999-00

% WRT TotalGrowth Rate %TrafficGrowth Rate %Traffic

JNPTAll India (Major Ports)Year

Exhibit 1.1.10 Trends of Container Traffic growth (in million TEUs)JNPT Container Cargo Traffic compared to other major Indian Ports

The difference between the growth rates of container traffic at JNPT and all major ports in the country reflects the robust position of JNPT in containerized cargo.

Exhibit 1.1.11 Trends of Container Traffic (in million TEUs)

0

1

2

3

4

5

1999-00 2000-01 2001-02 2002-03 2003-04 2004-05

Mill

ion

TEU

s

JNPT All India (Major Ports)

Source: Data From JNPT, KPMG Analysis



Terminal wise Container Traffic at JNPTWith the establishment of the NSI Container Terminal in 1998-99, the total container traffic handled by JNPT increased substantially. The container traffic was redistributed between the two terminals with NSICT getting the larger share of the traffic. NSICT displayed sharp increase in growth rates, the small base also amplifying the effect, while JNPCT went through an overall operational efficiency improvement initiative during this phase. Currently both JNPCT and NSICT handle comparable amount of container traffic.

Additional details on terminal performance are available on Chapter 7 of the inception report.

Exhibit 1.1.12 Container Traffic in '000 TEUs

0

500

1000

1500

2000

2500

3000

1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06

JNP CT NSI CT JNPT Total



1.2 JNPT Organization and staffing1.2.1 JNPT management model

Infrastruc-ture outside port premises

Enviro-nment

JNPCT

JNPT

GTICT

JNPT

NSICT

BPCL

Port Plann-ing

DredgingMooring services

TowagePilotageCargo handling activities

Superstr-ucture (Building)

Superstr-ucture (Equipm-ent)

Port Infrastru-cture

Nautical Infrastru-cture

Nautical Manage-ment

Port Administ-ration

Entity / Port Activity

JNPT can be considered as a partly landlord Port with JNPCT run by the Port Authority and other two terminals NSICT and GTICT run by private players P&O and Maersk on BOT basis respectively. A liquid cargo handling berth has also been established by BPCL on BOT basis with the objective of shifting the entire handling of POL and other liquid cargo to this berth.

As is the case with the landlord port model JNPT sees contracts between private and public sector participants. This may lead through into the steps of progressive privatisation where increasing private sector involvement is expected in JNPT . Going forward the port authority will have a policy decision and monitoring role, partly regulatory and partly to ensure contract performance and that royalties, revenues and rent are properly calculated and collected.

Shaded area indicates the responsibility of the corresponding entity

Exhibit 1.2.1 : Port model at JNPT


1.2 JNPT Organization and staffing1.2.1 JNPT management model

Private Sector Participation at JNPT

JNPT has private sector participation from container terminal operators NSICT (affiliated with DPW) and GTI (affiliated with APM and CONCOR). The latest contract with private sector players between NSICT and GTI contains certain performance obligations for the private player and also lays down a set of general obligations to be fulfilled by JNPT to facilitate the development of the port through private sector participation. JNPT is the Licensor in this context.

Obligations of the Licensee

Expected to conduct commercial operations in a manner conducive to the interest of the Licensor, the trade and the country.

Expected to achieve minimum guaranteed traffic norms (0.6 million TEUs in the 30th year for NSICT and 1.3 million TEUs by the 7th year for GTI)

Expected to maximise cargo handled and revenue without indulging in any unfair or discriminatory practice and in accordance with sound business practices.

The Lead Member of the consortium is required to hold at least 26% of the paid up capital and the members of the consortium together are required to hold at least 51% of the paid up capital.

May offer preferential window in berthing to any one or more shipping lines or operators with a view to optimise productivity in accordance with guidelines.

Obligations of the Licensor

Scheduling entry, berthing and sailing of vessels in consultation with the Licensee on a non-discriminatory basis.

Maintain entrance channel and berth draft and provide Pilotage and towage on a non-discriminatory basis.

Provide and maintain general port infrastructure and grant free and unrestricted access to Licensee to all infrastructure facilities and utilities including electricity, water, telecommunications at prevailing tariff rates.

Assist the Licensee in obtaining approvals, permits and licenses including environmental clearances for the project.

Obtain customs notification for the Licensees Premises to be utilised as a project.

Any levy or levies including taxes, duties, cess on account of Licensor’s assets within licenses premises payable to State Government or any statutory authority shall be met and paid by the Licensor.


1.2 JNPT Organization and staffing1.2.2 Organization structure and responsibility

Board of Trustees

Chairman

Dy. Chairman

Chief Manager (Finance)

Chief Manager (Operations)

Chief Manager (PP&D)

Chief Manager (Admn & Secy)

Dy. Conservator

Manager (Admn)

Sr. Manager (L&E)

Sr. Manager (P&IR)

Sr. Dock Master

Dock Master

Medical Superintendent

Manager (MS)

Pilot

Manager (MC/ PC)

Dy. Manager (VIG)

Manager (Engg)


Exhibit 1.2.2 : Organization Structure of JNPT



The Board of Trustees exercise limited power and are bound by directions on policy matters and orders from the Government of India. The Port Trusts are expected to serve public interest rather than maximise profits and revenues while at the same time ensuring optimum deployment of assets.

The Chairman and Deputy Chairman are part of the Board of Trustees and are representatives of the Board who are responsible for the management of the port. The Chairman is the Chief Executive of the port and exercises supervision and control over the day to day activities of the port. He also functions as the administrative head for all the port employees.

The Chief Manager, Operations has responsibility and authority for operations including -

Planning, documentation, operations in the Bulk and Container Terminal of the Port, landing, shipping or transshipping cargo between vessels in the Port, shifting, transporting, storing or delivering cargo/containers, brought within the premises of the Port, receiving, delivering, transporting, booking and dispatching cargo/containers originating in the vessels in the Port and intended for carriage by road or railways; Maintenance of port equipment, management of stores, sub-stores, procurement of materials, equipment, spares, consumables

Preparing and distributing statistics related to port operations

Providing engineering services related to port equipment, vehicles

The Chief Manager, Administration and Secretary has responsibility and authority for operations including -

Management and development of personnel

Industrial relations, liaison with trade unions, staff associations etc.

Management of estates owned/leased or rented by the Port

Legal matters and Board Matters

Matters and activities related to vigilance

Arrange training of employees

General administration and transport facilities



The Chief Manager, Port Planning and Development has responsibility for the execution and management including the following -

Planning, execution, monitoring and commissioning of new projects

Maintenance of marine structures and maintenance of port buildings, civil structure, etc.

Maintenance of township and allotment of land

Planning, survey, execution and monitoring of dredging activities

Formulation of 5 year plan and annual plan for the port and interface with MOST in regard to monitoring of plan schemes

The Deputy Conservator has responsibility and authority for the management of all marine related operations in their entirety including -

Marine conservancy and pollution control and safety

Marine operations including safe pilotage, berthing, unberthing and shifting of vessels

Ensuring observance of all relevant laws and harbour rules by ships and port users within the port limits

Ensuring that port crafts are properly maintained and safely operated by the contractors

Operation and maintenance of Port signal station, VTMS

Purchase and maintenance of capital equipment for navigation

Providing fire-fighting service to the Port and safety in navigation and operations

The Chief Manager, Finance has responsibility and authority for all financing and accounting activities including -

Collection of revenues for services provided in container, bulk, tank farms, estate and marine department

Disbursement of cash, maintaining and reconciliation of bank accounts

Payments related to project activities, bills, materials and establishment

Internal audit by the department, as well as preparation of financial and accounting statements

Costing, budgeting and loans and investments


1.2 JNPT Organization and staffing1.2.3 Labour

Classification of LabourLabour at JNPT can be classified into 3 categories -

Permanent ContractLabour employed by private players

Permanent Labour - These are a total of 1800 personnel and they have entered into a wage agreement with JNPT. Their wage levels are set by the Ministry of Shipping, Highways and Road Transport. The salaries are revised every 10 years through a revised wage agreement. These are again classified into categories. Class 1 & 2 employees are around in 260 in number and constitute the managerial/official cadre. Class 3&4 employees are 1500 in number. Of these 1200 are deployed in port operational roles with 300 being administrative staff. Details of these staff by department as well as salary structure are provided in exhibit 1.2.3 and 1.2.4.Contract Labour - This number is variable and changes depending on the status of port developments. This includes contract labour for all 3 shifts deployed in conservancy and construction activities in the port. JNPT deploys approximately 700 contract labour for their activities. The bulk of these labourers are hired for the container handling operations like operating tractor trailers and construction activities at JNPCT.

Exhibit 1.2.3 : Staff by Department at JNPT

1293Marketing

88

17

56

94

40

1260

Class 3 & 4

11022Administration

269Management Services

7519Port Planning & Development

11521Marine

6626Finance

1408148Operations

TotalClass 1 & 2 Department

Source: Discussions with JNPT

Exhibit 1.2.4 : Managerial staff Monthly Pay scales at JNPT

10750-16750Assistant Manager

13000-18250Deputy Manager

14500-18700Manager/ Pilot

17500-22300Senior Manager/ Dock Master

18500-23900Senior Dock Master

20500-26500Chief Manager/ Deputy Conservator

Pay scale range (in Rs)Designation

Private labour - This consists of labour employed by private terminal operators like NSICT and GTIPL.. Currently there are large numbers of contract labour deployed for civic and construction activities at 3rd terminal (GTIPL)


1.2 JNPT Organization and staffing1.2.4 Organizational limitations

Shortage of skilled Labour

Discussions with JNPT have indicated that availability of skilled operators especially in the marine side for pilots and launch vessel operators, is an area of concern, especially given the current pay-scales of the port. Data operators and other IT system operators is a category where finding qualified people is a concern.

Government regulations related to full-time employment at ports

Government regulations for major ports make hiring of a full time employee possible only in case of 3 vacancies arising in that section. This regulation may act as a barrier in hiring full time employees and has increased the contract labour on rolls at JNPT.

Lack of marketing efforts

Port user meetings have indicated that the private ports are more aggressive than other ports in their Marketing and Sales efforts and are undertaking exercises such as presentations, meetings etc with various shipping lines to increase their traffic. As competition in the port sector increases , JNPT will need to strengthen the marketing cell to undertake marketing, sales and pricing initiatives.

Source: Discussions with JNPT


Chapter 2

Hinterland Connectivity


2.0 Introduction

Introduction

There are two primary modes of transport for cargo at ports. These are road and rail. At JNPT road is the primary evacuation mechanism with over 72% share of non-trans shipment cargo in the year 2005-06. Railways have the remaining share of the non-transshipment cargo at JNPT.

The rail cargo is delivered/ received from Inland Container Deports (ICD) through trains that are run by CONCOR. At present there are over 23 ICDs in India which are connected to the various ports through rail and road. The Inland Container Depots are the existing intermodal facilities where goods are brought by road and then transferred to freight trains headed for other ICDs/ ports.

Waterways are not a well developed mode of evacuation at Indian ports. At JNPT inland waterways are not used for evacuation purposes due to lack of development of waterways in the vicinity. There is an infrequent use of barges for easing out congestion or to transfer cargo across the harbour to Mumbai port.

A schematic map indicates rail /road connectivity at JNPT in exhibit 2.0.1.


PANVEL

PANVEL CREEK

Mumbai

Sion-Panvel HighwayNERUL

BELAPUR

Exhibit 2.0.1 : Schematic Plan of JN Port

Showing Road & Rail Connectivity

Container terminal

PANVEL BYPASS

To G

oa

NH17

To T

hane

To Pune

NH4

NH4

NH4

To Chirner

SH81

Aam

ra M

arg

SH54To Uran

SH54

NH4B

NH4B

Jawaharlal Nehru PortJawaharlal Nehru Port

Proposed Interchange Locations

MUMBAI

PUNE

GAVAN PHATA

KARAL PHATA

THANE

Rai

lway

C

onne

ctio

n

Railway

ConnectionURAN

CHIRNER

GOA


2.1 Rail Connectivity2.1.1 Rail Infrastructure and Performance

Rail Infrastructure at JNPT

JNPT is linked with the Indian railways though a lead line connecting the port with it serving station Jasai. Jasai itself is located on the Panvel – Uran branch line section of Mumbai division, Central Railway at a distance of 9 km from the port. The rail system at the port, which is now owned, operated and maintained by the Indian railways, has 8 full length railway lines serving the three existing container terminals, besides a 4 line intermediate holding yard between Jasai and the port. The Jasai station yard deals with all traffic to and fro from JNPT and the Indian Oil Tank farm Ltd. The 4 line intermediate holding yard between Jasai and the port serves to hold back and regulate traffic in the event of congestion at JNPT or at Jasai yard.

Inside JNPT the rail infrastructure of 10 lines are divided by terminals as follows

JNPCT - 4 lines (line no 1 & 2 , as well as 6 & 8). Line no 6 & 8 are currently being served by reach stackers but conversion to a full fledged ICD with RMGCs and under the gantry stacking facilities is underway.

NSICT - 2 lines (line no. 4 & 5)

GTIPL - 2 lines (line no. 9 & 10)

Line no 3 & 7 are used as a common engine run round line and do not handle container traffic.

ICD lines 1 & 2 are served by 3 Rail Mounted gantry cranes with a span of 25.5. m and lift capacity of 35.5 tonnes. Line nos. 4 & 5 are served by 3 RMGCs with a span of 25.5 m and lift capacity of 40 tonnes.

Source: Data from JNPT , KPMG analysis

Exhibit 2.1.1: Rail traffic at Terminals by TEUs and No of trains (2005-06)

10050.9049.10% share (Trains)

420421372067Trains (In nos.)

10054.8945.11% share (TEUs)

682312363352318960Total (TEUs)

341505184325157180Export (TEUs)

340807179027161780Import (TEUs)

TotalNSICTJNPCTTraffic

Rail Traffic at JNPTDuring 2005-06 the total number of trains handled by the port were 4204 carrying over 0.682 million TEUs. A split up by rail cargo by exports and imports terminal wise is shown in exhibit 2.1.1. Rail cargo was 25.6% of the total container traffic of 2.67 m TEUs handled by JNPT in 2005-06.Of the remaining 74% close to 10% is trans-shipment traffic with the remaining 64% moving by road and handled by the port side CFSs. Over half of this container traffic is long distance that is suitable for movement by rail.



Rail Operations at JNPT

The handling of container trains is done by 3 main agencies – Railways, CONCOR and the terminal operators.

Railways provide the fixed infrastructure in the form or track, motive power and train crews. They have a small component of staff responsible for ensuring safe/receipt dispatch of container trains and compliance with regulations related to safe movement of trains.

CONCOR is presently the sole provider of rail-borne container transportation between the port and the hinterland. It owns all container flat cars as well as a large number of ICDs in port hinterlands. It is responsible for advising the terminal operators of the incoming container trains, particulars of containers to be unloaded and destination for each outward container train.

The terminal operator is responsible for the unloading and loading plan of each individual train and deploys the required tractor trailers (TT) and RMGCs for timely completion of loading/unloading operations.

Performance of JNPCT Terminal

As per studies conducted by RITES Ltd, in 2003-04 JNPCT handled 1.32 m TEUs overall with 0.276 m TEUs of ICD traffic. Total number of trains handled was 1943 at an average of 5.32 trains per day. Average period of detention of these trains was 12:08 hrs before leaving the port with an average productivity of 1.33 trains per line per day. 43% of these trains were mixed trains comprising containers boxed for both JNPCT and NSICT. An analysis for the month of Dec 04 revealed that mixed trains suffered an average detention of 13 hrs 50 mins as compared to 7 hrs 38 mins for dedicated trains.

Factors affecting the train handling performance at JNPT include

Lack of adequate pre-intimation of train particulars including destination information.

Absence of an advance train handling plan.

High idle time of RMGCs at the ICD.

Inadequate availability and high turn around time of Tractor trailers deployed at the ICDs.

Lack of coordination between two terminal operators.

Priority to ship side operations over ICD operations.



Performance of NSICT Terminal

As per studies conducted by RITES Ltd, in 2003-04 JNPCT handled 1.23 m TEUs overall with 0.335 m TEUs of ICD traffic. Total number of trains handled was 1772 at an average of 4.85 trains per day. Average productivity level of 2.43 trains per line per day with an average period of detention of these trains was 9:00 hrs before leaving the port. 27% of these trains were mixed trains comprising containers boxed for both JNPCT and NSICT. An analysis for the month of Dec 04 revealed that mixed trains suffered an average detention of 7:27 hrs as compared to 6:47 hrs for dedicated trains. The handling time for mixed trains was only 10% more than dedicated trains while at JNPCT the handling time for mixed trains is much longer.

Factors affecting the train handling performance at NSICT include-

Idle time of the RMGCs.

Insufficient number of TT to support the handling rate and avoid idle time of RMGCs.

Non utilization of under the gantry stacking facility.

Issue of Mixed Trains **

JNPT ICD suffers from the problem of mixed trains carrying containers for both NSICT and JNPCT. The terminal operator on whose line the train arrives unloads his own boxes and advises the other terminal to arrange TTs to evacuate containers belonging to the other terminal. The late arrival of TTs leads to delay in handling of boxes and slows down train turn around times. Similarly during loading train waits much longer for arrival of boxes belonging to other operator.

This is an extensive phenomenon with 45.1% and 27.26 % trains being mixed at JNPCT and NSICT during the year 2003-04. JNPCT handled 65% of the mixed trains. The average delay for mixed trains was over 6 hrs more than dedicated trains at JNPCT resulting in huge increase in handling time.

With the increase in capacity as a result of GTICT beginning operations as well more ICDs coming up in the hinterland, the number of mixed trains will increase. This is an issue that needs to be addressed by the terminal operators.

** Recent initiatives (in February 2007) have been taken by the port along with private terminal operators to implement the CRO mechanism to tackle mixed train issues. This is expected to improve turn around times of trains as well improve overall efficiency in rail handling


2.1 Rail Connectivity2.1.1 Rail Infrastructure and PerformanceShortage of Trains

There exists a demand supply mismatch in number of rail services needed for timely evacuation as seen in Exhibit 2.1.2. There exists a shortfall of 2.3 trains per day. With GTI set to go on stream and assuming a throughput of 1.3 million TEUs the total number of trains needed to be serviced rises to approximately 21 per day. In 2005-2006 the average number of trains that actually arrived per day was 11.5. Approximately 2 more trains are needed to service existing terminals efficiently besides 6-7 new trains for GTI.

Hence there exists a shortage of trains for evacuating containers. Increasing train services to the port is constrained by railway infrastructure at 2 levels-

On the main cargo corridors

In the vicinity of the port

Source : KPMG Analysis

*** - Adjusted for peak surges and cargo carried in/ out by a train

** - Share of Rail traffic as per JNPT data 2005-06

* - Planned when operations begin in August 2006

2.3Mismatch

11.5Actual no of trains in a day

4204Actual trains in 2005-06

6.7313.8Adj. Trains required per day ***

10.120.74Trains required per day

36977571No of trains in a year

332800681421TEU to be handled by train

25.625.6%% By rail **

13000002661801TEUs handled (2005-06)

GTI *

JNPT (includes both terminals)

Exhibit 2.1.2 : Mismatch in Rail Supply and Demand



Rail Operations in the vicinity of JNPT

Evacuation from JNPT is particularly constrained in the 93 km Vasai Road – JNPT section. Studies by RITES Ltd. indicate that against the overall average speed of around 30 kmph on the total route, container trains manage just 7.61 kmph. A closer scrutiny of trains running on Vasai Road – JNPT – Vasai segment in December 04 reveals that a round trip on this segment takes around 28 hrs. Of this travel time consumes almost 69% while balance 31% is consumed by handling in the port ICD. Container trains suffer an average detention of over 5 hours at Panvel and Jasai for various reasons including room in Jasai yard, room in port ICD, traction and train crews.

JNPT needs to ensure major improvements in ICD operations at the port and in coordination with Indian railways could implement the following measures to facilitate train operations while ensuring that road traffic does not get disrupted –

Provision of additional R&D lines in Jasai yard.

Provision of 4 additional lines in the holding yard.

Build a merry go round link between port ICD and Jasai yard to allow uni-directional flow of traffic.

Recent action has been taken by Indian railways with single line from Panvel to JNPT having been doubled allowing for more trains to visit the port from Panvel.


2.1 Rail Connectivity2.1.2 Hinterland linkages

Origin- Destination (O-D) Analysis

An origin-destination analysis of traffic carried out by RITES Ltd. for the year 2004-2005 reveals that certain ICDs have the bulk of the traffic as seen in exhibit 2.1.3.

91% of the traffic comes from the Top 10 ICDs, 75% of the traffic comes from the Top 4 ICDs and nearly 50% from just one ICD alone at New Delhi.

Key Rail Corridors

A look at the routes employed to reach the major ICDs allows us to split traffic from/to JNPT in order of their rail load into distinct rail corridors as follows –

A. Northern Route – JNPT - Vasai Road – Indore –Kota- Delhi (Tughlaqabad and Dadri) - Ludhiana (Dhandari Kalan)

Principal O-D points on their route comprise Tughlaqabad, Dadri, Ludhiana, Pitampur and Kanpur.

B. North Western Route – JNPT – Vasai Road –Vadodara – Sabarmati – Mahesana – Palampur –Jodhpur- Jaipur – Rewari – Bathinda

Principal O-D points comprise Vadodara, Sabarmati, Jodhpur and Jaipur.

C. Central Indian Route – JNPT – Aurangabad –Bhusawal – Nagpur – Bilaspur. ( Includes local Mumbai points like Mulund)

D. South- Central Route – JNPT – Chinchwad –Solapur – Hyderabad – Visakhapatnam.

Source : Rail Transport Logistics Study , RITES Ltd , February 2006

Exhibit 2.1.3 : ICD Share of Total Rail Container Cargo from/to JNPT (2004-2005)

Percentage

Traffic (TEUs

)ICD Name

100%621691Total

8.351737Others

2.817111Jodhpur

3.421477Delhi - Dadri

2.314422Kanpur

2.615868Jaipur - Kanakpura

3.722995Hyderabad - Sanatnagar

6.137637Nagpur

1.610087Indore - Pitampur

10.565372Ahmedabad- Sabarmati

9.559091Ludhiana - Dhandari

Kalan

49.2305894New Delhi- Tughlaqabad

Exhibit 2.1.4 : Corridor shares of Traffic

1.14D9.58C16.5B73.13A% shareCorridor

The corridor wise share of rail borne traffic as seen in exhibit 2.1.4 shows that over 90% of the traffic flows through corridor A & B. Exhibit 2.1.5 indicates principal rail corridors with saturated sections overleaf.


Exhibit 2.1.5 Rail Connectivity to Hinterland

Source RITES Report


2.1 Rail Connectivity2.1.2 Hinterland linkages

Analysis of Key Rail Corridors

With 90% of the traffic at JNPT passing through rail corridors A and B, these corridors merit close attention for potential bottlenecks. Barring a few short sections, both the corridors are already 100% saturated and the available line capacity is already overstretched. With predominance of passenger carrying trains over freight trains, the running of container trains is being affected.

The entire A corridor, except the Diva-Vasai Road and Godhra- Mathura segments has a predominance of passenger carrying trains with at least 3 different speed parameters. An analysis of train operations on this corridor for the month of December 04 is shown in exhibit 2.1.6. From a look at the average speeds we see that the following 3 segments of the corridor require specific attention for the resolution of line capacity deficiency and other bottlenecks –

JNPT – Vasai Road

Vasai Road – Surat – Vadodara – Godhra

Mathura - Tughlaqabad

The independent portion of the B corridor for most part is saturated with capacity utilization exceeding 100%. One of the major bottlenecks on this is the portion between Geratpur - Sabarmati – Palanpur. This is because the city of Ahmedabad has passage difficulties. Again the predominance of passenger trains makes it difficult for container trains to maintain speeds.

Source : Rail Transport Logistics Study , RITES Ltd , February 2006

Exhibit 2.1.6:Speed of Traffic on segments of the Rail Corridor A

31.3131.1045:0245:311410Total

10.948.948:3010:2393Vasai –JNPT

30.7130.657:007:01215Surat –Vasai

29.7127.306:487:23202Godhra –Surat

35.0839.656:305:45228Nagda -Godhra

50.0052.7811:0110:25549Mathura Jn – Nagda

23.7528.085:114:23123Tughlaqabad - Mathura

Avg Speed (kmph)

Up Down

Time ( hh : mm)

Up Down

Length km

Section

Immediate steps need to be taken by railways to ease pressures on key hinterland rail corridors and improve connectivity to JNPT.


2.2 Road Connectivity2.2.1 Internal Road network at JNPT

Road networks at JNPT are classified into internal (in and around JNPT) and external (connecting JNPT to the hinterland)

Internal Road Linkages at JNPT

The entry to the port from State Highway and National highway takes off from Karal junction as both the highways meet at this junction. Port road further travels up to the CFS junction which is a 4 arm junction and gives access to JNPT CFS and the tank farm roads. The road from Karal junction to Y junction ( called as Port road) is at present 4 lane road. The customs and PUB buildings are located along the port road and access to these buildings are from PUB junction. At Y junction, the port road bifurcates into the container road which gives access to the container terminals (JNPCT and NSICT) and another road namely bulk road giving access to the bulk terminal (now container terminal of GTIPL).

Shortcomings of Internal Road Linkages

The current road infrastructure is facing pressures leading to congestion at various places in the port area. The issues that need to be addressed are

Single evacuation route dependence.

Separation of container and passenger traffic at various junctions.

Shortening road access between key points.

Separation of container and trailer traffic from other vehicles.

Widening of roads for movement of container traffic.

Providing parking and other infrastructure to tractor trailers.


2.2 Road Connectivity2.2.2 Planned internal road projects

Source : A Diagnostic study of JNPT – B.Raghuram , IIM Ahmedabad, April 2006 , Discussions with JNPT35.17Total

Provisional estimate1.03Electrical sub-station9Deferred till finalization of grid separator2.64New evacuation road from JNPT to NH47

20 (to be completed by Jul 08)Nov 061.05

Development of road for passenger corridor /Widening of bulk road6

b. New 4 lane road connecting SH-54 and CFS road 8(completed by Mar 06)Apr 057.95

Development around CFSa. Parking area opposite to CFS

5

8 (completed by Dec 05)Mar 051.71Buffer yard development(14,000 sq mtrs area)4

d. Widening of culvert over ONGC pipelinec. Karal Junction to CFS road (500 m)b. PUB-Karal Junction road (2.3 kms)a. Container road (3.5 kms)

15 (to be completed by

Mar 2007)Oct 0514.12

Six laning of port road

3

10 (completed by March 06)Apr 050.99

b. Roads and additional pavements for new container gates10 (completed by March 06)May 050.97

Additional container gates : a. Container gate structure

2

d. Improvement of circulation inside portc. Improvement of Y Junctionb. Improvement of CFS junction

18 (to be completed by Jan 07)June 054.71

a. Karal Junction widening & signalization

1

Completion period (months)Award of work by

Present Block

Cost (Rs cr)ParticularsNo

Exhibit 2.2.1 : Proposed Projects to Develop Port internal Road network

A set of proposals by JNPT for immediate implementation to ease traffic within the port have been listed in Exhibit 2.2.1.


2.2 Road Connectivity2.2.3 External Road network at JNPT

External Road Linkages at JNPT

The major road linkages connecting JNPT with hinterland road network are NH4B, SH54 and Aamra Marg (existing name is MIDC pipe line maintenance road). The main hinterland road network consists of the following highways –

NH3: Mumbai - Nashik highway (2 lanes with portion of highway being 4 laned)

NH4: Mumbai - Pune highway (4 lanes)

NH8: Mumbai - Ahmedabad highway (2 lanes with portion of highway being 4 laned)

NH17: Mumbai- Goa highway (2 lanes)

A brief description of the major road linkages are as follows –

National Highway 4B: It has a length of 26.43 km and branches at km 108/800 of NH4. The road connects JNPT with Mumbai and other parts of Maharashtra state and adjoining states of Gujarat, Goa, Madhya Pradesh and Andhra Pradesh. The road mainly serves the heavy traffic of containerized vehicles to and fro JNPT. The widening of the road has recently been completed .Tolling on this improved facility would start shortly.

State Highway 54: It connects Uran with Panvel town. It runs more or less parallel to NH 4B and that railway track passes between SH54 and NH 4B. SH54 meets NH 4B at km 6/000 on Uran side and km 21/000 on Panvel side. The traffic is mainly to and fro JNPT. Number of container yards are located abutting SH54. The existing carriage way is 2 lane and widening to 4 lane is under progress. It is expected that, widening will be completed by the end of year 2006. The improved 4 lane road would be a tolled facility.

Aamra Marg: It begins at km 125/800 of Sion Panvel highway (SH42) and passes through Belapur, Nerul and Ulwa and ends at km 13/900 of SH54 and joins at km 15/000 of NH 4B near Padeghar village. The road is an important link between northern and southern parts of Navi Mumbai and JNPT. The existing carriageway is 2 lane and widening to 4 lanes is under progress. It is expected that , widening will be completed by the end of the year 2006.


Exhibit 2.2.2 : Map of external connectivity to port

SION- PANVEL HIGHWAY

NH17

GHAVAN PHATA

SH54

KARAL PHATA

PALASPE PHATA

NH4B

THANE-GHODBUN

DER RD

BELAPUR JUNCTION

AAMRA MARG

SHIL PHATA

KALAMBOLI JUNCTION

NH4

MUMBRA BY-PASS

NH4

AHMEDABADAHMEDABAD NASHIKNASHIK

PUNEPUNE

GOAGOA

URANURAN

SH40

B-K-

S RO

AD

JNP

NH 3NH 8


2.3 Intermodal Facilities

The source of intermodal transport of cargo to JNPT are Inland Container Depots (ICD). There are 23 ICDs all over the country where goods are brought by road and then transferred to freight trains headed for other ICDs / ports.20 of the 23 ICDs are directly connected to JNPT and act as transit points for cargo. CONCOR operates the rails between the ICDs and JNPT.

JNPT carries out 91% of its rail cargo traffic with the Top 10 ICDs, 75% with the top 4 ICDs and nearly 50% from just one ICD alone at New Delhi. A split of ICD business at JNPT is shown in exhibit 2.31. Exhibit 2.3.2 illustrated ICD connectivity with JNPT.

Source : Rail Transport Logistics Study for the Development of JNPT - RITES Ltd , February 2006

2.3198021442285765846Kanpur

2.5523931586882407628Jaipur - Kanakpura

2.7523321711199047207Jodhpur

3.45461214771067610801Delhi - Dadri

3.698783229952299510358Hyderabad - Sanatnagar

6.053972376371480722830Nagpur

10.51519653723303332339Ahmedabad- Sabarmati

9.504883590912790531186Ludhiana - Dhandari Kalan

Exhibit 2.3.1 : Top 10 ICDs that handle Cargo from/to JNPT (2004-2005) (TEUs)

302673

9643

4348

152546

Exports

319018

31736

5739

153348

Imports Total PercentageTrafficICD Name

100%621691Total

8.3219851737Others

1.6225110087Indore - Pitampur

49.20354305894New Delhi- Tughlaqabad


ICD / JNPT Connectivity Map

Exhibit 2.3.2 :ICD JNPT Connectivity


Chapter 3

Competitive Position


3.1 Competitive PositionAn analysis of trends of container traffic over the last 11 years illustrates that JNPT has a significant share of the western coast container traffic. Over the past 11 years this share has grown (83% in 05-06) indicating that the western coast traffic is primarily serviced by JNPT.

ICD traffic from roads in India is minimal. The ICD split of rail traffic at JNPCT terminal shows that the ICD traffic at JNPT is contributed primarily by the northern regions (over 70%). This indicates that JNPT serves primarily as a port for the northern and western traffic

The traffic from Eastern, Central and Southern regions is less than 10% in comparison indicating that southern regions contribute marginally to JNPTs traffic

Exhibit 3.1.1 Container traffic on western coast (Thousand TEUs)

83.51%12.52%26687.39%319505-06

79.70%4.50%23715.42%297504-05

80.40%17.63%226914.67%282203-04

78.38%22.55%192916.08%246102-03

74.25%32.27%157421.63%212001-02

68.27%33.71%119011.37%174300-01

56.87%33.03%89014.32%156599-00

48.87%32.74%6694.19%136998-99

38.36%19.15%5049.68%131497-98

35.31%24.78%4231.35%119896-97

28.68%339118295-96

% WRT Total

Growth Rate

%TrafficGrowth Rate %Traffic

JNPTWest Coast

Exhibit 3.1.2 ICD Traffic at JNPT Southern Total4%

Central<1%

South Central Total4%

Northern Total70%

Eastern Total<1%

Western Total22% Source: IPA, West Coast includes Mundra, Pipavav,

Kandla, Mumbai

Source: Ops Dep't data


Source: ipa.nic,in, Review of Maritime Transport – 2005, Port websites

*03-04

** 04-05

600 m (KICT) 600 m (PICT)

1236 m

1642m (JCT) and 940m (SAGT)

572 m

1280 m (expansion planned)

~600m

~600m

632 m

812 m

Berths/Quay Length

0.8 Mn TEU**

2.5 Mn TEU*

1.95 Mn TEU**

0.19 Mn TEU*

2.67 Mn TEU

0.18 Mn TEU *

0.2 Mn TEU

0.22 Mn TEU*

0.22 Mn TEU *

Throughput

12.2mApprox. Diversion from Europe Asia Route: 1469

Approx. Diversion from America- Far east Route: 1340 Karachi

Max 12.5Approx. Diversion from Europe Asia Route: 1849

Approx. Diversion from America- Far east Route: 306 Cochin

12-15m - JCT

9-11m – SAGT

Approx. Diversion from Europe Asia Route: 2093

Approx. Diversion from America- Far east Route: 0 Colombo

16 mApprox. Diversion from Europe Asia Route: 340

Approx. Diversion from America- Far east Route: ~2093 Salalah

Max 12.5Approx. Diversion from Europe Asia Route: 1666

Approx. Diversion from America- Far east Route: 898JNPT

12 m Approx. Diversion from Europe Asia Route: 1566

Approx. Diversion from America- Far east Route: 1390 Kandla


Approx. Diversion from America- Far east Route: 1088



Approx. diversion from Europe Asia Route: 1656


Location w.r.t major shipping routes (Nautical Miles)

14mPipavav

17.5 mMundra

9 m

Draft

Mumbai

Facilities

A comparison of current facilities at JNPT with competitors -

3.1 Competitive Position3.1.1 JNPT Competitor facilities snapshot


3.1 Competitive Position3.1.1 JNPT Competitor facilities snapshot

Cochin is connected through a double line to the Indian rail network. Rail connectivity is being added between Cochin and Vallarpadam.

Concor runs on demand services between northern regions and cochin

Dry Bulk and Break Bulk

Focus on containers has increased

2 Quay Cranes, 9 RTGCochin

Containers22 Quay Cranes, 67 RTGsColombo

General Cargo and Containers11 (Super post panamax), 1 (post panamax), 30 RTGSalalah

Containers and Dry Cargo. The port trusts plans to increase container terminals

6 quay cranes (KICT) 2 Quay Cranes (PICT)

Karachi International Container terminal

Containers

Liquid (POL and Crude)

Dry Bulk

Primarily dry cargo


Crude, Liquid Bulk and Dry Bulk

Primary Cargo Type

Regular services of over 2000 trains annually.

It is connected through broad gauge double line tracks to western and central rail network

24 Quay Cranes, 76 RTGJNPT

Has connectivity to the western rail network through a broad line -Kandla

-

6 Quay Cranes, 18 RTGs

2 quay cranes, 3 RTGs

Cargo Handling Equipment

3 Railway sidings and double stacking capability

Currently connected through a single linePipavav

Currently connected through a single line. The regular services at MICT is over 500 and in 04-05 516 trains were serviced at Mundra

Connectivity to nearby junctions is being improved through addition of tracks

Mundra International Container Terminal

MbPT Railway is connected to the Indian Railways at Raoli Junction at Wadala. The port is connected to Central and western railways and exchanges 3-4 trains a day

Mumbai

ConnectivityFacilities

A comparison of current facilities at JNPT with competitors -


3.1 Competitive Position3.2.1 JNPT Competitor plans

Future plans of Competitors

Currently JNPT serves over 50% of the container traffic in India. However, with the emergence of private players and capacity additions in other ports, it is expected that some of the traffic especially from northern regions (which lie closer to some of the western ports) would be diverted to the new ports. These new ports are also expected to capture a large proportion of traffic in their region.

The competitors considered are Pipavav, Mundra and Kandla in Gujarat, Port of Rewas and Mumbai Port in Maharashtra. As mentioned earlier, not all plans of these ports are available in the public domain. However a brief snapshot of future plans of the competitors is provided below:

Mundra

− Mundra International Container Terminal (MICT) is managed by P&O Ports

− The Container terminal comprises of 2 berths and is capable of handling 1.2 million TEUs per annum.

− Terminal throughput has doubled over the last one year to over 0.2 million TEUs in 2004-05.

− Work has begun on a second container terminal expected to double container capacity of the port by 2008 – 09 with 1250 m of quay and draft of 18.5 m

− 3 new CFS operators are set to begin operations in addition to the 3 existing CFS operators.

Pipavav

− It is India’s first private sector port with significant investments by the AP Moller-Maersk Group. Container traffic at Pipapav was 80,000 containers in 2005 and is expected to reach 0.25 million by 2006

− Pipavav has invested towards development of a modern container terminal which on completion will have a capacity of 1 million TEUs

− Facilities have been developed to handle double stacked container trains from the port till Jaipur ICD.

Kandla

− Kandla currently has one terminal with a capacity of around 700,000 TEU and is planning to develop another terminal by 2010-11 which would double its capacity


3.1 Competitive Position3.2.1 JNPT Competitor plans

Mumbai

− Mumbai is expected to develop an offshore container terminal with a capacity of 1.2 Mn TEU by 2018-19.

Port of Rewas

− Port of Rewas is being setup on the west coast of Maharashtra. It is located near Karanja creek at mouth of the Patalganga river, about 10 Km from JNPT. The Reliance group has recently acquired a stake in the port. The port expects to handle various types of Cargo (dry, liquid and containers). The plans of the port available in public domain indicate that the port expects a capacity of about 3-4 Mn TEUs beyond 2018.

Impact on JNPT

Analysis of competitor plans and discussion with port users and export promotion councils indicate that as the development plans of competitors would take time to fructify it is expected that JNPT would continue to capture a substantial proportion of the northern and western traffic for the next 5-6 years. However as competitors develop capacity and develop supporting infrastructure such as CFS etc the share of JNPT from northern regions could fall in the long term. Discussions also indicate that JNPT would continue to capture a substantial proportion of the Maharashtra traffic.


3.2 Captive and Non Captive Market3.2.1 ICD analysis and identification of captive and non captive market for export import cargo

ICD Analysis

A regional analysis of traffic from various rail ICDs to JNPT shows JNPTs growth in ICD traffic from northern regions is smaller compared to overall growth in Northern regions traffic.

Currently the demand for port capacity is higher than supply and the growth in port capacity demand is expected to increase in light of the increase in Indian maritime trade and increasing containerisation.

The traffic in JNPT is expected to grow over the short to medium term. However as other major and private players expand capacity, the traffic from northern region may get redistributed to ports in the western region due to their proximity to north.

Captive Market Owing to Location

The captive and secondary markets for JNPT are therefore expected to be as follows:

ICD analysis shows that JNPT has been able to maintain its share in the western region and even has been able to increase it. Over the long term western region is expected to serve as captive market for JNPT due to JNPTs proximity to the western regions.

The SEZ planned near JNPT will also generate traffic and it will be a captive market for JNPT due to its proximity to JNPT.

Exhibit 3.2.1 CAGR of traffic from ICDs between (02-03 to 05-06)

0.00%10.00%20.00%30.00%40.00%50.00%60.00%70.00%80.00%

Tugh

laka

bad

Ludh

iana

Jaip

ur

Agra

Ahm

edab

ad

Vado

dara

Pune

Nag

pur

CAGR OverallCAGR JNPT

Exhibit 3.2.2 CAGR of traffic from regions(02-03 to 05-06)

0.00%1.00%2.00%3.00%4.00%5.00%6.00%7.00%8.00%9.00%

10.00%

Nor

ther

nR

egio

n

Wes

tern

Reg

ion


Source: CONCOR, Ops Dept Data


3.2 Captive and Non Captive Market3.2.1 ICD analysis and identification of captive and non captive market for export import cargo

Non Captive Market

ICD analysis illustrates that JNPTs share of northern traffic is decreasing. This traffic is getting diverted to other ports in western India.

An increase in JNPTs capacity (planned third terminal and extension of berth) will aid in retaining the northern traffic to JNPT. However over the long term as connectivity and capacity of other ports increase, this traffic may get redistributed owing to proximity of other ports to northern traffic vis-à-vis JNPT and in the long term the northern regions are expected to be non-captive market for JNPT.

Captive Market

Non Captive Market

Exhibit 3.2.3 Captive and Non-Captive Market

Source: KPMG Analysis


3.3 Unique Selling Proposition3.3.1 Competitive Rating of ports

Introduction

ICD analysis and port user meeting analysis was used in conjunction to identify port choice determinants. Port user meetings were conducted with shipping lines, shipping agents and custom house agents.

Methodology

As part of these meetings the criteria for selecting a port were discussed along with their importance.

The users were also asked to rate these parameters across ports.

The factors that have been identified which act as port choice determinants are as follows

Port location – Distance from the point of production/ consumption

Frequency of ships

Port efficiency

Port infrastructure

Ease of dealing with port

Hinterland connectivity

Based on the rankings ports which have a ranking which is close to JNPT and which serve the same hinterland were identified and were considered for competition

Mundra

Kandla

Mumbai

Pipavav

The above ports compete with JNPT for export import cargo. However, the competition for transshipment cargo is based on factors as follows

Port Location – Distance from major shipping routes

Frequency of ships

Port efficiency

Port charges

Port infrastructure

Ease of dealing with port

Based on the above parameters the following ports were identified as competition for transshipment cargo

Cochin

Salalah

Karachi

Colombo

Mundra

Mumbai

Kandla

Pipavav


3.3 Unique Selling Proposition3.3.1 Competitive Rating of portsCompetitive Rating of Ports

According to the port users the two most important factors in choice of a port are

Port Location

Port Infrastructure

JNPT emerges as the overall port of choice with Mundra and Pipapav perceived to be the next best ports.

Port users believe that in the future Mundra and Pipavav have the potential to capture JNPTs share of market from the northern regions.

JNPT has high ratings in areas such as shipping frequency and hinterland connectivity.

Mundra and Pipavav are rated highly in terms of ease of paperwork.

It is important to note that the parameters on which JNPT has an advantage over others are not entirely in JNPTs control These are areas such as frequency and hinterland connectivity.

As frequency and hinterland connectivity of other ports improve JNPT will face competition. Hence JNPT should plan to develop sustainable sources of competitive advantage.

Exhibit 3.3.1 Port Choice Determinants

2Frequency

Port charges (costs/ price)

Ease of dealing with port (paperwork, contact, etc)

Port efficiency (speed & reliability)


Port infrastructure (number of berths, cranes, terminals etc)

Port location (distance)

Port Choice Determinants

6

5

4

4

3

1

Importance

1- Most imp.

6 - Least imp.

Source : Discussions with port users, KPMG Analysis

Exhibit 3.3.2 Comparative Ratings from Port Users

0102030405060708090

Mumbai JNPT Kandla Mundra Pipavav

Sco

re


Source: Port User Meetings


3.3 Unique Selling Proposition3.3.2 Identification of unique selling points

The three unique selling points of JNPT over other ports were found to be -

Hinterland Connectivity – Hinterland connectivity has been covered in detail in the infrastructure section. Users believe that inspite of congestion problems, in comparison to other ports JNPT still rates higher on connectivity. JNPT has the maximum number of regular trains visiting it. Pipavav and Mundra have a single track diesel connectivity while JNPT has a double line connectivity.

Frequency – Currently JNPT has the highest frequency of services to major shipping destinations. As a comparison JNPT had 1772 (977 NSICT and 795 JNPCT) vessel calls while Mundra had 480.

Infrastructure – JNPT currently has the largest infrastructure in comparison to other ports. The closest competitor for container traffic, in the western region, to JNPT is Mundra. Mundra has 632 metres quay length and 6 cranes while JNPT has 1280 metre quay length and 16 cranes (excluding GTIPL). JNPT therefore has an advantage compared to other ports in Infrastructure. Specific areas of advantage for JNPT are the presence of 16 CFS operators with 12 new operators scheduled to begin operations shortly. This is far more than its competitors

Exhibit 3.3.3 Unique Selling Points

0

5

10

15

20

25

Portlocation

Efficiency Infra Paper Charges Hinterland Frequency




3.3 Unique Selling Proposition3.3.3 Analysis of USPs


Currently hinterland connectivity to JNPT is reaching its peak capacity (See Exhibit 3.15). Many rail routes are operating at over 100% capacity.

Road connectivity is also facing issues related to capacity. Apart from persuading the Government JNPT can also fund such projects to a certain extent. JNPT has signed an MoU to partially fund a road expansion project. In the absence of such measure JNPT faces the risk of traffic diversions to other ports in the future.

Dedicated freight corridors will aid in improving hinterland connectivity further. Such plans will also aid competing ports. Mundra and Pipavav are also persuading the Government to improve connectivity.

JNPT can explore developing alternate options such as barges, double stacking to remove capacity constraints

As some of these factors are not totally in JNPTs control the port might also focus on developing other competitive advantages.

At the same time, JNPT should also endeavor to persuade the Government in improving hinterland connectivity.

Exhibit 3.3.4 Capacity Utilisation on Railway sections

115.363.8DAHANU ROAD-VIRAR17136.974.4VALSAD-DAHANU ROAD16137.564.55UDHNA-VALSAD15139.64.01SURAT-UDHNA14138.458.94BHARUCH-SURAT13138.270.12VADODARA (D)-BHARUCH12

92.22.11VADODARA (Z)-VADODARA (D)11

11467.04GODHRA-VADODARA (Z)10137.1185.21RATLAM-GODHRA9137.741.35NAGADA-RATLAM8110.9224.95KOTA-NAGADA7159.65.56GURLA-KOTA6128.2102.2MADHOPUR-GURLA5

123.2140.83BAYANA-SAWAI MADHOPUR4

8475.4MATHURA-BAYANA3131.9183.4PALWAL-MATHURA2151.729TUGLAKABAD-PAWAL1

% Line capacity

utilization (2003-04)

Length in Kms.Name of Section S. No

Source: Container Rail Corridors, An Approach Paper


3.3 Unique Selling Proposition3.3.3 Analysis of USPs

Infrastructure

JNPT currently has the largest infrastructure to handle container operations. However these will have to be enhanced in light of the increasing traffic while maintaining similar quality.

JNPTs berth occupancy has been between 75 – 80% which indicates requirement of additional capacity and an absence of additional capacity may lead to loss of traffic.

The planned extension of container berth, GTI and other planned expansions will help in maintaining the lead in infrastructure.

JNPT should also focus on improving quality and quantity of infrastructure. Upgradation of cranes and VTS are steps that have been initiated by JNPT in this direction.

JNPT lacks the infrastructure for ship repairing facility and there is limited integration of processes through use of IT. These areas may need to be strengthened in the near future to further improve JNPTs advantage in infrastructure.

JNPT also has a large amount of land which can serve as a source of competitive advantage through development of value added services and facilities.

Port of Mundra

• Mundra International Container Terminal (MICT) is managed by P&O Ports

• The Container terminal comprises of 2 berths is capable of handling 1.2 million TEUs per annum.

• Terminal throughput has doubled over the last one year and processed over 0.2 million TEUs in 2004-05.

• Work has begun on a second container terminal expected to double container capacity of the port by April 2007

• 3 new CFS operators are set to begin operations in addition to 3 existing CFS operators

Port of Pipapav

It is India’s first private sector port with significant investments by the AP Moller-Maersk Group

Container traffic at Pipapav was 80,000 containers in 2005 and is expected to reach 0.25 million by 2006

Development of a modern container terminal which on completion will have a capacity of 1 million TEUs

Facilities to handle double stacked container trains from the port till ICDs

Exhibit 3.3.5 Development Plans of private ports


3.3 Unique Selling Proposition3.3.4 Advantage- Disadvantage of JNPT vs. competing ports

Establishment as port of choice in western region will require significant interest from shipping lines as compared to established hub in JNPT

Captive assured traffic from integration with SEZ and ownership by Reliance, can expect traffic from Haryana SEZ in north

Can capitalize on the spillover traffic from JNPT which Is likely to face capacity constraints

Rewas

Currently does not have adequate capacity to service hinterland effectively

Ability to attract trans-shipment traffic from route headed to South East Asia

Can convert southern India into a captive hinterland

Cochin

Faces significant congestion problems due to city of Mumbai when compared with JNPT

Land for development of backup infrastructure and CFS is a constraint

Can service geographically small but significant hinterland of Mumbai

Mumbai

Frequency of services is low compared to JNPT

JNPT has better infrastructure and CFS network to service containers

JNPT currently has better connectivity to various locations than Mundra

Proximity to northern hinterland

Tariffs determination done by port and terminal operator

Double stacking of containers till select ICDs

Dedicated freight corridor expected to reduce cost of transportation and improve connectivity

Pipavav

Frequency of services is low compared to JNPT

JNPT has better infrastructure and CFS network to service containers

JNPT currently has better connectivity to various locations than Mundra

Proximity to northern hinterland

Tariffs determination done by port and terminal operator unlike major ports

Dedicated freight corridor expected to reduce cost of transportation and improve connectivity

Mundra

DisadvantagesAdvantages Competing port vis-à-vis JNPT


Chapter 4

Vision , Goals and Strategy


4.1 Development of JNPT Vision

With the Indian economy currently poised to grow at a significant rate, there are a number of opportunities that a port can potentially align itself to. However, each port has its own characteristics that enable it to play a specific role in the country’s growth. Various factors would impact this positioning including its location and hinterland, its physical advantages and limitations, its operational strengths and weaknesses as well as its competitive environment. In this context, the port has to make careful choices about its key focus areas, such that the port can play its service-oriented role in the regional context.

Our approach to developing the vision for JNPT was based on a combined assessment of a number of internal and external factors. On the internal front, an overall assessment of strengths and weaknesses with respect to its competitors was carried out, which assessed JNPT's capabilities with respect to competing ports. This clearly indicated that while JNPT had capabilities in some key areas, it also faced constraints and issues on the other. On the external front, a view was taken on the overall potential for cargo growth in the hinterland and the threats that emerged from competition and changes in the external environment. JNPT faces competition primarily from the ports in western region. These include the ports of Mundra, Pipavav, Kandla, Mumbai and Rewas. Apart from this the port also faces competition in transshipment cargo from Salalah, Colombo and Karachi.

Activities leading up to vision development

The vision development process for the port was a participative one, where port senior management and key stakeholders were involved in discussions related to generation of vision options and finalisation of the eventual vision. The key activities that were conducted as part of the visioning exercise were:

Background analysis and opportunity assessment by the consultant

Conduct of a SWOT workshop with port internal stakeholders

Discussion of SWOT output and conduct of visioning exercise with port senior management and key external stakeholders

Discussion of visioning exercise output with chairperson and senior management of the port


4.1 Development of JNPT Vision

The approach for vision development

The approach that was followed for developing the vision was a structured one, which built on the approach and some key observations identified as part of the inception report. The objective was to systematically develop a positioning for the port which it can sustain for the next 20 years. It essentially consisted of the following components:

Identification of key drivers and constraints impacting the port

SWOT analysis - High-level assessment of the strengths, weaknesses and threats related to the port. Opportunity analysis was carried out in detail separately

Preliminary short-listing of opportunities for the port based on identified criteria

Detailed analysis of attractive opportunities, including traffic projections

Formulation of vision statement

A summary output of each of the above is discussed in the following sections as a background to development of the vision.

A number of inputs went into the analysis and discussions at each stage of the vision development process, which included:

Analysis of macro-economic factors – Key drivers and traffic projections were derived from macro-economic and industry trends

Competitive analysis – The growth plans of competitors as well as their relative positioning have impacted the share of cargo that JNPT is likely to get.

Shipping industry analysis – Industry trends in terms of shipping lines, cargo routes and vessel sizes were used to identify key imperatives for JNPT from a transhipment and sea side capacity perspective.


4.1 Development of JNPT Vision4.1.1 Identification of constraints and drivers impacting the port

a. Port and Cargo related factors

Drivers and constraints

Consolidation of shipping lines and increasing ship sizes

Increase in trade on Asian routes

An increasing trend of shipping lines integrating into port operations

The export import imbalance in India

The limited area available at JNPT for expansion on the sea-side and land-side in the current location leading to capacity limitations

c. Regulatory Factors


Increased focus on PPP models as a means of rapid port infrastructure development

The imperative for major port trusts to operate under MPT act and TAMP regulations

Increased security needs across ports and resultant costs at ports

b. Hinterland factors


Significant growth in the hinterland economy leading to an increase in traffic

The related impact of SEZs and other such initiatives by the Government leading to additional growth in traffic

The introduction of VAT which could impact logistics and distribution (see annexure 1.1)

Constraints being faced by the port in road and rail connectivity

d. Competitive Environment related factors


The entry of international and national private players into theport sector by setting up competing ports

The impact of international ports such as Salalah, Colombo as competition to Indian ports

Any constructive vision exercise has to take into account the key macro-trends impacting the port and assess the boundaries within which the port operates. A recognition of these factors allows the port to apply a “reality check”on any recommendations that are made for its vision. In discussions that were conducted as part of the key workshops, a number of key points emerged as drivers and constraints for JNPT, which effectively fell into 4 distinct categories. These have been detailed in subsequent pages.

The purpose of identifying these key drivers and constraints was to set a context to the larger discussions on the vision and business plan. Key constraints like the limitations on expansion for the port as well as hinterland connectivity constraints had a strong impact on the eventual set of projects identified for the port. The above aspects are detailed out in the following pages.


Constraints and drivers together define the environment in which an entity operates. While drivers give directional indications of changes that an entity needs to make, constraints define the limits or rules under which an entity can change.

Port related factors


Consolidation of shipping lines and increasing ship sizes: Consolidation of shipping lines has had a strong impact on the bargaining power of ports. An example of this is the port of Singapore which lost almost 15% of its revenues when Maersk moved to a competing port. Simultaneously an increase in ship sizes would require ports to upgrade/ expand their equipment to handle the larger vessels.

Increase in trade on Asian routes: The Asian route is witnessing an sharp increase in trade due to growth in the Indian and Chinese economies. This is leading to increase in capacity requirement of ports. Ports in the Asian region are therefore facing capacity pressures and are expanding to meet the demand.

An increasing trend of shipping lines integrating into port operations: Integration of shipping lines and port operators is leading to an increase in bargaining power of shipping lines. Ports therefore need to develop additional services for retaining and attracting the shipping lines

Export import imbalance in India: The export import imbalance in India will continue over the medium to long term. This would mean that ports have to plan for additional infrastructure to meet the mismatch. An example of such an impact would be that sizing of import and export yards need to be matched to volume mismatches in exports and imports.

Limited area for expansion in the current location: JNPT faces limitations in expanding on the sea side as well as the land side for port operations. As exhibit 4.1.1 indicates, JNPT faces limitations in expansion on the sea side due to Nhava and Elephanta islands., Similarly land side expansion for port operations is limited due to the presence of Sheva hill to the south of the terminals.



SHEVA

Elephanta

NHAVA

Sheva Hill limits Land Side Expansion

Elephanta island limits channel expansion as it is a heritage site

Nhava Island limits expansion onto the eastern side

Sea Side expansion is limited to this area

Exhibit 4.1.1 Limited expansion space at JNPT



Hinterland factors


Significant growth in the hinterland economy leading to an increase in traffic: JNPT is located close to Maharahstra and Gujarat. Both these states are witnessing economic growth leading to an increase in international trade. This would also lead to an increase in demand for capacity. Ports in the region will have to expand to match the rising demand.

The related impact of SEZs and other such initiatives by the Government supporting the growth in traffic: While on the one hand SEZs and other such initiatives by the government would generate additional traffic there also exists an opportunity for port linked SEZs as a way to gain captive traffic.

Introduction of VAT could impact logistics and distribution: The introduction of VAT is expected to change the logistics industry with 3PL operators and organized distribution players entering the market. Ports will have an opportunity to tie up with such players to become part of an integrated logistics chain. The impact of VAT on port logistics has been indicated in annexure 1.1.

Constraints in road and rail connectivity: JNPT is likely to face significant pressure on Rail and Road capacity in the near future. This will act as a constraint as it may hinder the ports development plans.

Regulatory Factors


Increased focus on PPP models as a means of rapid port infrastructure development: Over the past decade, alternate mechanisms have emerged for port infrastructure development through BOT and PPP models, the components of which including model concession agreements are being discussed at the highest levels. JNPT was one of the pioneers in such BOT arrangements and is likely to benefit from similar models in future for port development.



The imperative for major port trusts to operate under MPT act and TAMP regulations : All major port trusts (including JNPT) are governed by the Major Ports Trust Act and TAMP guidelines, which need to be considered when envisaging a development plan.

Increased security needs and resultant costs at ports: Ports are now under the ISPS code and need to have stringent security measures which have been tightened as a result of incidents such as 9/11. This has led to increase in costs. JNPT would need to assess the impact on processes to ensure that the safety and security aspects are addressed without impacting port efficiency.

Competitive Environment


International and national private players have entered the port sector : JNPT can expect an increase in competition from private players who are now allowed to enter the port sector. Adani group (Port of Mundra) and Reliance (Port of Rewas) have already made investments in the sector and this increase in competition from private players is expected to continue in the future. JNPT would need to factor in this when developing a plan to face competition and maintain its leadership status.

International ports such as Salalah, Colombo act as competition to Indian ports: Salalah and Colombo act as competition to Indian ports by acting as transshipment hubs for vessels. Since JNPT does not lie on major shipping routes the transshipment opportunity may be limited. However, the impact of these ports on regional shipping patterns and on shipping routes needs to be considered by JNPT while developing its strategy.



The identified constraints and drivers were used as inputs to a SWOT analysis for JNPT, which eventually led to the development of the JNPT vision. In this section, a summary of the strengths, weaknesses and threats has been provided, while opportunities have been covered in detail in the next sub-section.

4.1 Development of JNPT Vision4.1.2 SWOT Analysis – Strengths, Weaknesses and Threats

Activities in the SWOT Workshop –• The SWOT analysis was carried out through a SWOT workshop involving key port stakeholders. • These stakeholders were divided into groups that individually developed a SWOT matrix for JNPT.• Inputs from all groups along with KPMG analysis was used to arrive at a perspective SWOT for JNPT.• The participants of the SWOT workshop were representatives of each of the departments of JNPT in addition

to stakeholders from NSICT, GTI and BPCL • The following guidelines were provided to the participants while developing the SWOT analysis

Strength

• A port strengths are its resources and capabilities that can be used as a basis for developing a competitive advantage which the port currently possesses.

Weakness

• A port weakness are resources and capabilities that the port lacks in comparisons to its competitors currently.

Opportunity

• Opportunities provide prospect of profit and growth. Opportunities arise due to changes that are occurring or are expected to occur in the external environment in which the port operates.

Threats

• Threats are events that can lead to reduction of profit and growth. Threats arise due to changes that are occurring or are expected to occur in the external environment in which the port operates.

A summary of the SWOT workshop output has been provided in the following pages.


The following aspects were identified as competitive advantages/ strengths that JNPT possesses currently. Some of these were also highlighted in port user meetings as indicated in exhibit 4.1.2

Frequency –

JNPT has by far the highest frequency of services to major shipping destinations in containers within India, allowing significant flexibility to port customers.

Infrastructure –

JNPT has over 2000 m of quay length for container handling, 24 quay cranes and a well developed CFS network, which places it at a competitive advantage as compared to competing ports (Comparison of infrastructure with other ports has been indicated in Exhibit 4.1.4).

Connected to major locations in hinterland -

JNPT currently has well-established rail and road networks connecting it to many parts of the country.

JNPT has the largest number of regular trains visiting it as compared to competing ports in India allowing multiple access options to port customers as seen in Exhibit 4.1.3

However JNPT has started to face pressures on connectivity and these have been discussed separately in threats.

Location –

Due to its proximity to states with strong economic activity, JNPT is well located with a well developed captive hinterland. This has been discussed in detail in subsequent sections.

Exhibit 4.1.2 :Unique Selling Points - JNPT vs Competition

05

10152025

Port lo

catio

n

Efficien

cy Infra

Paper

Charges

Hinterlan

dFrequ

encyCo

mpe

titiv

e Ra

ting


InfrastructureJNPT – 14.67Average – 12.1

ConnectivityJNPT – 14.33Average - 11

FrequencyJNPT – 23Average – 18.8

Exhibit 4.1.3 : Direct Connectivity to major ICDs

ICD NameICD Name

JodhpurNagpur

Delhi - DadriIndore - Pitampur

KanpurAhmedabad-Sabarmati

Jaipur -Kanakpura

Ludhiana - Dhandari Kalan

Hyderabad -Sanatnagar

New Delhi-Tughlaqabad

4.1 Development of JNPT Vision4.1.2 SWOT Analysis – Strengths


Regular services of over 2000 trains annually.

It is connected through broad gauge double line tracks to western and central rail network

Containers16 Quay Cranes, 47 RTG (excluding GTICT having 8 quay cranes)

JNPT

Exhibit 4.1.4 : Connectivity and Infrastructure of Competitors

Cochin is connected through a double line to the Indian rail network. Rail connectivity is being added between Cochin and Vallarpadam.

Concor runs on demand services between northern regions and cochin

Dry Bulk and Break Bulk


2 Quay Cranes, 9 RTGCochin

Containers22 Quay Cranes, 67 RTGsColomboGeneral Cargo and Containers

11 (Super post panamax), 1 (post panamax), 30 RTGSalalah

Containers and Dry Cargo. The port trusts plans to increase container terminals

6 quay cranes (KICT) 2 Quay Cranes (PICT)

Karachi International Container terminal

Liquid (POL and crude)

Dry Bulk

Primarily dry cargo


Crude, Liquid Bulk and Dry Bulk

Primary Cargo Type

Has connectivity to the western rail network through a broad line -Kandla

-

6 Quay Cranes, 18 RTGs

2 quay cranes, 3 RTGs

Container Handling Equipment

3 Railway sidings and double stacking capability

Currently connected through a single linePipavav

Currently connected through a single line. The regular services at MICT is over 500 and in 04-05 516 trains were serviced at Mundra

Connectivity to nearby junctions is being improved through addition of tracks

Mundra International Container Terminal

MbPT Railway is connected to the Indian Railways at Raoli Junction at Wadala. The port is connected to Central and western railways and exchanges 3-4 trains a day

Mumbai

ConnectivityFacilities



Financial Position –

JNPT has a healthy financial position with strong reserves and minimal liabilities. Exhibit 4.1.5 indicates that profitability ratios have gone up over the last few years.

Availability of Land –

JNPT has over 1200 hectares of developable land available( 670 ha of these are land demarcated for port operational activities) , which would be required for supporting port expansion requirements in the near future. The Exhibit 4.1.6 details the land use distribution plan.

Source: Final Draft Report on Reserve Price fixation for 1200 ha land at JNPT – CIDCO, May 2006

1978Total Gross Area

778Total Non Developable area

23.50Channels (Adjoining Nhava creek)

3

41Tree Belt2

713.5Mangrove & Nature park1

Non-Developable Area:B

Developable: A

1200Total Developable Area

50Rail network8

206Road network7

61Public utilities6

3.57Open space5

2.07Social facilities4

45.64Commercial3

670Port operational Activities2

162Residential1

Area (in Ha)Land useSl. No

Exhibit 4.1.6 : Proposed Land use Distribution for unutilized land of 1978 ha at JNPT


Exhibit 4.1.5 - Profitability Indicators

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

70.00%

2002-03 2003-04 2004-05 2005-06

Net Prof it Ratio ROCE Operating Profit Margin Ratio

ROCE – Return on capital employed


Maintaining the competitive strengths of JNPT Maintaining the competitive strengths of JNPT would require key action steps to be taken by the port on an ongoing basis, identified in Exhibit 4.1.7:

Exhibit 4.1.7 : Action steps to maintain strengths of JNPT

Identify and implement opportunities for land usage, which are complementary to the ports strengths. Areas such as logistics are possible value-added opportunities which JNPT could exploit.

Availability of Land

Key Action StepStrength

Leverage financial position to invest in future development plans. Opportunities for investment should be actively sought and followed, based on prudent financial reasoning.

Financial Position

JNPT should endeavor to maintain its well connected status by ensuring connectivity to planned major corridors such as Golden Quadrilateral etc.

Connected to major locations in India

Upgrade Infrastructure in sea side and cargo handling to improve throughput from current facilities. Equipment such as RMQC, Tugs etc may need upgradation to maintain world class performance levels. These investments need to be made to ensure JNPT's competitive strength in port infrastructure.

Infrastructure

Focus on providing appropriate services and infrastructure and increase marketing functions role and strength to maintain frequency of traffic. The marketing function could develop strategies to retain shipping lines based on customer management initiatives.

Frequency/ regular services



Some areas of competitive disadvantage which were identified for JNPT were as follows:

Restrictions arising from limited draft –

Only vessels with a maximum draft of 12.5 m can arrive at JNPT using tidal window.

Vessels with a draft above 12.5 m cannot call at JNPT at any state of the tide.

Distance from major shipping routes for transshipment–

Ships visiting JNPT require significant deviation from major shipping routes as seen in Exhibit 4.1.8.

Competitors like Salalah, Cochin and Colombo have an advantage of significantly lesser deviation from mainline routes such as Europe Asia and the America- far east route.

Limited space for expansion from a long-term perspective –

Elephanta island limits the sea side expansion due to its status as an archaeological site.

Sheva hill acts as a natural barrier to the expansion of container yard operations.

The physical limit of expansion of the port will probably have been reached after dredging and reclamation for fourth container terminal.

Assumption: For Europe Asia Diversion point is Aden for America- far east diversion point is Colombo, America- Far east route is via South Africa

Exhibit 4.1.8 : Comparison with competitors –

Distance from major shipping routes


Approx. Diversion from America-far east Route: 1340 Karachi


Approx. Diversion from America-far east Route: 306 Cochin


Approx. Diversion from America-far east Route: 0 Colombo


Approx. Diversion from America-far east Route: ~2093 Salalah


Approx. Diversion from America-far east Route: 898JNPT


Approx. Diversion from America-far east Route: 1390 Kandla


Approx. Diversion from America-far east Route: 1088


Approx. Diversion from America-far east Route: 1340

Approx. diversion from Europe Asia Route: 1656

Approx. Diversion from America-Far east Route: 888

Location w.r.t major shipping routes (Nautical Miles)

Pipavav

Mundra

Mumbai

Port

4.1 Development of JNPT Vision4.1.2 SWOT Analysis – Weaknesses


Sub-optimal utilization of space around port –

Certain pockets of land such as some CFS operators are being sub-optimally utilized impacting port operations

Contractual stipulations do not enforce utilization levels and throughput guarantees (e.g. CFS operators)

Customer service –

With competition expanding, JNPT will need to improve its customer facing processes through improved marketing and account management

Shortage of staff in key areas –

JNPT is facing shortages of skilled staff such as marine engineers, pilots and IT. Rise in average age of staff is also an area of concern for the port.

JNPT faces issues in retention of people owing to competition from private sector offering larger incentives.

Infrastructural limitations for liquid cargo –

Pipelines used at the liquid cargo jetty are of limited diameter and need to be upgraded for higher flow rate

Absence of IT connectivity –

The absence of IT connectivity in internal port operations such as between terminals for handling mixed trains impacts port operations.



Exhibit 4.1.9 : Implications of Weaknesses

Implement mechanism to IT enable activities at the port to largest extentIT Connectivity

Action StepWeakness

JNPT needs to undertake measures to optimize current utilization of space both on sea side and land side, this would entail upgradation of equipment and automation.

Limited space of expansion

Dredging to permit larger vessels in line with the requirements of future ship sizes. JNPT should endeavor to be able to handle a majority (over 84%) of the ship sizes that sail in the region (Europe Asia Route)

Restrictions arising from limited draft

Revamping of pipeline network to ensure optimum flow rates from the ships to the tanks. This would also lead to reduction in time consumed in pigging etc and therefore increase the liquid cargo capacity.

Infrastructural limitations for liquid cargo

JNPT should carefully evaluate the trans-shipment opportunity before choosing the same as a focus.

Distance from Major shipping routes

Addressing weaknesses from a competitive perspectiveWhile some weaknesses (e.g. customer service) can be addressed by JNPT through developmental activities, others will be more difficult to address. A high assessment of key action steps needed to address some of these weaknesses has been indicated in Exhibit 4.1.9 below



Hinterland Connectivity -

One of the most significant threats to JNPT's future plans is the increasing pressure on road and rail connectivity.

The number of trains required in JNPT is expected to go up in the future with an increase in traffic as seen in Exhibit 4.1.10. The marshalling yard at Jasai and key rail corridors are facing saturation pressures as seen in Exhibit 4.1.11. Details of the rail terminals and train calls have been included in the inception report.

The current road infrastructure is facing pressures leading to congestion at various places in the port area. The issues that need to be addressed are

• Single evacuation route dependence.

• Separation of container and passenger traffic at various junctions.

• Shortening road access between key points.

• Separation of container and trailer traffic from other vehicles.

• Widening of roads for movement of container traffic.

• Providing parking and other infrastructure to tractor trailers.

•JNPT has undertaken steps to address some of these issues. These include formation of SPV to develop road, widening of port road etc.

Exhibit 4.1.10 : Analysis of Shortage of trains

Source : KPMG Analysis , Details in inception report

*** Adjusted for peak surges and cargo carried in/ out by a train

** Share of Rail in total traffic as per JNPT data 2005-06

* Requirements when operations ramp upto ultimate capacity

2.3Mismatch

11.5Actual no of trains in a day

4204Actual trains in 2005-06

6.7313.8Adj. Trains required per day ***

10.120.74Trains required per day

36977571No of trains in a year

332800681421TEU to be handled by train

25.6%25.6%% By rail **

13000002661801TEUs handled (2005-06)

GTI *

JNPT (includes

both terminals)

4.1 Development of JNPT Vision4.1.2 SWOT Analysis –Threats


Exhibit 4.1.11 Rail Connectivity to Hinterland

Source RITES Report


Exhibit 4.1.12 : Imperatives arising from threats at JNPT

• Development of a marketing strategy and strong value proposition to retain customers.

Increasing bargaining power of shipping lines

• Globally a few shipping lines control majority of the traffic. Currently the top 20 shipping lines comprise over 90% of the global maritime traffic.

• Improving processes and increasing automation to ensure smoother operations

Increasing Complexity of multiple terminals

• Complexity would arise due to increase in number of terminal operators in areas where shared resources are involoved. An example would be mixed train (Train carrying cargo for more than one terminal) handling as it would require various terminal operators loading/unloading on the same train.

• Similarly other processes where common infrastructure is used such as port roads etc will face increasing pressures

• Value added services to retain traffic from northern regions

• Strengthening of marketing function at JNPT to attract and retain customers

Increase in Competition

• JNPT will face increasing competition in the future from private terminal operators

• The new ports will attract traffic from Northern regions in the future

Imperatives for JNPTOther emerging Threats

A number of other threats are also being faced by JNPT currently, which might require a careful assessment of future development plans in this light.

4.1 Development of JNPT Vision4.1.2 SWOT Analysis –Threats


Identifying the universe of opportunities

In a growing economy, there are a significant number of growth opportunities, which a port can exploit. These were essentially categorized into three types for an assessment at a high level.

Opportunities arising from export-import traffic: These opportunities covered cargo opportunities that arise from the export import trade in India. The opportunities included are

• Container

• Break Bulk

• LNG

• POL/crude

• Chemicals

• Coal

• Dry Bulk

• Ro-Ro

• Cruise

Opportunities arising from Transshipment traffic: The transshipment traffic opportunity for JNPT can arise from primarily two routes, namely

• Europe Asia Route

• America- far east Route (via south Africa)

JNPT could evaluate opportunity to act as transshipment hub on these routes

Value Added Opportunities: These opportunities covered areas that were beyond the core operations of the port but were expected to supplement core port activities. These included:

• Logistics Opportunities

• Other related opportunities

4.1 Development of JNPT Vision4.1.3 Preliminary short listing of opportunities


Short-listing of opportunities

The opportunities identified were evaluated at a preliminary level using specific criteria. These were then combined to give an overall score on “alignment to capabilities” and “market attractiveness” which were then used to filter the opportunities. The preliminary analysis considered the following aspects:

• Revenue – A high-level assessment of revenue that can be generated from pursuing the opportunity. This was a major factor in arriving at the market attractiveness score.

• Safety Health and Environmental Effects – The impact of handling dangerous or dirty cargo next to clean cargo was considered as part of this parameter. This was a major factor in arriving at the alignment to capability score.

• Sustainability of revenues – This was based on the stability of growth that can be achieved if the opportunity is pursued. This also contributed to the market attractiveness score.

• Availability of external supporting infrastructure (external) – Availability of external infrastructure helped in assessing the challenges that will be faced in pursuing the opportunity. This contributed to market attractiveness as well as the alignment to capability score.

• Resources used – Resources that the port would have to expend at a high level in terms of land or other resources to pursue the opportunity was also a consideration in evaluating the opportunities.

• Growth potential - This growth that could be achieved if the opportunity was pursued was a significant contributor to the market attractiveness score.

A high-level assessment was carried out on the basis of the above parameters to arrive at the market attractiveness and alignment to capability scores.



Cargo Opportunities

• Revenue• Safety, Health and Environmental

Effects• Sustainability of revenues• Availability of supporting

infrastructure (external)• Resources used• Growth potential

Short Listed Opportunities

First Level of Shortlisting

Market AttractivenessScore

Alignment to capabilities

Parameters for analysis of Opportunities



• Coal

Dry Bulk

Break Bulk

LNG

Crude & POL product

Chemicals & other liquids

RO-RO

Cruise

Container

Market Attractiveness

Low Medium High

Hig

hM

ediu

mLo

wDo not enter the opportunity

Re Evaluate and decide

Enter/ Build the opportunity


Based on the above analysis, opportunities were rated as shown below. Cargo types like Dry Bulk, Break Bulk were observed to lack from a market attractiveness as well as a JNPT capability perspective. LNG was perceived to be of uncertain stability and growth potential. Coal as a “dirty” cargo was not aligned with JNPT's positioning as a general cargo port. The Ro-Ro and Cruise opportunities seemed attractive financially but were not aligned to the specific capabilities of JNPT. Container and liquid cargo emerged as attractive opportunities. Based on the above criteria, detailed analysis was taken up for specific export import cargo types in the next stage, i.e.-

• Container• Liquid cargo

Alig

nmen

t to

capa

bilit

ies


A more detailed assessment of the selected opportunities was discussed in the vision workshop, which was used to obtain additional senior management inputs to arrive at the set of opportunities which JNPT which would focus on from an end-state perspective. The set of opportunities considered for detailed assessment included the following:

• Export Import Cargo

• Container

• Liquid Cargo

• Transshipment (coastal and regional)

• Distribution Hub (Regional distribution facilities/warehousing)

• Logistics Hub (warehousing, distribution, logistics and packaging)

These opportunities were analyzed in detail based on four key parameters

• Strength/Weakness of port with respect to the opportunity

• Revenue potential

• Growth potential

• Sustainability/ Stability of revenues

A summary of the analysis of these opportunities has been provided in annexure 1.2 to provide an assessment of the discussions that took place on these opportunities. The analysis that has been carried out was used primarily to facilitate discussions from a JNPT perspective.

4.1 Development of JNPT Vision4.1.4 Detailed assessment of opportunities


Opportunity Landscape for JNPT

A summary of the opportunity landscape was prepared for JNPT based on revenue potential and growth and sustainability as shown below, which was used for further discussions during the vision development stage. This landscape is based on the assessment of opportunities detailed in annexure 1.2. Benchmark figures are based on JNPT data and industry research as illustrated in annexure 1.2.

Rev

enue

Pot

entia

l

Transshipment FTZ

Growth and Sustainability Potential

Distribution Hub

Logistics Hub

Export Import Container traffic

180 Cr (2000Rs/TEU, 25%

mkt share)80* Cr

(2 Crore/hectare, 40 hectares developed)

90* Cr(2.25 Crore/hectare, 40

hectare developed)

110* Cr(2.75 Crore/hectare, 40

hectare developed)

* Excluding revenues from traffic generated due to these initiatives

POL & Liquid10* Crore

(BOT basis)

1100 Cr(2000Rs/TEU)

4.1 Development of JNPT Vision4.1.4 Detailed assessment of opportunities - Summary


Vision Workshop –The visioning exercise was carried out keeping a few key factors in mind -JNPT has limited sea-side and land-side resources which it must use prudently. The choice of vision has to be aligned to the activities that are already undergoing at the port. Changing the priority of the port completely to a different type of cargo form what it is handling today could be retrogressive, even if the alternative opportunity was attractiveValue-added opportunities must be aligned with the vision of the port and the expected priorities in the future. An objective to purely maximize the economic value of the available land may lead to sub-optimal decisions.Key participants in the vision development exercise were representatives from the following entities:

Mechanism of the Vision workshop –

After the detailed opportunity assessment discussions, stakeholders were divided into groups and asked to carry out a resource allocation exercise. Out of the resources at JNPT, a specific percentage had already been deployed into containers and liquids. Stakeholder groups had to allocate the remaining resources of the sea and land side between cargo categories. In addition to a focus on cargo types, participants were also asked to identify key value added opportunities that would complement the cargo focus.

Each group was presented with examples of vision statements that JNPT could choose depending on the resource allocations in the earlier exercise. Groups could either choose one of the alternative vision statements or create their own vision statement keeping in mind their resource allocations. Each group therefore came up with a distinct vision statement and a prioritization of resources. These statements were combined to arrive at a vision statement for the port after discussion with the stakeholders as shown in Exhibit 4.1.13.

• JNPT Heads of Department• NSICT• GTI• BPCL• Indian National Ship Owners association• Container Shipping Lines association• Mumbai and Nhava Sheva Ship Agents

association

• Customs and Excise Department• Central Railways• CONCOR

4.1 Development of JNPT Vision4.1.5 Vision


“To be recognized as India's premier container port providing integrated logistics services to the best interest of trade and customers”

Focus Cargo types


Other Guiding principles

• Container• National Export Import Trade

• Logistics• EPZ (Export processing zone)• Warehousing• Involvement in hinterland connectivity ventures

• Creation of value for customers through value added services• Enabling Indian trade through JNPT, efficiently and smoothly• Ensuring safety and security at the port and development in the area

around the port• Expanding capacity and upgrading equipment in line with customer

requirements

Exhibit 4.1.13 : Vision and Elements of Vision for JNPT

Other Cargos Serviced

• Coastal and regional transhipment• Ro-Ro• Liquid



Elements of the Vision

The vision arrived at by JNPT had several distinct elements to it. Each of these elements have a impact on the manner in which JNPT executes the vision over the period of the business plan. The elements of the vision are -

Focus business areas

Other Cargoes serviced

Geographies of focus


Guiding Principles

Focus business areas

JNPT will maintain a clear focus on containers as its core business and will attempt to remain India’s largest container port providing customers with the best container handling experience in the country.

Other Cargoes Serviced

JNPT will also serve coastal trans-shipment needs of the Indian sub-continent for traffic that arrives at the port in its natural course of operations. This cargo is likely to be trans-shipped coastally from other smaller regional ports. The port may not actively invest additional resources in seeking transshipment cargo. This transshipment cargo is likely to be regional or coastal in nature.

Since the infrastructure required for Ro-Ro services is largely similar to that of containers, JNPT will be ready to service Ro-Ro in the future in case the market for Ro-Ro expands and the potential for containers falls.

Since JNPT has already committed resources to liquid cargo it will continue to serve this cargo in the future. It will also enable JNPT to derisk its cargo profile going forward.



Geographies of focus

JNPT will focus on attracting the largest share of traffic originating from or destined to its natural hinterland of Maharashtra as well as retaining market share of traffic from the northern hinterland.


JNPT will conceptualize and establish a state of the art logistics hub offering -

• Warehousing and forwarding facilities (including storage/stuffing/stripping of containers)

• Value added services – processing of goods according to specific customer and country-of-destination requirements, packing and re-packing, labeling and assembly, sorting and invoicing

• Free trade zones/export processing areas

• State of the art communications infrastructure

• Multimodal transport facilities

JNPT will also attempt to enter into partnerships with various container rail freight operators so as to develop dedicated services to JNPT from northern hinterland. This gains importance in light of 13 new licenses for container rail freight handling operations having been issued by the Government of India. JNPT could enter into partnerships with one or more of these players to offer a regular service to exporters/importers. Such a partnership would help in retention of JNPT traffic from the northern hinterland.

Guiding Principles

JNPT's guiding principles are obtained from its current mission statement which stresses on fulfilling the needs of the nation as well as ensuring safety and security. The significant guiding principles derived from the mission statement are

• Enabling Indian trade through JNPT, efficiently and smoothly

• Ensuring safety and security at the port and development in the area around the port

• Creation of value for customers through value added services

• Expanding capacity and upgrading equipment in line with customer requirements



4.2 Identification of goals4.2.1 Goals from Vision

Development of a business plan aimed at achieving the vision requires that the vision is cascaded to goals and a strategy to achieve those goals is developed.The goals and strategy are then converted into an action plan for the organization. It is imperative to understand that goals should be analyzed to assess the time period within which they can be achieved. This would help in differentiating between long term goals and short to medium term goals.The short to medium term goals need to be converted into an actionable plan that can be implemented and monitored by the port while the long term goals should be evaluated at a later stage and an action plan for the same should be developed at that time. This is because an action plan for a long term goal might become irrelevant in light of the changing scenario and emerging trends in the industry over the long term.

Characteristic of a well defined GoalKPMG has followed a set of principles to ensure that the goals developed for JNPT are specific, actionable and time boundA goal should be specific and aligned with the visionA goal should be relevant to the vision and should address critical aspects of an organization (capacity, service offering and efficiency etc)A goal should be time bound and an immediate or medium

term goal should have a specific time line attached to them A goal should be achievable and should not consist of unrealistic aspirations

Vision

Goals

Capability

Short Term Goals

Trends

Forecasts SWOT

Action Plan

Long Term Goals

Operation Plan

Project 1 Project 2…

ACTION PLAN

Dev needsBarriers

Strategy

Exhibit 4.2.1 :PERSPECTIVE PLAN



Identification of Goals

Each element of the Vision is analyzed to identify the goals that would be required to achieve the vision

To become a premier port JNPT may need to evaluate expansion into new locations or expand further in the current location. The resulting goal would be:

To expand JNPT to new locations

• To become India’s premier container port

This would require JNPT to develop logistics capabilities and the resulting goal would be


• To provide Integrated Logistics services

To enable Indian trade smoothly and efficiently JNPT would need to further improve its efficiency and service levels to international benchmarks.

Improve efficiency across the port to achieve 2200 TEUs/m quay length

• Enabling Indian trade through JNPT, efficiently and smoothly

Achievement of this element would require JNPT to expand to its maximum capacity at the current location. KPMG assessed the maximum capacity of the port through an integrated model and thegoal arrived is:


• Expanding capacity and upgrading equipment in line with customer requirements

RESULTING GOALELEMENT OF VISION



Identification of Goals

Each element of the Vision is analyzed to identify the goals that would be required to achieve the vision

As can be seen the Goals identified deal with the following critical aspects:

Capacity


To expand JNPT to new locations

Efficiency

Improve efficiency across the port to achieve 2200 TEUs/m quay length

Service offerings


Invest into hinterland connectivity ventures

This would require JNPT to

Invest into hinterland connectivity ventures

• Increased involvement in hinterland connectivity ventures

RESULTING GOALELEMENT OF VISION


4.2 Identification of goals4.2.2 Analysis of goals

PRIORITIZATION OF GOALSAchievement of the vision require a sequence of goals to be achieved by JNPT. KPMG has evaluated these goals on the following parameters to ascertain their timeframes and to make each goal time bound:

Ease of implementation – This factor takes into consideration various aspects that have an impact on the implementation of the goal. These would include

− Resources required – Each goal would require a different set of resources for its implementation. An assessment of the availability of resources with the port vis-à-vis resources required was used to evaluate this parameter

− Capability – JNPT has traditionally been a port operator and off late is developing into a landlord port. This parameter would evaluate JNPTs capability in achievement of the goal

− Business Environment – This factor includes factors such as market demand, competition, entry barriers, regulatory aspects etc to evaluate whether the environment is conducive to achievement of a particular goal

Criticality – This parameter measures if a goal is critical to the vision. A highly critical goal would have to be achieved at the earliest even if it scores low on ease of implementation

Criticality

Ease

of i

mpl

emen

tatio

n

High Low

Low

Short Term

Long Term

Exhibit 4.2.2 Framework to analyze goals



PRIORITIZATION OF GOALS

MED-HIGH

Criticality

JNPT is facing saturation pressures and would require to increase its capacity without which it might lose market share to other players in the region. Hence the criticality for expanding capacity is high

MEDIUM –HIGH

Ease of implementationResource Required: Several private operators have evinced interests in developing capacity at JNPT through a BOT model. In such a scenario the capacity of the port can be expanded through private sector investments . This indicates low resource requirements from JNPT.

Capability: JNPT has experience in undertaking BOT based expansion projects.

Business Environment:: Currently Indian ports are facing capacity constraints and there is a significant demand for port capacity in light of increasing export-import traffic from India. There are a number of private players that are willing to invest in the sector. The demand and attractiveness of the port sector have created a conducive environment for expansion of port capacity in India.


ScoreParameter & AnalysisGOALS




HIGH

Criticality

JNPT is facing constraints limiting its capacity and would require to increase its capacity in the current location through efficiencyimprovements to meet market demands. Such an improvement would also result in incremental reduction in costs. Hence the criticality for expanding capacity is high

HIGH

Ease of implementationResource Required: Investment required for efficiency improvements consist of upgradation, replacement or process improvement initiatives such as new RMQCs, sea side equipment etc. The resource requirement for such projects is lower than that of capacity creation projects where new infrastructure needs to be created.

Capability: JNPT has high efficiency compared to other ports and is capable in managing efficient operations.

Business Environment:: International players have entered the Indian port sector and competing with them would require international best practices and benchmarks.


ScoreParameter & AnalysisGoals




HIGH

Criticality

The growth of traffic in northern regions in comparison to growth of traffic in JNPT indicates that there is some diversion of traffic to western ports. Under such circumstances it is critical for JNPT to develop value added services which could further strengthen its value proposition and aid in retaining/ attracting traffic

MED-HIGH

Ease of implementationResource Required: JNPT has available land which can be used for development of value added services. The additional resources required primarily consists of land development costs which are lower in comparison to capacity creation investments.

Capability: JNPT does not have experience in offering value added services such as logistics, warehousing etc

Business Environment: The development of SEZs near the port would attract industries closer to the port. JNPT can further provide complimentary services such as warehousing etc which are not thecore offering of an SEZ






LOW

Criticality

An expansion in the current location and operational improvements will enable JNPT to retain and attract traffic as well as maintain its premier status over the short to medium term. Hence it is not very critical for JNPT to expand into new locations immediately

LOW-MED

Ease of implementationResource Required: Development of a port at a new location wouldrequire significant resources for creation of infrastructure, land development etc.

Capability: JNPT has experience in operating a terminal as well as in developing port infrastructure.

Business Environment:: Entry of private sector players in ports sector has increased competition in sector. Currently, a number of players in the sector have developed expansion plans and it is expected that capacity requirement for the region would be met by these expansion plans. Over the long term however there would be a shortfall in port capacity in the region.






LOW

Criticality

An additional line leading upto the port has recently been laid. Also the DFC (Dedicated Freight Corridor) and entry of private players in rail freight business is expected to increase the efficiency of the system

In such a scenario it is expected that the efficiency of the system would improve and JNPT would get benefits even without entering into the sector. Traffic projections also suggest that JNPT would attract traffic from northern regions in the medium term due to absence of capacity elsewhere.

CONCORs investment at JNPT would also lead to improvement in connectivity to JNPT by rail over the medium term,

Given the above facts it is not immediately critical for JNPT to enter the rail freight business.

LOW-MED

Ease of implementationResource Required: Significant resources would be required by JNPT to enter the rail freight business including investments for obtaining a license and for operations. JNPT would need to enter into a tie-up with a player to implement this strategy.

Capability: JNPT does not have experience in operating a rail freight business.

Business Environment: There are a number of players who have obtained the license and it is envisaged that there would be high competition in the sector over the medium term. Presently, the business environment is not highly conducive.





Exhibit 4.2.3 Short and Long term goals

Criticality

Ease

of i

mpl

emen

tatio

n

High

Low

Long Term


Short Term







The goals listed above should be achieved by the port in the short to medium term to realize its Vision. The Short term goals are within a planning horizon of 7-8 years and should be achieved within this time frame. This would enable JNPT to maintain its leadership status and increase its capacity as per the requirements of the customer.

2013-14Improve efficiency across the port

2010-11To develop logistics capabilities and services at JNPT

2015-16• Achievement of 10Mn TEUs of traffic at JNPT

TimelineShort Term Goals



The long term goals act as guiding principles for the development of ports future strategy. The long term goals as identified have been provided below. Also it should be noted that an action plan for these plans should be developed at a later stage however preliminary activities for them should be considered in the near future.

The goal for expansion into new locations would require the port to assess, evaluate and shortlist locations for expansion before investing into any locations. This is expected to be a long process and the port should therefore initiate steps in this direction over the next few years. JNPT should set up a task force by 2010-11 which would focus on evaluating various locations for expansion.

The long term goals for JNPT would enable the port to further expand capacity, build a Unique Selling Proposition in the area of logistics and would improve JNPTs relationship with the population in the region.

Role of the port

It is envisaged that the port will increasingly play the role of a landlord with limited presence in port terminal operations (JNPCT). The role of the port would be to manage the support and common infrastructure of the port and working as a planning authority for the port.

JNPT will evolve primarily into a landlord port facilitating services by terminal operating companies and other providers. The solitary terminal will be the responsibility of JNPT over the medium term horizon of the plan period

Expansion into New Locations

JNPT is expected to reach its overall capacity (under the current geographical and policy restrictions) of 10.9 Mn TEU in 2015-16. This is because of the current status of restrictions on expansion in the immediate surroundings. JNPT would therefore need to explore opportunities for expansion beyond its current boundaries. JNPT has two options for expansion which are described below:


• Invest in rail freight business

Long Term Goals



Expansion towards Nhava Island

JNPT can expand towards the Nhava Island and develop additional terminals at Nhava. These terminals would aid in increasing JNPTs traffic handling capacity. The terminals would require JNPT to carry out a detailed technical and financial assessment of the Nhava Island area.

Based on preliminary observations it is expected that JNPT can extend the current channel towards Nhava and use the land at Nhava Island to create backup area for the terminals. The roads and rail for the terminals can be planned such that they do not lead to congestion on existing road.

Currently regulations and policy guidelines issued by the Prime Ministers Office do not allow JNPT to expand into the Nhava Island area however, given the potential of the region (over 25 Mn) the policy can be reexamined.

It is also important to note that there are environmental difficulties which would have to be overcome to successfully develop terminals in Nhava island. This is because the Island has Mangroves and development of terminals would restrict the circulation of sea water supply. To overcome the same a channel would need to be created to ensure circulation of sea water to the mangroves.

Expansion to new locations

JNPT can also explore the opportunity to expand into new locations. The new locations could be in the same region and about 80-100 Km away from the existing port. The new port can act as a sister port to the existing port and customers can be provided services across both the ports. The port can explore a number of options to expand into new locations as listed below:

Public private partnership to set up a new port : JNPT and a private developer enter into an MoU to develop the port and enter as equity partners

Acting as a development authority for the port :Here the government invests in the venture and hands over the development activity at the port to JNPT. JNPT then enters into BOT for terminals with private parties for operations

Taking up container terminal operations in such a port set up by a 3rd party : JNPT could enter into a different area by attempting to be a terminal operator with investments at the new port, in a departure from its role as development authority

A decision on the mode of entry would be based on those capabilities of JNPT that would help in development of



greenfield port –Port Development capabilities (infrastructure, roads etc)Marine capabilitiesTerminal operation capabilitiesExperience in forming PPP’sAbility to attract private operators to invest

It is important to mention that the attractiveness of these options would to a large extent be determined by the business and regulatory environment prevailing then, which is something that cannot be factored in now

It is expected that the development as port authority has the highest alignment with the port’s capabilities. Its financial benefit would to a large extent be determined by the agreement entered into between various stakeholders (Government, port, private players)

The role of JNPT in such an arrangement is envisaged to be that of a port development authority responsible for development of basic infrastructure. The operations of the terminal would be handed over to private players on a BOT basis. Such a PPP model would be an attractive option financially for JNPT and could be a profitable use of the investible surplus which would be created post 2015-16.


4.2 Identification of goals4.2.3 Perspective plan

The broad level time frames for the goals were ascertained based on the “Ease of Implementation vs. Criticality”framework. The short term goals were further analyzed through an integrated capacity assessment model to determine key timelines for the short term goals. The long term and short term goals together form the perspective plan for JNPT. The perspective plan, through the goals, focuses on following key aspects:

Capacity Creation:

JNPT would endeavor to expand capacity at the current location to the extent possible. The integrated capacity assessment model developed by KPMG (detailed in later sections) indicates that JNPT can achieve 10.9 Mn TEUs from the current location. JNPT should therefore aim at achieving a target of 10 Mn TEUs over the next 7-8 years.

JNPT would face capacity limitations beyond the year 2015-16 and would need to explore expansion opportunities in areas outside the current location. JNPT would have multiple options in locations as well as mode of entry. It can expand into a new port as a terminal operator or a JV. Similarly JNPT can develop a new port and operate it as a land lord port (wherein JNPT acts as the land lord). These locations and mode of entries need to be considered by JNPT after 3-4 years. This is primarily because the nature of the industry could change over the long term and hence the options need to be re-evaluated 3-4 years later to assess their alignment with the vision. An action plan for the same should only be made post an evaluation of the goal at a later stage.

Efficiency Improvements:

JNPT would also aim at improving its efficiency to match and surpass international benchmarks. In this regard JNPT would need to invest in areas such as up gradation and automation. JNPT would also improve its IT infrastructure to improve process efficiency and reduce process time.

Service Offerings:

JNPT would provide its users with a value proposition that is superior to competition. This would be done through addition of service offerings at JNPT. Over the short to medium term JNPT would expand its value added services portfolio by setting up an FTZ/EPZ and CFSs and empties yard within the port


4.3 Strategy to Achieve Goals

The overall strategy of JNPT should enable a framework within which the goals can be achieved. The aim of the strategy would be to create an environment and support the goals identified for JNPT.

The strategy for JNPT to achieve its goals would consist of three key elements:

Marketing Strategy: The Marketing strategy consists of the approach and outlook of JNPT would adopt in meeting capacity demand, customer requirements and industry trends.

Commercial Strategy: The commercial strategy delineates the strategy JNPT would adopt to manage its sources of revenue and areas of expenditure.

Financial Strategy: The financial strategy contains JNPTs plan for raising and managing finances. The strategy would aim at identifying sources of finance that would be used to undertake various planned initiatives.


4.3 Strategy to Achieve Goals 4.3.1 Marketing strategyMarketing Strategy

JNPTs marketing strategy would revolve around the levers of price, customers, geographies, services and communication and would delineate JNPTs target within each of the levers

Cost – How would JNPT ensure competitive prices for its services and how would it provide better value to its customers?

Customers – What customers would JNPT focus on?

Geographies – What geographies would be serviced by JNPT?

Communication – What would be JNPTs marketing strategy to attract and retain customers?

Services - What services would JNPT offer?

JNPT would focus on customers in the western and northern region. It would aim at attracting and retaining these customers through various customer driven as well as service driven initiatives.

The customers would be large shipping lines for cargo and marine related services. To retain and attract these customers JNPT would develop customer centric marketing team which would ensure customer satisfaction within the users. JNPT would also endeavor to capture a larger part of the value chain and get direct contact with the end customers. This would be done through extension of services.

Customers

JNPT would endeavor to reduce its cost of operations through undertaking various initiatives that aid in improving efficiency. This would include development of automation infrastructure to reduce process time, improvement and upgradation of infrastructure to increase efficiency and regular training of employees to improve turn around times.

JNPT would also focus on improving service level of current processes through improvement in processes and introduction of marketing team which would undertake customer management practices to ensure service levels and customer satisfaction.

Cost

Details of StrategyElement of Marketing Strategy


4.3 Strategy to Achieve Goals 4.3.1 Marketing strategy

JNPT would primarily be a landlord port facilitating port services executed by services providers. It would as a port offer the following services in the following areas

Containers (Marine and Cargo Handling)

Liquids (Marine and Cargo Handling)

Logistics (CFS, Empty yards and FTZ)

The services provided by JNPT would help in retaining and attracting customers. Apart from this services such as logistics would also enable JNPT to generate additional revenues from resources available at JNPT. The additional services would also help in industrial growth in the region and would help industries in:

Reducing transit losses,

Reduce time to market ;

thereby, aiding the industries in reducing costs. JNPT would also evaluate entering into new service segments such as Ro-Ro if they are found to be an attractive proposition in the future. These services would also act as a sustainable competitive advantage of JNPT over other ports in India.

Services

JNPT would also develop a marketing team to ensure that the users are aware of its capabilities and service offering. The marketing team would also ensure effective customer management and satisfaction through account management and feedback (These have been detailed within the commercial strategy)

Communication

JNPT would service Maharashtra and the northern geographies. To ensure smooth flow of traffic from these regions JNPT would ensure that all elements in the port are developed (connectivity, RMGCs, RMQCs etc).

Apart from this JNPT would also endeavor to attract traffic from northern regions by providing additional value through services such as warehousing, EPZ etc. Over the long term JNPT would also explore entering the transport logistics sector (Rail freight containerization) between northern geographies and the port to ensure smooth flow of traffic.

Geographies

Details of StrategyElement of Marketing Strategy


4.3 Strategy to Achieve Goals 4.3.1 Marketing strategy

It is also imperative to realize that the marketing strategy outlined above would be supported by a financial and commercial strategy. The aim of the supporting strategies are as follows:

• Financial Strategy: The financial strategy of the port focuses on utilization of financial resources of the port. It delineates the sources of finance, expected costs and provides a framework for identifying the source of finance for various development activities.

• Commercial Strategy: The commercial strategy deals with the three levers of customer management, cost management and service offerings of the port. It is aimed at achieving commercial success within the operating business environment through effective management of customers and suppliers.

The commercial and financial strategy for the port are detailed in the following sections.


4.3 Strategy to Achieve Goals 4.3.2 Commercial Strategy

The commercial strategy of the port deals with the revenue flow to the port through the elements of customer management, cost management and service offerings. The execution of the commercial strategy has to be in complete alignment with the vision and port development strategy. Key focus areas identified in the port development strategy would emerge as the revenue drivers of the port and thus determine the success of the commercial strategy. Framework of commercial strategyJNPT's commercial strategy would be influenced by variables in the external environment such as the business environment, customers and suppliers. The methods under JNPT's control that can be used to determine its commercial strategy include services offered, cost management and customer management. The commercial strategy is illustrated in Exhibit 4.2.1. JNPT’s commercial strategy is influenced by several external variables as seen below -

• The business environment impacts cost and customer management through regulatory and other factors.

• JNPT's supplier network impacts the kind of services it can offer as well as the cost incurred in providing those services.

• The competitive environment will determine the services that need to be offered by JNPT and require JNPT to manage its customers.

Cost Management

Customer Management

Servicesoffered

Port Commercial

strategy

Exhibit 4.3.0 Framework of Commercial strategy



Services Offered In line with the port development strategy, JNPT has defined certain focus areas over the next 20 years. These include a strong focus on national export-import container traffic as well as greater participation in the container handling value chain through creation of logistics and free trade zones. Service offerings that JNPT is likely to offer over the next few years are listed below -

• Container handling operations• Liquid cargo handling operations• Vessel related operations (towage, pilotage etc)• Logistics/Distribution zone• Free trade zone• Container freight operations/ empty depot storage

These service offerings would be influenced significantly by the competitive environment. In case certain services currently not offered at JNPT were to be offered by major competitors, JNPT would need to create mechanisms to offer similar services to prevent diversion of traffic to these competitors.



Cost managementTo ensure that its commercial strategy is effective, JNPT would need to effectively manage its costs. These cost savings could directly translate into value offerings that could help in attracting customers. Cost management could be attempted at two broad levels –Operational Efficiency towards low costs : JNPT will continuously strive to improve its operational efficiency levels. This could translate into substantial operational cost savings.Contracts with Suppliers: JNPT would ensure preparation of detailed specifications for all contracts and orders to ensure that quantities and goods and services procured are fit for purpose using industry standards as the norm. Focus would be on optimal match of requirements with order quantities. Contract management will take on an increasing importance given the large number of projects likely to be taken up over the next few years.

An example of cost management in internal processes could be the introduction of automation between CFS operators and terminal gates. A different illustration of cost management could be training of RMQC operators for carrying out double moves. This could translate into significant improvements in operational efficiency and translate into long term cost savings.



Customer management

With increasing competition between ports, the element of customer service would prove to be a key differentiator for the port. To provide for effective customer service JNPT would need to develop a culture that supports all customers so that their needs and specifications are met. JNPT would need to create and develop strong, positive relationships with key customers by developing and implementing customer relationship management strategies and best practices.

Customer Acquisition/ retention -

JNPT would need to follow a multi pronged strategy to acquire customers. The strategy would broadly consist of three aspects which are as follows:

• Provide value added services

• Provide the best value for money

• Marketing activities

Value added services - The port will develop value added services for customers to increase the attractiveness of port and develop a sustainable competitive advantage. These value added services would be in the area of logistics and will enable the port to emerge as an integrated logistics hub in the country.

Best Value for Money - The port will endeavor to optimize its resources to generate maximum throughput from its current infrastructure. Apart from this the port will also undertake automation projects to bring down the time and cost required for various processes. This will enable the port in lowering its overall cost for the customer.

Marketing activities - The port will also develop and expand a marketing team which will undertake customer management exercises. This would primarily be aimed at retaining and targeting key customers. The marketing team will take regular feedback from customers and will have key accounts manager for strategic customers. These key account managers will resolve customer queries and issues.



Marketing at JNPT

JNPT's marketing team will strive toward efficient customer management and developing the same as a competitive advantage of JNPT over other ports. The role of the marketing team will be centered around the following four aspects

• Customers

• Price

• Promotion

• Competition

Customers: The marketing team would be divided into key account managers. Each account manager would be responsible for 2-3 customers and would aim at maximizing revenues from the customers as well as for resolving any customer related queries.

Price: The marketing team would constantly study the competitors and would play a role in developing pricing strategies for the port. These strategies would revolve around volume discounts, growth discounts as well as route discounts.

Competition: The team would regularly study the environment to develop reports on competitor plans as well as future scenarios. These would be provided to various departments of the port for appropriate action. The team would also be responsible for identifying future opportunities. These can arise from specific routes, specific industries or specific customers. The marketing team would then develop strategies to exploit the opportunity for the port. These would be passed to the senior management for review.

Promotion: The marketing team would regularly showcase capabilities of JNPT in port and logistics to customers to attract new customers and retain strategic customers.



The appropriate management of costs, customers and service offerings would result in consistent revenue streams for the port. JNPT's key revenue drivers following from the port development strategy are expected to be -

Revenues from BOT for terminal operations - JNPT currently is engaged in three BOT contracts with NSICT, GTI and BPCL. These currently constitute 15% of revenues and is expected to rise as GTI begins operations in 2006-07. With JNPT expected to enter into several BOT contracts for future container and liquid terminals as illustrated in the port development strategy, BOT revenues will be a significant driver for JNPT going forward and are expected to rise as a percentage of total revenue. Likely revenues from individual BOT contracts are indicated in chapter 4.Revenues from Leasing of land - Playing a greater part in the container handling value chain through utilization of available land is of strategic focus for JNPT. JNPT has 670 hectares of developable land available for port operations. Utilization of this land for various operations like container freight stations, free trade areas and warehousing is a focus area. All operators utilizing this land can be expected to contribute leasing revenues to JNPT.. Revenues from container terminal operations - JNPT currently gets 50% of its revenues from its container terminal operations (JNPCT) . Revenues from JNPCT will continue to be a significant proportion but are unlikely to increase as a total proportion of revenues.

Other revenue sources for JNPT are as follows -Revenues from Sea-side services provided - As landlord of the port area, JNPT retains the vessel related operations under its control. Activities like towage, pilot age and mooring of vessels are carried out by JNPT. JNPT earns vessel docking and berth hire charges. This currently constitutes over 20% of port revenues. With increase in number of vessels calling at JNPT, the revenues from these operations are expected to increase. Revenues from break bulk handling operations - JNPT also handles break bulk cargo at a single shallow water berth. Going ahead this is likely to be a minor service offering. Hence, revenues from the handling of break bulk can be expected to be a negligible percentage of total revenuesRevenues from port investments – JNPT has regular reserves and surplus created through revenues from terminal operations. These are utilized for investing in various government investment instruments such as bonds. Revenues accrue to the port from interest as well as maturity of these instruments. Going ahead this is likely to be a small percentage of the total revenues. Investments by the port would be done primarily in securities, which is in line with port guidelines of investing in securities that provide a steady cash stream with negligible risk typically provided by government securities.


4.3 Strategy to Achieve Goals 4.3.3 Financial Strategy

The financial strategy of the port provides the guiding principles that enable raising finance for the execution of projects in line with the vision of the port. Identification and availability of the optimal source of financing for various projects would be critical to the success of a port development strategy.

As part of the business planning exercise, JNPT needs to undertake several developmental projects. These projects could potentially be financed from a variety of sources.

JNPT's choice of financing options would be dependent on the nature of the project being undertaken. JNPT as a major port operates within guidelines laid down by the Government of India which poses certain constraints on the mode of financing options available to the port.

Sources of Finance –

The set of financing options that have been considered as part of the business plan as detailed in exhibit 4.3.1 are as follows -

• Port internal resources

• External resources

• Public private partnership

• Public participative financing

Public participative financing

Joint venture or Special purpose vehicle between public players

Public private partnerships

Build operate and transfer (BOT) contract awarded to private player

External resources

Loan financing

Issue of Bonds

Port internal resources

Investable reserves and surplus

Exhibit 4.3.1 : Sources of Finance

Sources of finance are discussed in greater detail in section 1.5. A comparison of the various financing options available to JNPT is made in the Exhibit 4.3.2



Exhibit 4.3.2 : Comparison of financing options available to JNPT

Financial returns of such investments are limited to the equity share

Port gets lesser revenues from financially attractive projects via-a-vis financing these projects independently

Requires listing of bond issues and involves significant transactional expenses for a government body

Requires governmental clearances and creates annual cash flow liabilities

Disadvantage

Depends on financing arrangement between players

Cost of capital ~13% for a 10 year loan with D/E ratio of 1 and 100 bps over ZCYC cost of debt

9.0-9.5% for 10 year bond

9.5-10% for long term loan (over 10 year period)

Opportunity cost of capital – Spread over GoI bond rate

Cost of Capital

Port is able to positively influence execution of projects that impact its operations

Partnership Finance/ SPV mode

5.

Port can create infrastructure at minimal risk to own capital while enjoying BOT contractor expertise

BOT4

Cheapest source of external capital and allows initiation of large projects that cannot be independently funded by reserves and surplus

Issue of Bonds3

Allows initiation of large projects that cannot be independently funded by reserves and surplus

Loans2

Cheapest source of capital which also does not lead to creation of a liability

Reserves and Surplus1

AdvantageSource of FinanceSerial No.



As part of discussions during the business planning exercise, certain guiding principles have emerged for financing of projects. It has been indicated that a preferable mode of financing for the projects would be either port resources or private participation. Government participation for funding of these projects is unlikely as has been indicated in discussions at various fora. The guiding principles adopted have been discussed below. Guiding Principles -Projects taken up as part of the business plan can be funded from internal resources or by private investment. Projects that have a clearly identified revenue stream as well as a viable Net present value/Internal rate of return (NPV/IRR) can potentially involve private sector participation (e.g. through BOT participation)Projects involving creation of common-user infrastructure or projects that may not show clearly identified revenue streams or a viable NPV/IRR are likely to be undertaken through port resources. While these projects may not show an attractive NPV/IRR, they would still benefit the overall operations of the portFinancing method to be used for different projects –The list of projects identified for financing are limited to those projects identified through the vision and port development strategy of JNPT. Likely sources of financing have been identified based on guiding principles illustrated in Exhibit 4.3.3. a) Common user infrastructure – Based on discussions at various fora, it emerged that the creation of all common user infrastructure allowing operation of various terminal operators would be the responsibility of the port. This is also in line with the way the landlord port model operates the world over. This common user infrastructure in the case of JNPT includes -

• Internal connectivity projects ( Road, rail etc.)• Dredging of main channel and JNPT channel• Sea side handling (Towage, pilotage etc) • Other infrastructure ( security etc.)

The financing method for common user infrastructure would depend on the presence of a viable revenue stream for that infrastructure. As internal connectivity projects may not have a clear revenue stream unless tolled, they are unlikely to be financed through loans /bond issues and would be funded through port internal resources. Dredging as a project would result in revenue streams for JNPT in the form of sea side tariffs. Given the fact that dredging is an expensive proposition JNPT is unlikely to finance the entire project from internal resources. Discussions with port officials reveal that dredging is likely to be part funded by reserves and partly through loans.



As a landlord port JNPT would continue to provide sea side services such as towage and pilotage. Purchase of equipment and services for servicing rising number of ships is expected to be funded through port reserves and surplus. Other common user infrastructure provided by the port such as security are likely to be funded via port internal resources. b) Future terminals –Projects that have a clearly identified revenue stream as well as a viable NPV/IRR can potentially involve BOT participation. All terminal operations would have identified traffic projections and in turn revenue flows. Hence, creation of new terminals is likely to be through private participation via the BOT route. c) Warehousing/CFS/free trade zones/Storage facilities –Projects that have a clearly identified revenue stream as well as a viable NPV/IRR can potentially involve BOT participation. All warehousing/free trade/CFS operations would be based on the traffic projected at JNPT and would have clearly identified revenue flows. Hence, creation of warehousing/CFS/free trade zones/storage zones is likely to be through private participation via the BOT/leasing route. JNPT as landlord would need to develop the land prior to handing it over to private players for construction and operation. This development has a clear stream of revenues arising from lease/revenue sharing and hence can potentially be financed via loans/ port internal resources.d) External connectivity projects –JNPT is dependant on external roads/railways connecting it to the immediate hinterland. These networks are critical to the evacuation of containers and prevention of congestion at the port. Examples of projects that can be executed as part of this are

• Road projects in the vicinity of the port like Link roads, highways etc• Railway lines connecting the port to key rail corridors

Stakeholders in such projects include regional land authorities and road/rail developers. Although responsibility for their execution does not lie on the port it is advocated that they participate in such projects so as to positively influence their timely execution. Given the multiplicity of stakeholders and the imperative of the project to JNPT, It is suggested that JNPT participate in these projects through special purpose vehicles with other stakeholders. d) JNPT operated container terminal –JNPT owns and operates a container terminal (JNPCT). This terminal will require significant expense in terms of projects for equipment upgradation/capacity expansion. As these projects are not common-user based and have clearly identified revenue streams, it is likely that they will be funded via port internal resources or loans.



Opportunity cost of capital –spread over GoI bond rate

Reserves and SurplusCommon user infrastructure-vessel handling related projects

3


Reserves and SurplusEquipment / expense for JN Port owned container terminal (JNPCT)

3

Exhibit 4.3.3 : Project Financing Options available to JNPT

Depends on financing arrangement between players

Cost of capital ~13% for a 10 year loan with D/E ratio of 1 and 100 bps over ZCYC cost of debt


9-10% (exact cost dependant on proportion of finance from each source)

Cost of Capital

Critical external road/railway connections

Construction and operation of terminals, logistics, distribution and warehousing facilities, free trade zones

Common user infrastructure-Internal roads

Common user infrastructure-Dredging

Type of Projects

Partnership Finance5.

Public private partnerships such as BOT

4

Reserves and Surplus2

Combination of reserves and surplus as well as bank loans

1

Likely Source of FinanceSerial No.



Total investments expected in the port till 2017-18 are Rs 14556 crores. Investment requirements of the port trust itself are Rs 4530 crores. These investments would be needed in order to fund various projects for building infrastructure required for serving future traffic potential. These amounts are derived based on financial coverage and other analysis done for individual projects. Assumptions taken to arrive at financial outlay are listed alongside individual projects. A contingency cost of 10% has been taken on the overall investment figure. The financing requirements for upgradation and replacement as well as costs envisaged for equipment hired and personnel costs have not been included currently.

This outlay can be financed from the sources detailed earlier. The approximate outlay through each of the sources is tabulated in Exhibit 4.3.4 below.

1398Other investments ( as part of XI plan outlay)

Exhibit 4.3.4 : Investment outlay by mode of finance

* Apart from this there would be regular upgradation investmentsas well as recurring investments for hired equipment such as pilot launches, tugs etc. These figures factor in annual inflation

207 Public investments

14556Total Investments

231.7Public participative financing/SPV (excluding JNPT’s contribution)

8190BOT developer

4530Port resources (Includes internal port resources as well as external financing like bank loans, Also includes the port’s expected contribution to SPV)

Investment outlay (in Rs crores)*

Mode of finance

anujkumar

Text Box

till 2017-18


Chapter 5

Trade and Traffic forecast


5.0 Traffic Projections5.0.1 Introduction

An assessment of future national traffic is necessary to understand the capacity requirement for ports in the future. Traffic projections serve as the basis for development of a integrated master plan and therefore should be estimated through a comprehensive and robust methodology.

An integrated master plan for a port identifies investment requirements across the port in areas such as terminal capacity, sea side capacity and hinterland connectivity using demand forecasts/ traffic forecasts.

JNPT's vision aims at developing JNPT as a premier container port with capabilities in liquid handling as well. In line with the vision the traffic projection have been detailed out for two key components:

• Container Traffic projections

• Liquid traffic projections

• POL/ Crude

• Chemicals

• Edible oil and molasses

Currently Ro-Ro is not a focus area for JNPT. However if the Ro-Ro opportunity grows considerably then JNPT can evaluate the opportunity in detail and, depending on the outcome of the evaluation, can increase its focus on Ro-Ro.

Guiding principles used to develop traffic projections (national and JNPT) are as follows:

• To ensure validity of data and assumptions through discussions with industry experts, port users and secondary research.

• To ensure that the methodology followed is transparent and follows a logical approach.

• To build flexibility in the approach to ensure that region or industry specific scenarios can be incorporated in the projections.

• To ensure that competitor plans are incorporated to arrive at port specific traffic projections.

• To ensure integration of current trends in traffic from various regions for JNPT in the traffic projections.

• To ensure integration of global trends, macroeconomic trend and industry trend are incorporated in projections for JNPT.


5.0 Traffic Projections5.0.1 Introduction

Various data sources that have been used to arrive at traffic projections include Ministry of shipping, IPA, Ministry of Statistics, Ministry of Petroleum and natural gas etc. Suitable assumptions have been made in discussions with the port users and industry experts.

Some of the data sources that were used for traffic projections are as follows:

Infraline.comKPMG India Energy Outlook 2006

Solvent Extractors Association of IndiaMinistry of Agriculture

Ministry of Chemicals and PetrochemicalsMinistry of Petroleum and Natural Gas

Deutsche Bank Research, Container ShippingEconomic Survey of Maharashtra, Directorate of economics and statistics, Planning department, Government of Maharahstra

CMIE data on National IncomeIndiastat.com

Government of national capital territory of Delhi, Estimates of state domestic product

Economist intelligence Unit

India infoline.comCygnus Industry reports

Ministry of Statistics & Programme ImplementationMinistry of petroleum and natural gas

Indian ports association dataMinistry of shipping, highways and road transport


5.1 Container Traffic Projections5.1.1 Methodologies for Traffic Assessment

There were fundamentally three approaches that were considered to arrive at the future traffic potential. Each of these approaches has its strengths and weakness. Also these approaches also are suited to different scenarios. An explanation of these approaches is given below:

Historical Approach: The historical approach uses historical growth rates and applies the same to arrive at future traffic potential. The underlying assumption of the approach is that the port operates in a steady business environment with limited changes.

Advantages− This approach is easy to apply as it uses historical data points which are easily available− The approach provides accurate results where business environment is steady

Disadvantages:− In scenarios where the business environment is dynamic this approach will not yield correct results as

historical growth rates may not continue in the futureApplicability to JNPT

− JNPT's business environment is evolving rapidly. This is a result of a number of factors such as increase in India's international trade volumes, entry of private players in the port sector etc.. This approach may therefore not yield correct results.

Top – Down Approach: The top down approach essentially uses a correlation of container traffic with macro economic factors such as GDP (for a country/region) to arrive at future container for a country/region..

Advantages− It is a widely known prediction methodology used to arrive at national/regional traffic projections.− As opposed to the historical approach, this methodology recognizes that future growth rates need to be

considered for projecting traffic. Disadvantages

− The approach correlates macroeconomic factors with the traffic. However, it does not reflect the relative difference between services and manufacturing.

− This methodology does not factor changing levels of containerization over a long term


5.1 Container Traffic Projections5.1.1 Methodologies for Traffic Assessment

Applicability to JNPT:− While this approach can be used to assess national traffic growth it is difficult to arrive at traffic potential at a

port and any extrapolation from national projections to a specific port may not be appropriate. This is because the hinterland of a port may not behave as that of the entire country.

Bottom Up Approach – This approach incorporates industry trends within a region to assess the resultant increase in traffic based on specific regional and industry trends. These trends are summed to arrive at the national traffic projections.

Advantages− This approach can be used to identify regional trends for industry specific cargo. As a result the approach is

able to differentiate between manufacturing led and service led growth.Disadvantages:

− The approach requires a significant amount of data at a regional and industry level in granular detail to arrive at the traffic potential for various regions.

Applicability to JNPT− This approach is most suitable for projecting traffic for JNPT as it can convert regional and industry level

trends into traffic potential for a port based on the traffic potential of the hinterland.

KPMG has applied the bottom up approach to arrive at traffic potential for JNPT. A comparison of national level using the top-down and bottom up approach has also been done.


5.1 Container Traffic Projections5.1.2 Top-Down Approach

Various studies indicate that a growth of 1% in the GDP of a country leads to a growth of about 1.5 – 2 % in the container trade. This however depends on the nature of the GDP growth (services vs. manufacturing), level of containerisation and container handling infrastructure in a country. Indian GDP has shown a growth of almost 8% over the past three years and is expected to show comparable growth rates in the future. According to the Goldman Sachs BRIC report, the Indian economy is expected to become the third largest economy in terms of market exchange rate by 2050.

The forecasts for Indian GDP in the future are shown in exhibit 5.1.1. As can be seen the GDP growth rate between 2011 and 2017 is expected to be average of 6% and an average of 5% growth beyond 2017. This is inline with the estimates of various analysts and experts.

The correlation of past traffic with GDP was carried out through a regression analysis assuming a log-linear relation ship between the stuffed TEUs and the GDP.

It was found that the correlation with the real GDP is the strongest and the results of the correlation test are shown below

The correlation is very strong which is evident from the low F value as well as the low standard error.

Real GDP GrowthYear

Source: EIU Country report on India

Exhibit 5.1.1 India GDP Forecast (in %)

2010 – 11

2009 – 10

2008 – 09

2007 – 08

2006 -07

6.84

6.67

6.87

6.95

7.06

Real GDP GrowthYear

Source: Analyst Reports, Discussions with experts

Exhibit 5.1.2 India GDP Forecast

2017 – 26

2011 – 17

5% (Average)

6 % (Average) ValueParameter

Standard ErrorSignificance F

0.0037948241.04006E-05



Using data taken from ministry of shipping and other sources, a log linear relationship between the stuffed containers and real GDP was found to be strong in the form of the following equation

Log (Stuffed Traffic) = m*Log (Real GDP) + c

m = 2.4565603

c = - 11.63588073

Additionally a relationship between empties and stuffed TEUs was found which was as follows:

Empty Containers (E) = .1759 * Stuffed Traffic + 90.8

It is assumed that the transshipment traffic would be around 10% of the total traffic in line with current trends.

Using the above the traffic projections for Indian container traffic are shown in exhibit 5.1.3. It is expected that the traffic in the year 2026-27 would be around 85 Million TEUs.

Exhibit 5.1. 3 India Projected Traffic (in 000 TEUs)


85528.808552.8811591.9065384.102026 – 27

75879.607587.9610292.8057998.802024 – 25

67320.306732.039140.4651447.802023 – 24

59727.705972.778118.2945636.602022 – 23

52992.705299.277211.5740481.902021 – 22

47018.504701.856407.2635909.402020 – 21

41719.104171.915693.8131853.402019 – 20

37018.203701.825060.9428255.502018 – 19

32848.403284.844499.5525064.002017 – 18

29149.502914.954001.5722232.902016 – 17

25275.302527.533480.0019267.802015 – 16

21917.80219.173027.9916698.102011 – 12

10766.00107.661526.648162.802009 – 10

4809.59480.95724.723603.912004 – 05

2430.72243.07404.461783.181999 – 00

TotalTransship

mentEmptiesProjectedYear



4810 5670 6669 7835 916510766

1240714301

1648719008

2191825275

2915032848

37018

41719

47019

52993

59728

67320

75880

85529

0

10000

20000

30000

40000

50000

60000

70000

80000

9000020

05-0

6

2006

-07

2007

-08

2008

-09

2009

-10

2010

-11

2011

-12

2012

-13

2013

-14

2014

-15

2015

-16

2016

-17

2017

-18

2018

-19

2019

-20

2020

-21

2021

-22

2022

-23

2023

-24

2024

-25

2025

-26

2026

-27

000

TEU

S

Exhibit 5.1.4 : National Container Traffic Projections using top down approach


5.1 Container Traffic Projections5.1.3 Bottom Up Approach

Assessment of current import export traffic by industry

1

Development of state wise export

import data

3

Source: Ministry of commerce

Assessment of traffic by state and industry

Source: Annual Survey of Industries

2Analysis of level of containerisation,

empties and transhipment

Source: KPMG AnalysisSource: KPMG Analysis

Assessment of traffic growth due

to growth in industries

5

Traffic Projections with state wise break

up

6

4

The methodology followed for the bottom up approach took into account a number of factors. A high-level schematic of the approach is given below -

Assessment of traffic growth due

to increase in containerisation


Two inputs were required for estimating the current origination/destination of Indian international trade cargo . The first was to understand the various industries that contribute to container traffic and the second was to evaluate the regions/states of production/consumption across all industries.

Step 1: Assessment of current import export traffic by industry

An analysis of export import data was carried out to arrive at the total international trade cargo traffic in India. This involved aggregating trade data available with the Directorate general of foreign trade (under the Ministry of Commerce) for all industries.

Step 2: Assessment of traffic by state and industry

An assessment of cargo generated from various states was performed by using industry level data available on the industrial output from various states. Data from the Annual Survey of Industries released by the Ministry of Statistics was used for this analysis.

Step3: Development of state wise import export data across industries

Using the assessment carried out in Step 1 and Step 2 a mapping of industries to locations of import consumption and export generation was done to arrive at state level export and import data across industries.


An analysis of export import data was done to arrive at total export import cargo from India by volume



Step 4: Analysis of level of containerisation, empties and transshipment

To arrive at the container volumes for export import the extent of containerization across various industries was applied to the output of step 3. This provided the state level container trade volumes across various industries.

Exhibit 5.1.5 shows the level of containerization that has been assumed for various key industries. These assumptions were arrived on the basis of data produced by the Ministry of Shipping as well as through discussions with port users and export promotion councils.

Apart from the above container volumes also consist of transshipment and empties. Coastal and regional Transshipment was assumed to be around 10% of the total traffic, while empties were calculated on the basis of the following equation.


The equation was obtained on the basis of historical correlation between empties and stuffed containers.

A correlation for empties has been used because the flow of empties depends on a large number of factors such as export import imbalances, shipping line business flows, global business flows, FCL ratio etc. Hence a bottom up approach (based only on local export import behavior) would may not yield a true representation of empties flow.


Exhibit 5.1.5 Level of Containerization

45.65%Textiles (Cotton, Silk, Synthetic) Yarn Etc.

50.00%Tea & Coffee41.18%Sugar41.18%Spices50.00%Oil Seeds, Fats Etc.23.16%Metal & Metal Products50.00%Meat & Dairy products50.00%Marine Products43.75%Machinery, Instruments Transport Equipments

0.01%Liquid50.00%Leather & Its Products47.00%Jute & Its Products41.57%Hossiery, Harberdasherry and Millinary

18.71%Fruits & Vegetables11.20%Foodgrains (Cereals and Pulses)24.58%Fodder0.00%Dyes and Colours

50.00%Dry Fruits46.03%Drugs and Medicines75.00%Consumer goods40.00%Chemicals10.00%Miscellaneous

2003-04Description



Step 5: Industry and Containerization Analysis

To estimate future traffic potential, key industries were analyzed to arrive at expected growth rate for industries. Inputs for the same were taken from secondary research of analyst reports (Cygnus, Data Monitor, B&K Industry Reports, Insight Industry Reports, EIU etc) . In some cases where growth rate over a long term was not available growth rates were tapered in line with the GDP projections (around 5% over the long term).

The Industry growth rates were applied to each industry to arrive at the future traffic potential from all industries. The growth rate of industries was adjusted to take into account regional variations based on known plans and discussions with industry experts (Export promotion councils, Economic survey of states etc). Some regions such as Maharashtra were assumed to grow at a higher rate due to SEZ setups and various Sops being offered by the state Government.

The above analysis enabled an estimate of future container traffic (stuffed) that is expected from various regions across India.

Apart from this Empties and transshipment traffic was also analyzed and added to the stuffed container volumes to arrive at total traffic in the future. Coastal and regional transshipment was assumed to be around 10% of the total traffic, while empties were calculated on the basis of the following equation. The equation was obtained on the basis of historical correlation between empties and stuffed containers.


National container traffic was the total of the stuffed containers, empties and transshipment traffic that was expected in the future. The result of the analysis is shown in Exhibit 5.1.6 and 5.1.7.

The traffic proportion generated from various regions is shown in Annexure 1.3



National ProjectionsEXIM cargo generated nationally was calculated based on the analysis carried out. To this transshipment of around 10% was added to arrive at the national container traffic potentialA comparison of the two methodologies shows that the top down approach predicts a traffic of 85 Mn TEUs while the bottom up approach estimates around 72 Mn TEUs. One of the reasons for the difference could be that the top down approach assumes that the current correlation between macroeconomic factors and traffic will continue over the long term. However, it has been observed that an increase in GDP by 1% can lead to an increase in container trade by 1.5-2%. In developed economies the increase is lower than that in developing economies as in developing economies level of containerization is also rising. As can be seen the bottom up approach predicts a higher growth rate in the medium term than the GDP approach. This is primarily because manufacturing led growth is likely to increase in India, which reflects sharply in a bottom up approach, while it may not do so in a GDP approach. Some of the reasons for this could be:1.Increased focus on manufacturing sector in India.

• There has been an increase in India being chosen as an export base for manufacturing by MNCs

2.Specific industries such as Auto are expected to grow at a high rate and will contribute to exports

• Indian auto component industry is expected to capture as much as 20% share of the global component industry

3.Government support through policies such as SEZ, tax benefits etc that aid growth in manufacturing.

Exhibit 5.1.6 Projected Traffic by Bottom Up Approach

Traffic (Mn TEUs)Year

71.662026-27

66.012025-26

60.812024-25

56.022023-24

51.622022-23

47.562021-22

43.832020-21

40.392019-20

35.002018-19

31.222017-18

27.772016-17

24.692015-16

21.852014-15

18.792013-14

16.172012-13

13.862011-12

11.892010-11

10.162009-10

8.452008-09

7.022007-08

5.842006-07

4.872005-06

4.122004-05



4.81 5.67 6.67 7.849.17

10.7712.41

14.3016.49

19.0121.92

25.28

29.15

32.85

37.018

41.719

47.019

85.529

4.87 5.84 7.028.45

10.1611.89

13.8616.17

18.7921.85

24.6927.77

31.22

35.00

38.50

43.50

47.56

71.6675.88

67.32

59.728

52.993

66.01

60.81

56.02

51.62

0.00

10.00

20.00

30.00

40.00

50.00

60.00

70.00

80.00

90.0020

05-0

6

2006

-07

2007

-08

2008

-09

2009

-10

2010

-11

2011

-12

2012

-13

2013

-14

2014

-15

2015

-16

2016

-17

2017

-18

2018

-19

2019

-20

2020

-21

2021

-22

2022

-23

2023

-24

2024

-25

2025

-26

2026

-27

Mn

TEU

s

Projected GDP Projected Bottom Up

Exhibit 5.1.7 Comparison of traffic projections of bottom up and top down approach


5.1 Container Traffic Projections5.1.4 JNPT Traffic Projections

The development of the national traffic projections using a bottom up approach provided an insight into specific growth patterns across regions and key industries that form part of JNPT's hinterland and therefore enabled development of forecast for JNPT. The choice of hinterland for assessing JNPT's future traffic potential was based on an analysis of the origination/destination of the current traffic at JNPT.

KPMG followed a qualitative gravity assessment model to estimate share of traffic from various regions for JNPT, the gravity assessment model was based on an analysis of the key factors that can impact the share of container traffic that JNPT can expect from various regions across India:

1. Future investment plans of competitors to assess traffic that can be handled by competitors

2. Trends in share of ICD traffic arriving at JNPT from various regions

1. Future plans of Competitors

Currently JNPT serves over 50% of the container traffic in India. However, with the emergence of private players and capacity additions in other ports, it is expected that some of the traffic especially from northern regions (which lie closer to some of the western ports) would be diverted to the new ports. These new ports are also expected to capture a large proportion of traffic in their region.

The competitors considered are Pipavav, Mundra and Kandla in Gujarat, Port of Rewas and Mumbai Port in Maharashtra. As mentioned earlier, not all plans of these ports are available in the public domain. However a brief snapshot of future plans of the competitors is provided below:

Mundra

− Mundra International Container Terminal (MICT) is managed by P&O Ports

− The Container terminal comprises of 2 berths and is capable of handling 1.2 million TEUs per annum.

− Terminal throughput has doubled over the last one year t over 0.2 million TEUs in 2004-05.

− Work has begun on a second container terminal expected to double container capacity of the port by 2008 – 09

− 3 new CFS operators are set to begin operations in addition to the 3 existing CFS operators.



Pipavav− It is India’s first private sector port with

significant investments by the AP Moller-Maersk Group. Container traffic at Pipapav was 80,000 containers in 2005 and is expected to reach 0.25 million by 2006

− Pipavav has invested towards development of a modern container terminal which on completion will have a capacity of 1 million TEUs

− Facilities have been developed to handle double stacked container trains from the port till Jaipur ICD.

Kandla− Kandla currently has one terminal with a

capacity of around 700,000 TEU and is planning to develop another terminal by 2010-11 which would double its capacity

Mumbai− Mumbai is expected to develop an offshore

container terminal with a capacity of 1.2 Mn TEU by 2018-19.

Port of Rewas− Port of Rewas is being setup on the west

coast of Maharashtra. It is located near Karanja creek at mouth of the Patalganga river, about 10 Km from JNPT. The Reliance group has recently acquired a stake in the port. The port expects to handle various types of Cargo (dry, liquid and containers). The plans of the port available in public domain indicate that the port expects a capacity of about 3-4 Mn TEUs beyond 2018.

MumbaiJNPT

KandlaMundra

Pipavav

Competing Ports

Rewas

Non Captive Hinterland (Overlapping)

Captive Hinterland of JNPT

Map of competing ports with overlapping hinterland



Impact on JNPT

Analysis of competitor plans and discussion with port users and export promotion councils indicate that as the development plans of competitors would take time to fructify it is expected that JNPT would continue to capture a substantial proportion of the northern and western traffic for the next 5-6 years. However as competitors develop capacity and develop supporting infrastructure such as CFS etc the share of JNPT from northern regions could fall in the long term. Discussions also indicate that JNPT would continue to capture a substantial proportion of the Maharashtra traffic.

2. ICD Analysis and trends

Analysis of ICDs shows the following key trends:

A regional analysis of traffic from various ICDs to JNPT shows JNPT's growth in ICD traffic from northern regions is smaller compared to overall growth in Northern regions traffic. (This includes regions such as Delhi, UP, Uttaranchal etc). This may be because of ports in Gujarat increasing their proportion of the northern traffic. It is expected that as these players expand capacity , the traffic from northern region may get redistributed to these ports due to their proximity the north relative to JNPT.

ICD analysis shows that JNPT has been able to increase its share in the western region (primarily Maharashtra). Over the long term this region is expected to serve as a captive market for JNPT due to proximity to the region.

Exhibit 5.1.8 CAGR of traffic from ICDs between (02-03 to 05-06)

0.00%10.00%20.00%30.00%40.00%50.00%60.00%70.00%80.00%

Tugh

laka

bad

Ludh

iana

Jaip

ur

Agra

Ahm

edab

ad

Vado

dara

Pune

Nag

pur


Exhibit 5.1.9 CAGR of traffic from regions(02-03 to 05-06)

0.00%1.00%2.00%3.00%4.00%5.00%6.00%7.00%8.00%9.00%

10.00%

Nor

ther

nR

egio

n

Wes

tern

Reg

ion


Source: CONCOR, Ops Dept Data



Based on the above analysis it is anticipated that:

JNPT would continue to garner a major share of the traffic in Maharashtra as no other port in Maharashtra is expected to have similar infrastructure and traffic handling capabilities over the short to medium term.

JNPT's share from regions such as Gujarat would reduce substantially due to presence of competitor ports in the region (Mundra, Pipavav etc)

JNPT's share from northern regions would reduce as some of the Northern Region traffic will be diverted to competing ports

JNPT would continue to be a large container port in India

These inferences were discussed with port users, port departments and export promotion council to arrive at quantitative numbers for the current share of JNPT's traffic from various regions and expected share of traffic from the regions in the future. The results of these discussions are presented in Exhibit 5.1.10.

Exhibit 5.1.10 : Traffic potential for JNPT from various regions

* These numbers were arrived at through discussions with port users and export promotion councils

15%15 -20%Others

60 %

60 %

37 %

10 %

80 %

75 %

80%

80%

90 %

% of current traffic of the

region coming to JNPT*

40 %Madhya Pradesh

10 %Gujarat

5 %Karnataka

5 %Andhra Pradesh

40 %Punjab

40 %Delhi

40 %Uttaranchal

40 %Uttar Pradesh

80 %Maharashtra

% of future traffic of the

region coming to JNPT

State



The capacity assessment model and the share of traffic from various regions allowed an estimation of traffic that would arrive at JNPT from various regions. This was aggregated along with transshipment and empties volume to estimate future traffic potential.

JNPT would service primarily export import cargo with transshipment cargo being a small part of the total volumes handled. Currently JNPT consists of around 8-9% transshipment cargo and this is expected to continue. Since JNPT has chosen transshipment as one of the business areas and not a focus areas it is assumed that the transshipment percentage would remain similar to current levels of approximately 10%. Transshipment is expected to remain at similar levels due to the following reasons:

the trend in development of smaller ports in nearby region which might lead to an increase in coastal transshipment

the presence of ports with deeper drafts and emergence of ports such as Colombo as transshipment hubs would reduce transshipment traffic arriving at JNPT

Hence it is expected that while the volume of transshipment would increase the proportion of transshipment traffic at JNPT would continue to be around 10% and this would be largely coastal in nature.

Apart from this each TEU is assumed to contain around 13 to 14 tonnes of cargo.

2.282004-05

Exhibit 5.1.11 Projected Traffic potential for JNPTTraffic (Mn TEUs)Year

25.452026-2724.212025-2622.702024-2521.292023-2419.982022-2318.762021-2217.632020-2116.572019-2014.652018-1913.342017-1815.112016-1711.002015-169.952014-158.752013-147.702012-136.752011-125.932010-115.192009-104.432008-093.772007-083.222006-072.682005-06



The traffic potential at JNPT is shown in exhibit 5.1.11. Traffic potential for JNPT is predicted to be around 25 Mn TEUs. However, JNPT faces expansion constraints and therefore the traffic potential at JNPT is limited by the realistic estimate of overall capacity (under the current geographical and policy restrictions) at JNPT.

The overall capacity (under the current geographical and policy restrictions) for JNPT is estimated to be around 10.9 Mn TEUs by 2015-16 (this has been discussed in detail in the capacity assessment model, section 3).As can be seen the projections made by the model for the traffic in 2004-05 and 2005-06 are very close to the actual numbers. A comparison of the Actual and Predicted throughputs is given in the Exhibit 5.1.12

Inferences from Traffic Potential at JNPT

Saturation in 2016-17

The traffic potential for JNPT is increasing over the years to reach around 25 Mn TEUs in 2026-27, however JNPT would not be able to service this traffic as it will be constrained by its overall capacity (under the current geographical and policy restrictions) . This capacity is estimated to be around 10.9 Mn TEUs. (details of the same are available in section 3)

A check was made on the consistency of the forecasts by checking with the traffic for the years 04-05 and 05-06. The variation observed is less than 4%

Exhibit 5.1.12 Comparison of Actual and Predicated Traffic

2.67

2.28

Predicted (Mn TEUs)

-0.4%

3.8%

Variation

2.662005-06

2.372004-05

Actual (Mn TEUs)Year

Need for an additional port

This indicates the requirement of an additional port in Maharashtra either by private players or by the Government of India. A detailed analysis of locations suitable for such a port fall beyond the scope of this study however the projections indicate that there is potential for about 10 Mn TEU (between 2018-26) for a new port in this region.


5.1 Container Traffic Projections5.1.4 Traffic at JNPT

2.68 3.22 3.774.43

5.195.93

6.757.70

8.759.95

11.0012.11

13.34

16.3217.63

18.76

25.4524.21

22.7021.29

19.98

14.65

0.00

5.00

10.00

15.00

20.00

25.00

30.0020

05-0

6

2006

-07

2007

-08

2008

-09

2009

-10

2010

-11

2011

-12

2012

-13

2013

-14

2014

-15

2015

-16

2016

-17

2017

-18

2018

-19

2019

-20

2020

-21

2021

-22

2022

-23

2023

-24

2024

-25

2025

-26

2026

-27

Mn

TEU

s

Exhibit 5.1.13 JNPT's Traffic Projections

Capacity of the port would be 11.67 Million TEUs at 75% berth occupancy in 2015-16 and 2016-17. At 70% berth occupancy the overall capacity (under the current geographical and policy restrictions) of the port would be 10.9 Million TEUs by 2015-16.


5.2 Liquid traffic forecast

Introduction KPMG carried out a detailed set of forecasts for traffic at ports which can be classified into 4 distinct categories which are -

• Crude Oil• POL product• Liquid chemicals• Other liquids (includes Edible Oil/ Molasses)

JNPT currently services three of the four categories and it is expected to begin servicing the fourth category of crude oil shortly.Overview of forecast methodologyAs liquid cargo handled by a port could consist of products from various industries, KPMG has undertaken a broad assessment of each of the industries that could impact cargo growth in liquid traffic. The forecast for the traffic was developed at 2 levels

a. National level forecasts for each liquid categoryb. JNPT forecasts for each liquid category

A detailed methodology for forecast of individual categories has been included later in the section. A summary of the methodology is briefly discussed here. A national level demand-supply assessment is made along with an analysis of export-import traffic for the category. Industry research was utilized to arrive at export and import growth rates. These inputs were used to arrive at national level forecast for total traffic through Indian ports for the commodity. JNPT was apportioned a portion of the national level traffic based on certain key factors. These included -

• Expected growth rates through industry research• Regional/local variations and trends• Historical shares

Individual forecasts for each of the categories of liquid cargo are detailed over the next few pages.


5.2 Liquid traffic forecast5.2.1 Crude oil and POL product forecast

Basis for Crude/POL product traffic forecast

National forecast

The Oil and gas sector was studied to identify key trends that could impact the traffic through ports. Production and consumption mismatch in crude and POL product over the past few years was studied along with export/import trends. While India’s domestic consumption of crude and POL product has been rising steadily, India’s domestic production of crude has stagnated over the last few years. This has resulted in increasing imports of crude oil.

Several export oriented refineries are at various stages of being set up. This is expected to translate into significant rise in POL product exports. Current and planned refining capacity (from announced expansion plans of leading refiners) was assessed to arrive at the requirement for crude oil in the country. These inputs helped in arriving at a demand-supply assessment for crude and POL product in the medium term. Industry forecasts for growth rates were applied for the period beyond 2011-12 to arrive at the national level traffic forecast for POL and crude oil.

JNPT forecast

JNPT has no crude linkages with existing refineries and does not service crude traffic at present. All upcoming refineries have already established linkages with other ports. JNPT thus cannot expect any crude traffic through these upcoming refineries. ONGC plans to ship a part of its offshore crude production at Bombay High via JNPT to the coastal refinery of Mangalore from early 2007 onwards. JNPT crude forecasts are thus closely aligned with ONGC plans.

JNPT POL product traffic is largely coastal based traffic which has been grown in line with national trends of coastal traffic. JNPT can expect some increase in the POL export-import traffic due to plans of refining majors to increase refining capacity in Mumbai. Most of this increase in traffic can be expected to flow through Mumbai port with a small proportion flowing through JNPT. Coastal and exim traffic estimates were used to arrive at JNPT POL traffic forecast.

A detailed forecast has been made in the following pages with exhibit 5.2.1 indicating the methodology for the forecast.



Analysis of POL and crude export and import trends

Study of existing and planned refinery capacity by state

3

Source Data: Ministry of Petroleum

Analysis of crude production and consumption

Source Data: Ministry of Petroleum

2National projections for POL and crude traffic

4

Source : KPMG Analysis, Industry report


Regional crude linkages and

refinery trends

Source : KPMG Analysis, Industry data

Apportionment of national forecastSource: KPMG Analysis of regional trends

5a5b

Traffic projections

for JNPT

6

Projections for JNPT

Exhibit 5.2.1 – Methodology of POL and crude forecast

1


5.2 Liquid traffic forecast5.2.1 Crude oil and POL product forecast - Introduction

Overview of Current Energy Mix -

India is the fifth largest energy consumer in the world with primary commercial energy consumption in 2004 of 375.8 Million Metric Tonnes of Equivalent (MMTOE) (Source : BP statistical survey 2005). In 2004, the consumption of oil and gas formed a major percentage in the world energy consumption basket. In India, however, coal dominates the consumption basket with a share of 54% as seen in exhibit 5.2.2.

Energy consumption grew at an average compounded annual growth rate (CAGR) of 3.8 per cent in the period 1999-2005 with the GDP growing at CAGR of 6.3 per cent resulting into a very attractive GDP elasticity of little above 0.6.

Overview of Oil & Gas Sector -

• Largest contributor to the national exchequer in 2004-05 with taxes amounting to US$ 27 billion.

• Oil & Gas constituted 40 per cent of the primary energy source in 2004.

• India is the sixth largest crude oil consumer in the world with consumption at 122 MMT in 2003-2004.

• Petroleum, Oil Lubricants (POL) imports is 28 per cent of the total imports of India and POL exports is 8 per cent of total exports for 2004-05. (Source : PwC Analysis)

• All five Indian companies appearing on the Fortune 500 list operate in the Oil & Gas sector.

Exhibit 5.2.2 - India's Energy consumption basket 2004

Coal54%

Natural Gas8%

Oil32%

Hydro energy5%

Nuclear energy1%

• India is Ninth largest crude oil importer in the world

• India ranks sixth in refining capacity in the world with capacity at 2.5 million barrels of oil per day in 2004 which is 3 per cent of the world’s refining capacity

Source: India Brand Equity Foundation


5.2 Liquid traffic forecast5.2.1 Crude oil and POL product forecast - Introduction

Significant Sectoral Trends

The sector has been opened up to private and foreign investments with private players now able to bid for oil exploration blocks.

Movement from an administered price mechanism to a market driven mechanism has taken place.

India has also developed significant refining capabilities that capitalize on cost competitiveness and location advantage. There exists potential for India to emerge as a major refining hub over the next 5-10 years. By 2010, there is likely to exist a deficit of 112 Mtpa across the world owing to shutting down of select refineries. Several Export oriented refineries are being set up to capitalize on world shortage of refined product.

Refinery capacity is expected to go up from 2006 levels of 132 Mtpa to 243 Mtpa by 2011-12 based on projects under various stages of implementation. crude imports and refinery exports are expected to rise significantly based on this trend as has been the case over the last few years as seen in exhibit 5.2.3

Pipeline networks are being laid across the country to aid in the transport of POL product.

Source: KPMG India Energy Outlook

Exhibit 5.2.3 India’s petroleum exports on the rise since 2001 (in value terms)



Demand & Supply Overview of crude Oil - Step 1 & 2

The domestic production of crude oil has been in the range of 32-34 MMT over the past few years and is unlikely to increase in the absence of any significant discoveries of crude oil.

Consumption has been in excess of production as seen In exhibit 5.2.4 and has been growing at around 6% per annum over the last five years.

India meets 75 per cent of its crude oil demand through imports as seen in exhibit 5.2.5. Crude oil exports have been negligible historically. About 60 per cent of crude imports are from the Middle East.

Exhibit 5.2.4 India's Crude Oil Consumption and Production

32.4 32.0 33.0 33.4 34.0

103 107 112122

127

0.0

20.0

40.0

60.0

80.0

100.0

120.0

140.0

2000-01 2001-02 2002-03 2003-04 2004-05In m

illio

n m

etric

ton

nes

per

annu

m

ProductionConsumption

Source: Ministry of Petroleum & Natural gas

Exhibit 5.2.5 : Indian crude oil imports

74 79 8290 96

0

20

40

60

80

100

120

2000-01 2001-02 2002-03 2003-04 2004-05in

milli

on to

nnes

per

ann

um



Demand & Supply Overview of POL Product - Step 1 & 2

India’s POL product consumption has been growing at 3-3.5% annually with production overtaking consumption in recent years as seen in exhibit 5.2.6.

Mirroring the production trend, India has turned into a net exporter of POL product over the last few years as additional refining capacity is created as seen in exhibit 5.2.7.

Exhibit 5.2.7 :India POL product trade (in volume)

9.3

7.0 7.28.0

8.910.0 10.1 10.3

14.6

17.5

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

18.0

20.0

2000-01 2001-02 2002-03 2003-04 2004-05

in m

illio

n to

nnes

per

ann

umPOL importsPOL exports

Exhibit 5.2.6 : India's POL product Consumption and Production

83.0

99.6104.3

108.7117.6

122.7 124.0

97.1 100.1 100.4 104.1107.8 111.6 111.9

0.0

20.0

40.0

60.0

80.0

100.0

120.0

140.0

1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06

In m

illio

n m

etric

tonn

es p

er a

nnum P roduction

Consumption

Source: Ministry of Petroleum & Natural gas



Refinery : Current and Planned capacity -Step 3

The traffic assessment for crude and POL product was undertaken after taking into account the trend of increasing refining capacity.

Existing Refineries -

As of 1st April 2006, India had 18 refineries with a total installed capacity of 132 mtpa as seen in exhibit 5.2.8. Total refinery crude throughput for 2005-06 was 126 Mtpa. None of these refineries share crude linkages with JNPT.

Upcoming Refineries -

By 2011-12, an additional refining capacity of 111 mtpa is expected to be created.

Additional refining capacity is being set up at 14 different locations by 2011-12.

Of these 7 are existing refineries with plans for capacity augmentation. 7 refineries are being set up as greenfield ventures.

Details are seen in exhibit 5.2.9.

CapacityCrude Linkage withName of Refinery

Exhibit 5.2.8 : Installed capacity of Refineries (as of 1st April, 2006) in TMTPA

Krishna Godavari Basin

Jamnagar

Mangalore port

Assam Oil fields

Assam Oil fields, Haldia

Chennai port

Chennai port

Cochin port

Visakhapatnam port

Bombay High offshore, Mumbai port

Bombay High offshore, Mumbai port

Kandla Port

Assam Oil fields

Kandla Port

Haldia Port

Kandla Port

Haldia Port

Assam Oil fields

78ONGC-TATIPAKA

33000RIL-JAMNAGAR

9690MRPL-MANGALORE

3000NRL-NUMALIGARH

2350BRPL - BOGAINGAON

1000CPCL-NARIMANAM

9500CPCL-CHENNAI

7500KRL-KOCHI

7500HPC-VISAKHAPATNAM

5500 HPC-MUMBAI

12000BPC-MUMBAI

6000IOC-PANIPAT

650IOC-DIGBOI

8000IOC-MATHURA

6000IOC-HALDIA

13700IOC-KOYALI

6000IOC-BARAUNI

1000IOC-GUWAHATI




Exhibit 5.2.9: Year wise additions/ creation of Capacity by Refineries in India

(in Thousand Metric tonnes pa) *

Greenfield

Expansion

Greenfield

Greenfield

Expansion

Greenfield

Greenfield

Greenfield

Expansion

Expansion

Greenfield

Expansion

Expansion

Expansion

Type of Capacity creation

243871236171212871182201152201141701Total Capacity

236171212871182201152201141701132468Existing Capacity

7000233003067030000105009233Year wise additions

7000BPCL UP Lohagara

5300MRPL Mangalore

9000HPCL Bhatinda

9000IOCL Paradip

1500IOCL Haldia

6000Nagarjuna Cuddalore

6000BPCL Bina

7500ONGC Kakinada

3000BPCL Kochi

27000Reliance Jamnagar

10500ESSAR, Vadinar

30006000IOCL Panipat

2400HPCL Mumbai

6670833HPCL Visakhapatnam

2011-122010-112009-102008-092007-082006-07Name of Refinery

Source: KPMG Analysis, Existing plans of industry

* - Based on project announcements till July 15, 2006



Crude Linkages for planned refineries -

As seen in exhibit 5.2.10, the majority of the refineries planned are coastal and will have crude linkages with existing ports through creation of single bouy mooring facility off the coast.

Existing refineries being augmented already have established crude linkages with specific ports.

The 4 refineries to be established inland, have crude linkages planned with the Gujarat ports of Vadinar and Mundra.

Additional refinery capacity in Mumbai region will source crude through imports from Mumbai port as well as crude from ONGC’s offshore production via Bombay High.

JNPT is unlikely to have a linkage with any of these planned refineries for import of crude.

Exhibit 5.2.10: Location of Additional refining capacities till 2011-12


Jamnagar

Mumbai

JNPT

Cochin

New Mangalore

Haldia

Paradeep

Visakhapatnam

Cuddalore

Panipat

Vadinar

Kakinada

Bina

Bhatinda

LohagaraPlanned crude Linkage for inland refineries with Gujarat ports

Additional refinery Capacity



National projections for crude and POL product traffic – Step 4

Significant assumptions in the forecast

India’s energy consumption has grown at the rate of 3.6% between 1999-2005. In line with this trend as well as industry research we assume growth in POL consumption at 3.6% from FY06-07 till FY11-12. To be on the conservative side we reduce this growth to 3% beyond 2011-12. Overall assumptions are well in line with India’s CAGR of petroleum product consumption of 3-3.5% between 2001-05.

POL exports are expected to substantially increase with the setting up of large refining capacities. POL exports have been linked with this increasing refinery capacity till 2011-12 and are grown at a conservative 3% beyond 2011-12.

Indian POL imports have historically grown at 5% since 2001. Given the planned increase in Indian refining capacities by over 90%, it is likely growth rate in imports will be lower than historical levels. Additional refining capacity would satisfy a large percentage of local consumption requirements. A POL product import growth rate of 3% was taken FY06-07 onwards based on our analysis as well as industry research.

Domestic oil production in India has stagnated between 32-34 Mtpa for the last few years. In the absence of any fresh crude discoveries it is expected that Indian crude production will start shrinking in a few years. Industry research indicates a decrease of 25-30% by 2025. Accordingly a degrowth of 2.2% a year has been taken into domestic production from 2012-13.

Coastal traffic of POL product is currently a significant portion of total traffic as it is used to distribute products through the country. However with new greenfield refineries being established along with pipeline networks, coastal traffic of POL product as a percentage of total POL traffic is expected to reduce. This has been factored into the forecast with coastal tonnage as a percentage of refinery production reduced proportionately to 10% in FY24-25 from current level of 25%.

Crude throughput as a percentage of refinery capacity have been maintained at 95% from empirical industry data.

Refinery production of POL product as a percentage of crude throughput has been maintained at 95% from empirical industry data.

Crude oil exports are assumed to be nil as has been the case historically. This is unlikely to change owing to the increasing energy consumption by India and low domestic production. All domestic production of crude is expected to be consumed by local refineries.

Sources : KPMG India Energy Outlook 2006, Ministry of Petroleum and Natural Gas, RITES Report, Cygnus Industry Insight – Oil and Gas industry


5.2 Liquid traffic forecast5.2.1 India Crude and POL forecast

Methodology for Crude forecast – Step 4Crude traffic in ports is a sum of two kinds of traffic – import traffic and offshore crude traffic. Crude consumption in refineries was obtained from the total refining capacity planned upto FY 11-12. As domestic production is likely to be completely consumed by refineries, the crude consumption was adjusted with domestic production to arrive at expected import traffic. Offshore production is generally transferred coastally to the nearest port. In Bombay High’s case some portion of offshore production is transferred by pipeline to Mumbai refineries. Hence, coastal traffic for crude is total production adjusted for Bombay High production sent by pipeline. Crude requirements till 2011-12 were obtained from the sum of import and coastal traffic. Beyond 2011-12, POL consumption and POL export trends were utilized to arrive at total refinery production and in turn to arrive at requirements for crude. National level crude forecast -Based on the above methodology the national level forecast for crude traffic is 321 million tonnes in 2024-25 as seen in exhibit 5.2.11

Exhibit 5.2.11 : National Level Crude traffic projections


5.2 Liquid traffic forecast5.2.1 India POL Product forecast

Methodology for POL Product forecast – Step 4 Total POL product traffic in the country was taken as the sum of import, export and coastal traffic.Coastal traffic was obtained as a percentage of refinery production. POL imports were grown from current levels based on industry forecast. Forecasted refinery production was adjusted for POL import and consumption trends to arrive at POL product exports.The sum of these forecasts was used to arrive at national POL product traffic. National level POL product forecast -National level forecast for POL product traffic is 229 million tonnes in 2024-25 in exhibit 5.2.12.

Exhibit 5.2.12 : National POL product traffic projections


5.2 Liquid traffic forecast5.2.1 JNPT Crude and POL forecast

JNPT Crude and POL forecast – Step 5

Having arrived at national level forecasts for crude and POL product, we attempted to apportion a portion of the national level traffic to JNPT via a study of regional trends in traffic growth. In JNPT's context the absence of any refinery linkages meant that crude forecasts had to be studied on the basis of regional traffic.

ONGC Crude Scenario -

Oil and Natural Gas Corporation (ONGC) controls the single largest source of India’s crude production in Bombay High off the shore of Mumbai. It also owns Mangalore refinery and petrochemicals Limited (MRPL) that operates a 9.7 Mtpa refinery in Mangalore. This refinery is carrying out an expansion to reach 15 Mtpa by 2010-11.

Currently ONGC has a submarine pipeline that originates from Bombay High and passes by its Uran oil fields (in the vicinity of JNPT). This submarine pipeline then extends to the oil terminal Butcher island of Mumbai port as well as the refineries of HPCL and BPCL.

ONGC aims to begin coastal shipment of Bombay High production crude via JNPT to its coastal refinery in Mangalore. This is because it saves them substantial distance and time over sending crude via Mumbai port as seen from exhibit 5.2.13

ONGC is currently in the final stages of building a pipeline network connecting the BPCL jetty at JNPT to the Uran segment of its pipeline. This will allow them to pump crude from Uran to JNPT to be coastally shipped by its vessels to its refinery in Mangalore as well as other refineries along the west coast.

ONGC aims to begin operations of the pipeline by Dec 2006/Jan 2007 and go from 1 Mtpa to 6 Mtpa by 2024-25. This depends on the availability of berthing schedules at BPCL’s liquid jetty.

This scenario is illustrated in the map of Mumbai harbour in exhibit 5.2.13.


Uran to BPCL jetty Pipeline

Existing ONGC Pipeline to

Mumbai Port

JNPT to Mangalore

Exhibit 5.2.13

ONGC crude scenario

BPCL Jetty

MbPT Oil terminal


5.2 Liquid traffic forecast5.2.1 JNPT Crude forecast

Methodology for JNPT Crude forecast – Step 5JNPT crude forecasts are closely aligned with ONGC crude forecasts starting at 1 Mtpa in 2007-08 rising to 6 Mtpa by 2024-25. For the period beyond 2011-12 certain additional refinery capacity is expected to be set up inline with consumption trends. JNPT as a port located in proximity to the crude hub may attract some portion of incremental refining crude beyond 2011-12. We assume 5% of incremental national refinery production beyond 2011-12 as crude volumes that may be handled by JNPT. JNPT Crude forecast -JNPT forecast for crude traffic at JNPT is 6.49 million tonnes in 2024-25 as seen in exhibit 5.2.14.

Exhibit 5.2.14 : JNPT Crude traffic projections


5.2 Liquid traffic forecast5.2.1 JNPT POL product forecast

Methodology for JNPT POL product forecast – Step 5JNPT POL product traffic is largely coastal and this component is expected to continue to grow at the nationwide historical rate of 5%. The regional POL product traffic is expected to increase in the next couple of years due to expected growth of refining capacity in Mumbai region by 2007-08. The bulk of this traffic is expected to be handled by Mumbai port. With the growth in Mumbai refining capacity , JNPT export traffic is expected to grow faster than import traffic. Accordingly an export growth rates of 7% and import growth rate of 5% was used to arrive at total export-import traffic for JNPT. The sum of coastal and export import traffic was taken to arrive at JNPT's total traffic.

JNPT Crude forecast -Forecast for POL product traffic at JNPT is 6.27 million tonnes in 2024-25 as seen in exhibit 5.2.15.

Exhibit 5.2.15 : JNPT POL product traffic projections


5.2 Liquid traffic forecast5.2.2 Edible Oil and Molasses forecast

Basis for Edible Oil and Molasses forecast

The edible oil sector was studied to identify key trends that could impact the traffic through ports. India’s edible oil consumption has been rising by 7% annually. It is expected that this will continue as per capita consumption is well below world average. There has traditionally been a production consumption mismatch necessitating large edible oil imports. At the same time domestic production has been fluctuating significantly resulting in variable edible oil traffic.

Suitable assumptions on production and consumption growth rates were taken for edible oil and molasses to arrive at a forecast for traffic at a national level.

In light of fluctuating nature of the cargo, it was attempted to be conservative in forecasting JNPT share. State wise share of national production and consumption was arrived at using data from the Annual survey of Industries. Apportioning of state wise outputs was done to arrive at JNPT traffic based on industry research/ historical data. JNPT was found to have a significant share of the molasses market with edible oil traffic originating from its primary hinterland of Maharashtra.

JNPT share of the national edible oil and molasses traffic was found to be around 13%. A detailed forecast has been made in the following pages.

Source: Annual report, Ministry of Agriculture



Significant Trends in the Industry -

With steady growth in population and personal income, Indian per capita consumption of edible oil has been growing but is still far below world average as seen in exhibit 5.2.16.

Vegetable oil production has been trailing consumption growth, necessitating imports to meet supply shortfall as seen in exhibit 5.2.17.

Domestic oil seed output typically shows a fluctuating production trend which impacts edible oil supply.

Imports currently constitute 45% of the consumption and this share may rise in the future.

Exhibit 5.2.17 : India Edible Oil Production and Consumption

54996146

4728

71097664

967610468

9093

12404 12500

0

2000

4000

6000

8000

10000

12000

14000

2000-01 2001-02 2002-03 2003-04 2004-05

n th

ousa

nd m

etric

tonn

es p

er a

nnum

Production

Consumption

Exhibit 5.2.16 : Edible oil consumption per capita

0

5

10

15

20

25

1998-1999 1999-2000 2000-2001 2001-2002 2002-2003 2003-2004

Kgs/

annu

m

IndiaWorld

Source: Solvent Extractor’s Association of India, Annual report - Ministry of Agriculture



Assumptions -

Growth in edible oil consumption was taken at taken at 7.3% till 2011-12. This was the predicted growth rate for edible oil consumption from the Exchange Traded Commodities Outlook 2006. Industry research indicates that beyond this period edible oil consumption growth is likely to slow down as Indian per capita consumption would have increased significantly to be close to current world levels. Accordingly a growth rate of 5% has been taken beyond 2011-12.

Edible oil production growth has consistently lagged behind consumption growth over the past few years. As per Solvent Extractor’s association estimates this is likely to continue going forward. Accordingly a production growth of 5% in line with the industry estimates is taken from 2006-07 onwards.

Edible oil exports have traditionally shown a fluctuating trend and these are grown at 3% in a conservative estimate from 2006-07 onwards.

Molasses imports and exports are expected to grow at 3% annually based on industry research.

Methodology -

National Edible oil traffic was determined from the sum of import and export traffic.

Export and import traffic in edible oil and molasses was arrived at from Directorate General of Foreign Trade , Ministry of Commerce statistics for 3 years till 2005-06. Domestic consumption and production of these liquids was grown at specific percentages.

Import traffic was grown at a specified percentage. The differences between edible oil consumption and production was used to arrive at annual import traffic.

Port traffic was assumed to be 95% of total import and export traffic.

Source: Solvent Extractor’s Association of India, Annual report -Ministry of Agriculture, Exchange Traded Commodities Outlook 2006


5.2 Liquid traffic forecast5.2.2 India Edible Oil and Molasses forecast

National level forecast -

Based on the above methodology, national level forecast for Edible oil and Molasses traffic is 16.2 million tonnes in 2024-25 as seen in exhibit 5.2.18.

Exhibit 5.2.18 : National Edible oil and Molasses forecast


5.2 Liquid traffic forecast5.2.2 JNPT Edible Oil and Molasses forecast

JNPT forecasts -

Annual survey of Industries (ASI) gives state wise outputs and inputs for each industry. State wise traffic for each state was arrived at by mapping onto ASI data for edible oil and molasses industry and was projected upto 2024-25. Maharashtra traffic of edible oil exports and imports was calculated.

JNPT has historically had a share of 90% of edible oil exports and 15% of imports from Maharashtra. These percentages are likely to be maintained going forward and have been used to arrive at JNPT's edible oil traffic.

JNPT is expected to retain its share of 40% in a growing national molasses traffic. This percentage share was used to arrive at national molasses export and import traffic till 2024-25.

Based on the above methodology, JNPT's forecast for edible oil and molasses traffic for 2024-25 is 2.1 million tonnes as seen in exhibit 5.2.19.

Exhibit 5.2.19 : JNPT Edible oil and Molasses forecast


5.2 Liquid traffic forecast5.2.3 Liquid chemical forecast

Basis for liquid chemical forecast

Liquid chemicals are a diverse set of chemicals/ petrochemicals. Their growth depends on the specific segment of the chemical/petrochemical industry they are associated with.

Liquid chemical forecast was limited to a set of 7-8 chemicals that JNPT is capable of handling. Having defined theuniverse of chemicals, each of their related segments in the chemical/petrochemical industry were studied for trends and usage in those industries. Suitable growth rates were assumed from these industries and applied to arrive at national level traffic for this universe of liquid chemicals.

State wise share of national production and consumption for each of these chemicals was arrived at using data from the Annual survey of Industries. Aggregation of individual chemical data and apportionment of state wise traffic was done to arrive at JNPT traffic. JNPT's liquid chemical market was found to be closely aligned to its primary hinterland of Maharashtra.

As per our forecasts JNPT's share of the national liquid chemical market was found to be less than 3%. A detailed forecast has been made in the following pages.

Source: Annual report, Ministry of Chemicals, Cygnus Chemicals Industry insight, Industry research, KPMG Analysis



Definition -Sector definition is limited to liquid chemicals of class A, B and C handled by JNPT in the past. These chemicals as listed below are -

• Xylene• Paraxylene• Styrene• Butyl Acralate• Phosphoric Acid• Acetic Acid• Linear Alkyl Benzene (LAB)• Mono ethylene glycol (MEG)

Significant Trends in the Sector -Liquid chemicals is not classified separately as a industry – it Is dependant on growth of chemical and petrochemical industries.Indian per capita petrochemical consumption is rising significantly.Significant refinery capacity is being set up which is expected to enhance liquid chemical production as by products of the refining process. Aromatics such as Xylene and styrene are used in further down stream production of various petrochemical products.Surfactants such as LAB used for cleansing are expected to see rise in exports owing to surplus capacities and shortages abroad.Basic chemicals industry has shown a consistent growth rate of over 8% with exports and imports rapidly increasing.Chemicals/ petrochemical industry is dominated by the state of Gujarat with over 50% share of production with Maharashtra being the second highest producer with approximately 15% share.



Significant Assumptions -

Four main classifications of the liquid chemical products are created based on usage -

• Surfactants such as LAB

• Aromatics such as styrene, xylene

• Acids/basic chemicals such as phosphoric acid, acetic acid

• MEG (Mono ethylene glycol)

Industry research indicated that India has a surplus capacity of LAB coupled with a shortage abroad. Growth rates of exports have been over 12% over the last 2 years and are expected to rise further. Accordingly LAB exports were grown at 15% till FY11-12. LAB imports have reduced substantially over the last few years as India has set up capacity. Imports have shown a degrowth and this has been maintained at a rate of 5%

Requirement for aromatics such as styrene and xylene has increased with the growth in petrochemical industry have Industry research indicates an import growth at 7% till FY11-12. Beyond this period export growth is expected to slow down. Accordingly this has been taken at 5% beyond 2011-12.

The acids component of the chemicals industry has stagnated with import and export growth rates hovering around 3% as per industry research. Accordingly 3% is the growth taken from current levels for acids. MEG trade has shown a similar trend.

Methodology -

National liquid chemical traffic is determined from the sum of import and export traffic. Export and import traffic for the last 3 years was arrived at from Directorate General of Foreign Trade , Ministry of Commerce statistics. Exports and imports are grown at specified percentages as discussed in the assumptions above. These were aggregated to arrive at national liquid chemical traffic.

Source: Annual report, Ministry of Chemicals, Cygnus Chemicals Industry insight, Industry research, KPMG Analysis


5.2 Liquid traffic forecast5.2.3 India liquid chemical forecast

National liquid chemical Forecast -

Based on the above methodology, national level forecast for liquid chemical traffic is 22.3 million tonnes in 2024-25 as seen in exhibit 5.2.20.

Exhibit 5.2.20 : National liquid chemical forecast


5.2 Liquid traffic forecast5.2.2 JNPT liquid chemical forecast

JNPT forecasts -

Annual survey of Industries (ASI) gives state wise outputs and inputs for each industry. State wise traffic for each state was arrived at by mapping onto ASI data for chemical industry and was projected upto 2024-25. Maharashtra traffic of chemicals was calculated.

JNPT has historically had a share of 32% of liquid chemical imports and 40% of liquid chemical exports from Maharashtra. These percentages are likely to be maintained going forward and have been used to arrive at JNPT's liquid chemical traffic.

Based on the above methodology, JNPT forecast for liquid chemical traffic in 2024-25 is 0.57 million tonnes as seen in exhibit 5.2.21.

Exhibit 5.2.21 : JNPT liquid chemical forecast



Exhibit 5.2.22 : Overall national liquid forecast

214.9 231.5 250.1

312.4

375.1420.5 429.3 438.8 448.9 459.4 470.2 481.5 493.3 505.5 518.1 531.2 544.8 558.9 573.5 588.7

0.0

100.0

200.0

300.0

400.0

500.0

600.0

700.020

05-0

6

2006

-07

2007

-08

2008

-09

2009

-10

2010

-11

2011

-12

2012

-13

2013

-14

2014

-15

2015

-16

2016

-17

2017

-18

2018

-19

2019

-20

2020

-21

2021

-22

2022

-23

2023

-24

2024

-25

in M

illion

tonn

es p

er a

nnum

Crude POL Edible Oil/ M olasses Chemical Total

\

The overall national liquid traffic forecast reaches 588.7 million tonnes per annum (in 2024-25) as seen in exhibit 5.2.22



Exhibit 5.2.23 : Overall liquid forecast at JNPT

3.3 3.5

4.7 5.0 5.2 5.5

7.88.3 8.6 8.8

10.1 10.4 10.7 11.1 11.4

12.8 13.1 13.5 14.0

15.4

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

18.020

05-0

6

2006

-07

2007

-08

2008

-09

2009

-10

2010

-11

2011

-12

2012

-13

2013

-14

2014

-15

2015

-16

2016

-17

2017

-18

2018

-19

2019

-20

2020

-21

2021

-22

2022

-23

2023

-24

2024

-25

in M

illion

tonn

es p

er a

nnum

Crude POL Edible Oil/ M olasses Chemical Total

\

JNPT is forecasted to have less than 3% of total national traffic in liquids by 2024-25. Total traffic is expected to rise upto 15.4 million tonnes per annum by 2024-25 as seen in exhibit 5.2.23.


5.3 Vessel forecast5.3.1 Vessel Sizes on the Europe Asia Route

A substantial portion of the traffic in JNPT consists of ships plying on the Europe Asia Route. A break up of the traffic at JNPT as seen in exhibit 5.3.1 shows that about 75% of traffic is Europe, Mid East or far east traffic. As a result the vessel forecast for JNPT would depend primarily on vessel sizes on the Europe Asia route.

The vessel size break-up as of 2004-05 at JNPT is shown in exhibit 5.3.2. To arrive at the future vessel sizes, the vessel size projections for the Europe Asia route was used. This was calculated on the basis of the UNESCAP study titled Regional Shipping and port development strategies.

The base case scenario proposed by the UNESCAP study on Regional Shipping is adopted to evaluate developments in vessel sizes. The base case scenario explores a relatively conservative hypothesis. This is that the growing demand for the carriage of containerized cargoes will be met by a continuation of the slow ‘creep’ in ship size similar to that which characterized the 1970s and 1980s. This is combined with an increase in the number of ‘strings’ (as each service offered by a consortium of liner shipping companies has come to be known) that are operated in each of the major trades. The number of ports included on each string is similar to the number included on the major services of today.

The base case scenario has been chosen to identify sea side requirements for JNPT as the port does not lie on any of the major shipping routes, where the big ship scenario is applicable.

Exhibit 5.3.2 : Vessel Size Break up at JNPT -Current

ProportionTEU

0.00%8001-13000

5.10%5500-8000

14.58%3500-5500

58.75%1750-3500

15.72%750 - 1750

5.84%< 750

29.34 %

20.21 %

18.17 %

8.09 % 14.60 %

2.06%

Source: JNPT, Ops Department & CES report

Exhibit 5.3.1: Region wise Container Traffic


5.3 Vessel forecast5.3.1 Vessel Sizes on the Europe Asia Route

Expected change in vessel size composition on the Europe Asia route between 2006 and 2011 has been shown in exhibit 5.3.3 with their CAGR of the change in proportion. For example if the proportion of 750-1750 TEU vessels in 2006 is 29.62% which reduces to 28.95% in 2011 the CAGR of the proportion would be -.45%. At the same time the number of ships of 750-1750 TEU may have increased.

The growth rate of the Europe Asia route (as estimated by the UNESCAP study) consists of transhipment, coastal as well as export import traffic. Discussions with port users and shipping lines also indicate that 3500 – 6000 TEU ships that ply on main trade routes (Europe Asia, Europe Far East, America- far east, transpacific) will be replaced by larger ships (above 8000 TEU) and the replaced ships would be deployed on the Europe Asia route. This would lead to a higher growth rate in the 3500-5500 TEU bracket than that predicted by the UNESCAP model. Historical data and discussion with the port indicate that 750-3500 TEU ships are witnessing a reduction in proportion.

Discussions with experts and shipping lines indicate that the average growth rate of ship sizes would be around 2 -2.5% on the Europe Asia route.

Based on the above the growth rates as predicted by the UNESCAP model have been corrected based on discussions with port users and analysis of historical data at JNPT.

JNPT vessel composition predictions for future years were found on the basis of corrected growth rates for the Europe Asia route as seen in exhibit 5.3.4.

Exhibit 5.3.3 Vessel Sizes on the Europe Asia Route

Source: KPMG Analysis, ASEAN Maritime Transport Development Study, UN ESCAP 2001 ‘Globalization and Integration of Transport: Regional Shipping and Port Development Strategies’Apart from this the 8001-13000 Ship Bracket is assumed to grow at the average rate of 0.03%

0.15%13.89%13.78%5500-8000

0.41%14.66%14.37%3500-5500

0.53%25.69%25.02%1750-3500

-0.45%28.95%29.62%750 - 1750

-0.47%16.81%17.21%< 750

CAGR in vessel

proportion2011

(Base)2006Size (TEU)

Exhibit 5.3.4 : CAGR in vessel proportion

Source: KPMG Analysis, Discussions with port users

0.15%

0.41%

0.53%

-0.45%

-0.47%

CAGR in vessel proportion (UNESCAP)

0.40%

1.20%

-0.85%

-1.35%

-1.41%

CAGR in vessel proportion (Corrected)

5500-8000

3500-5500

1750-3500

750 - 1750

< 750

Size (TEU)


5.3 Vessel forecast5.3.2 JNPT capabilities

JNPT's capabilities in handling large vessels would also determine the future vessel traffic at JNPT. Currently due to certain constraints in the channel JNPT cannot service ships beyond 4000 TEU (fully laden) and 6000 TEU (partially laden). The channel draft is restricted to 12-12.5m and ships requiring deeper draft cannot be serviced by JNPT.

Shipping lines are likely to send smaller ships to JNPT if it is unable to service the larger ships in their fleet. However, through discussions with ship owners it is believed that a world class port should be able to handle 82 -85% of the vessel types plying on its route (In this case the Europe Asia route). Otherwise shippers may move to another port which can service a larger proportion of their fleet.

Exhibit 5.3.5 shows the proportion of vessels that can be serviced by JNPT within each size category. A homogenous distribution of ships across each size category was assumed to arrive at the figure.

As illustrated in the exhibit JNPT can currently service only a limited number of 5500-8000 TEU ships since it can only service partially laden 6000 TEU ships.

* Figures based on discussions with port

Exhibit 5.3.5 Vessels that can be serviced by JNPT

0%

5%

38%

100%

100%

100%

Percent Accommo

dation

8001-13000

JNPT can service ships upto 6000 TEU partially

laden5501-8000

JNPT can only accommodate 4000 TEU

vessels fully laden and vessels upto 5500 TEU

partially laden3500-5500

All vessels in this bracket can be serviced by JNPT1751-3500

All vessels in this bracket can be serviced by JNPT750 - 1750

All vessels in this bracket can be serviced by JNPT< 750

DescriptionTEUs


5.3 Vessel forecast5.3.3 JNPT sea side traffic

Future Vessel Calls in containers

The parcel size currently at JNPT is around 1319.10 TEUs. This is expected to grow at the rate of 5.36% every year. This growth rate is based on actual growth rates witnessed in parcel sizes over the past three years, from 1237.6 to 1319.1 between 2003-04 to 2005-06. The traffic beyond JNPT 2015-16 is expected to remain constant as it is expected that JNPT would reach its realistic overall capacity (under the current geographical and policy restrictions) of around 10.90 Mn TEUs in 2015-16.

The average parcel size along with traffic projections can be used to arrive at future vessel calls at JNPT. Average parcel size 2016-17 onwards continues to grow given the trend of increased ship sizes. This has been shown in Exhibit 5.3.6. This reflects in the reduced number of vessel calls of all sizes 2016-17 onwards.

Future Vessel Break Up in containers

The future vessel break up at JNPT would be dependent on vessel sizes on the Europe Asia Route (Exhibit 5.3.2) and the current vessel composition at JNPT.

Analysis of the current vessel composition and application of the growth rate of the vessels on the Europe Asia route enables estimation of future traffic composition.

Estimates of the future traffic composition at JNPT can be seen in exhibit 5.3.7.

Exhibit 5.3.6 Future Container vessel Calls at JNPT

Vessel Calls

Avg Parcel Size (TEUs)

Traffic Handled

(Mn TEUs)Year

29363,748.55 11.002026-27 30933,557.82 11.002025-26 32593,376.80 11.002024-25 34343,204.98 11.002023-24 36183,041.91 11.002022-23 38122,887.13 11.002021-22 40162,740.23 11.002020-21 42312,600.81 11.002019-20 44582,468.48 11.002018-19 46972,342.88 11.002017-18 49492,223.67 11.002016-17 52142,110.53 11.00 2015-16 49692,003.14 9.95 2014-15 46011,901.22 8.75 2013-14 42661,804.48 7.70 2012-13 39411,712.67 6.75 2011-12 36471,625.53 5.93 2010-11 33671,542.82 5.19 2009-10 30231,464.32 4.43 2008-09 27141,389.81 3.77 2007-08 24411,319.10 3.22 2006-07



The expected composition of vessels at JNPT is given below.

As can be seen an increase in the proportion of vessels between the 3500-8000 TEU range is expected indicating increasing ship sizes at JNPT. Using the above and the total vessel calls expected (Exhibit 5.3.6) the future container vessel calls at JNPT can be predicted (Exhibit 5.3.8)

Exhibit 5.3.7 Expected Vessel Composition for containers at JNPT (in Percentage)

2026-272025-262024-252021-222018-192015-162012-132009-102006-07TEUs

0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%8001-13000

6.14%6.09%6.04%5.83%5.72%5.57%5.41%5.26%5.10%5501-8000

20.58%20.25%19.91%18.62%18.00%17.09%16.22%15.39%14.58%3501-5500

55.07%55.29%55.50%56.33%56.72%57.28%57.81%58.30%58.75%1751-3500

13.32%13.44%13.56%14.05%14.29%14.65%15.01%15.37%15.72%750 – 1750

4.88%4.93%4.98%5.17%5.26%5.41%5.55%5.69%5.84%< 750



4,969 4,6014,2663,9413,6473,3673,0232,7152,441Total

Exhibit 5.3.8 :JNPT Vessel Composition for containers (2006-15) *

2014-152013-142012-132011-122010-112009-102008-092007-082006-07TEUs

8001-13000

274 251 231 211 194 177 157 140 125 5501-8000

835 760 692 628 571 518 457 403 356 3501-5500

2,855 2,652 2,466 2,285 2,120 1,963 1,767 1,591 1,434 1751-3500

734 685 640 596 556 517 468 424 384 750 – 1750

271 253 237 221 206 192 174 157 142 < 750

2,935 3,093 3,259 3,435 3,618 3,812 4,016 4,231 4,458 4,697 4,949 5,214 Total

Exhibit 5.3.8 : JNPT Vessel Composition for containers (2015-27)

266

831

2,673

677

250

2017-18

278

861

2,826

719

265

2016-17

290

891

2,987

764

282

2015-16 2026-272025-262024-252023-242022-232021-222020-212019-202018-19TEUs

8001-13000

180 188 197 206 215 224 234 244 255 5501-8000

604 626 649 673 697 722 748 775 802 3501-5500

1,617 1,710 1,809 1,913 2,023 2,140 2,262 2,392 2,529 1751-3500

391 416 442 470 499 531 564 599 637 750 – 1750

143 153 162 173 184 195 208 221 235 < 750

* - Individual categories of ships have been brought to their closest integer



Liquid Cargo -JNPT has liquid vessels of several sizes visiting it ranging from ships less than 10000 DWT carrying chemicals to ships of uptil 50000 DWT carrying POL product.The average parcel size of liquid vessels calling at JNPT in 2005-06 was 10739 tonnes. Parcel sizes for various product categories vary between 12446 tons for POL product to 2944 tonnes for chemical as seen in exhibit 5.3.9.The average parcel size for individual categories has been grown at 3% annually to arrive at overall parcel size. The traffic for individual categories along with parcel size is usedto arrive at the expected number of vessel calls in the future.Exhibit 5.3.10 presents the expected number of liquid cargo vessel calls for JNPT.

Exhibit 5.3.9: Liquid vessel calls and parcel size by product category (in2005-06)

10739310Overall

1047010Molasses

1071751Edible Oil

294460Chemicals

12446189POL product

Average parcel Size

(in tons)

Number of vessel calls

Current Category

Exhibit 5.3.10: Liquid traffic forecast of annual vessel calls

609584578572567540534529524520Vessel Calls

25253238972341722951224982112620698202821987719483Parcel Size

15390139511353413137127591140011058107331042410129Product Forecast (in TMTPA)

2024-25

2023-24

2022-23

2021-22

2020-21

2019-20

2018-19

2017-18

2016-17

2015-16

490485480467398387376364327310355Vessel Calls

180781770617337166181378013514132591301311033107399819Parcel Size

88498583832277625485522549814742361233293486Product Forecast (in TMTPA)

2014-15

2013-14

2012-13

2011-12

2010-11

2009-10

2008-09

2007-08

2006-07

2005-06

2004-05


Chapter 6

Internal infrastructure assessment and project

identification


6.1 Internal Infrastructure Requirements6.1.1 Need for Integrated Capacity Assessment Model

Capacity of a port is determined by a number of elements that contribute to the overall functioning of a port. It is important to realize that capacities of these direct and indirect elements involved in the port and their interdependencies may potentially inhibit a port from achieving its full capacity.

Any capacity addition in a port therefore needs to be looked at from an integrated perspective by identifying various projects across the ports process chain that need to be undertaken.

KPMG has developed an integrated capacity assessment model to identify bottlenecks and constraints that would be faced by the port every year and the projects that need to be undertaken to remove the bottlenecks to achieve the strategic goals of the port.

The model is based on the following three principles:

1. Identification of interdependencies between various processes

2. Quantitative assessment of capacities across each element (using assumptions obtained from the port and KPMG)

3. Assessment of required capacities every year based on traffic forecasts (provided in section 5)

The model has also attempted to exploit synergies that exist by phasing projects while keeping replacement cycles of the equipment in mind. Extensive discussions with port personnel in operations, finance and planning department were done to identify projects that need to be undertaken to ensure that phasing of the project overlaps with replacement cycles of the equipment thereby ensuring effective cost management.

The basis for the model is the traffic projections which have been broken down into the following :

Rail and Road – The traffic proportion between rail and road has been taken on the basis of traffic projections. To ensure that all points the model plans for excess capacity of around 10%, the rail and road traffic has been increased by 10%. (Rail & Road split has been explained in Annexure 1.7)

Exports, Imports and Transshipment – The traffic has been divided into exports and imports on the basis of growth rates of exports and imports from the country across various industries (See section 5.1). Transshipment has been assumed at 10% during the plan period based on the following trends:

− the trend in development of ports in nearby region which might lead to an increase in transshipment,− the presence of ports with deeper drafts and emergence of ports in the south such as Colombo as

transshipment hubs would reduce transshipment traffic arriving at JNPTHence it is expected that while the volume of transshipment would increase the proportion of transshipment traffic at JNPT would continue to be around 10%


6.1 Internal Infrastructure Requirements6.1.2 Introduction to Integrated Capacity Assessment Model

The integrated capacity assessment model consists of the following modules and respective outputs from each them:

Requirement of Berth capacity

Requirement of Pipelines

Requirement of Tank farms

Cargo Capacity (Liquids)

Requirement of CFSs

Requirement of Empties storage yards

Storage Capacity

Requirement for rail capacity (number of tracks) within the port

Requirement of RMGCs

Requirement of road (from highway to port vicinity) capacity

Requirement of rail (from port vicinity to port) capacity

Hinterland Capacity

Requirement of RMQC

Requirement of Reach stackers

Requirement of RTGCs

Requirement of Tractor Trailers

Requirement of Import yard Capacity

Requirement of Export Yard Capacity

Requirement of Gate Capacity

Cargo capacity (Containers)

Requirements of pilots

Requirement of Pilot Launches

Requirement of Tugs

Expected ship sizes and number of calls

Sea Side capacity

OutputModule



The individual module interlink the dependencies and process flows to arrive at the output. The interdependencies and process flow considered for each of the module is provided below:

Sea Side capacity

The traffic forecasts were used in conjunction with the average parcel size to arrive at the number of ship calls that are expected.

Detailed discussions with marine department were dome to arrive at assumptions for the number of tugs/pilots etc that would be required to service a ship call at JNPT.

1.00 Tugs are required per ship/day or 0.5 tugs per movement / day would be required. This includes a buffer of 10% tugs being non operational. This also includes downtime and shifting (inter and intra terminal) operations. (This figure considers extreme weather conditions/ large vessels)

0.15 pilot launches/ship per day or 0.30 pilot launches per movement/day would be required. This includes a buffer for downtime, servicing of supply vessels and other movements.

Assuming each pilot working on 24 hours shift on alternate days the number of pilots required would be 0.50 pilots per ship per day. This would include buffer requirements for pilots which arises due to reserve leave, shifting movements (inter and intra terminal) and dredging movements (for dredging vessels).

Ships entering the port

Number of tugs

required

Number of pilots

required

Number of pilot launches required

Average parcel Size

Traffic forecast



The details of expected traffic and assumptions from marine department were used to identify bottlenecks that would be faced as shown below

Specific projects were then identified to overcome these bottlenecks.

2010-112009-102008-092007-082006-072005-062004-05

9.00 9.00 9.00 9.00 9.00 9.00 9.00 Pilots Available

5.00 5.00 5.00 5.00 5.00 5.00 5.00 Pilot lauches Available

7.00 7.00 7.00 7.00 7.00 7.00 7.00 Tugs Available

Available

11.08 10.28 9.31 8.44 7.58 6.40 -1 pilot /ship/dayNumber of pilots required

3.32 3.09 2.79 2.53 2.28 1.92 -.3 pilot launches/ship per day

Pilot launches

11.08 10.28 9.31 8.44 7.58 6.40 -1 tug/ships per dayNumber of tugs required

Required

4,045.00 3,754.00 3,399.00 3,079.00 2,768.00 2,335.00 Total Calls

Bottleneck due to requirement greater than

avilability

Bottleneck due to requirement greater than

availability



Exhibit 7.2 Future Vessel Calls at JNPT (Containers)

Vessel CallsAvg Parcel Size (TEUs)

Traffic Handled

(Mn TEUs)Year

29363,748.55 11.002026-27 30933,557.82 11.002025-26 32593,376.80 11.002024-25 34343,204.98 11.002023-24 36183,041.91 11.002022-23 38122,887.13 11.002021-22 40162,740.23 11.002020-21 42312,600.81 11.002019-20 44582,468.48 11.002018-19 46972,342.88 11.002017-18 49492,223.67 11.002016-17 52142,110.53 11.00 2015-16 49692,003.14 9.95 2014-15 46011,901.22 8.75 2013-14 42661,804.48 7.70 2012-13 39411,712.67 6.75 2011-12 36471,625.53 5.93 2010-11 33671,542.82 5.19 2009-10 30231,464.32 4.43 2008-09 27141,389.81 3.77 2007-08 24411,319.10 3.22 2006-07

Exhibit 7.3 Future Vessel Calls at JNPT (Liquids)

Vessel CallsParcel Size

Product Forecast (TMTPA)Year

60925,253 15,390 2024-25 58423,897 13,951 2023-24 57823,417 13,534 2022-23 57222,951 13,137 2021-22 56722,498 12,759 2020-21 54021,126 11,400 2019-20 53420,698 11,058 2018-19 52920,282 10,733 2017-18 52419,877 10,424 2016-17 52019,483 10,129 2015-16 49018,078 8,849 2014-15 48517,706 8,583 2013-14 48017,337 8,322 2012-13 46716,618 7,762 2011-12 39813,780 5,485 2010-11 38713,514 5,225 2009-10 37613,259 4,981 2008-09 36413,013 4,742 2007-08 32711,033 3,612 2006-07 31010,739 3,329 2005-06 3559,819 3,486 2004-05



Cargo capacity (Containers)

The traffic forecasts was used as the basis to identify required capacity in the following areas:

RMQC Capacity

Wharf to Yard Capacity

Import Yard Capacity

Export Yard Capacity

Gate Capacity

These are then compared with the required capacity (based on traffic) to identify bottlenecks that exist.

Assumptions in the section were made in discussions with the operations department and covered:

Moves/hour (calculated only on actual working hours)

Number of working days

TEU/Moves ratio

Twin moves as a percentage of total moves

Moves/hr of reach stackers and RTGC

Moves per hour of tractor trailers

Stack height in import and export yard

Dwell time in import and export yard

Check in time at gates

BerthTerminal Capacity

Yard ManagementRTGC and Reach Stacker capacity

Wharf to YardTractor Trailer

Capacity

YardExport Yard

Capacity

YardImport Yard

Capacity

GateGate Capacity

Import yard to gate

Gate to export yard

Traffic forecast



Number of teu/ hour that can be managed by 1 tractor trailer

Wharf to Yard Tractor

Number of TEU/ hour that can be managed by 1 RTGC

Wharf to Yard RTGC

Number of moves/ hour that can be managed by 1 Reach Stacker/hr

Wharf to Yard Reach Stacker

Wharf to Yard Capacity

Double Moves

TEU/Moves Ratio

Actual Working hours/day

Working days/ year

Berth Occupancy

RMQC Capacity

25 mins per round with two TEUs

RMQC moves/ 2.3 (For each TEU RTGC will make min of 2 moves Assuming 2.3 moves)

5

10%

1.3 (based on current reality)

24 * Occupancy * 0.9 (10% movement time)

363

70% (to ensure 30% excess capacity at all times)



10%Peak Load

1.6Trucks/TEU ratio

Container check time (Hrs)

Gate Capacity

Area/ Ground Slot (sqm)

Stack height

Yard Capacity @ 70%

Dwell Time (days)

Export Yard Capacity

Area/ Ground Slot (sqm)

Stack height

Yard Capacity @ 70%

Dwell Time (days)

Import Yard Capacity

0.05 (based on discussions)

45

4

30% space is not used due to suboptimal utilization

6

45 (based on discussions)

3.5

30% space is not used due to suboptimal utilization

2



Increase in capacity due to GTI becoming

operational


operational


operational

Capacity shortfall due to lack of available

capacity

The details of expected traffic and assumptions as listed were used to identify bottlenecks that would be faced as shown below

Specific projects were then identified to overcome these bottlenecks.

*Transshipment traffic assumed at 10% of total traffic** Rail and Road traffic has been modeled for 10 % excess capacity at all times

*

**

**


operational



Hinterland Capacity

The hinterland capacity assessment module of the ICAM has three sub modules within it. These are:

Rail capacity Inside port: This module measure the capacity of rail tracks laid inside the port and whether they would be enough to service the projected traffic

Rail capacity outside port: This module measures the rail capacity available outside the port (rail tracks leading to the port) and whether they would be enough to service the projected traffic

RMGC capacity : This measures whether the RMGC capacity would be able to handle the projected traffic

Road Module : This measures whether there is capacity to handle traffic on roads leading to the port from highways (link roads) and roads leading to the port from link roads (approach roads)

To quantitatively assess the capacity of each of the above modules assumptions were made for the following

Number of mixed trains in the port as terminals get added

Non (un) loading hours of mixed and pure trains: Taken on the basis of current performance

Trains that can be handled by a single track outside port (arrived at post discussion with railways)

The rationale behind rail road split is explained in Annexure 1.7

Approach road

capacity

Traffic forecast

Traffic by road Traffic by rail

Link road capacity

RTGC capacity

Track capacity in

port

Track capacity

outside port



60.00% (based on current data)Non (un)loading time (mixed train) (J)

20.00% (based on current data)Non (un)loading time (I)

No of rakes/(moves/hr*number of cranes*moves/TEU)loading/ unloading time (H)

1.3 (based on current realities)Moves/TEU Ratio (G)

363Working days/year (F)

20Working hours / day (E)

18 (based on discussion with ops department)Moves per hour (D)

9Number of cranes (C)

C*D*E*F*GRMGC Capacity12 (based on discussion with railways)Trains/day/track (B)

2Number of tracks

(Number of rakes * number of trains handled/day(B))/(1+mismatch between export and imports)Rail Capacity Outside Port

Mismatch between exports and imports

Percentage of pure trains

Percentage of mixed trains

Number of Trains that can be handled/day (A)

Number of tracks inside the port

Number of rakes/train

Time taken to turn around mixed trains

Time taken to turn around pure trains

Time taken to turn around the train (hrs)

Rail Capacity inside port

30%

60.00%

40.00%

(24/(time to turn around the train (hrs))*number of tracks in the port

6

180

loading time + Inactive time (mixed train)

loading time + Inactive time (pure train)

weighted average turn around time

(Number of rakes * number of trains handled/day(A))/(1+mismatch between export and imports)



Note: Overall Rail capacity would therefore be equal to minimum of rail capacity inside port, rail capacity outside port and RMGC capacity

Mismatch between exports and imports

Percentage of pure trains *

Percentage of mixed trains *

Number of Trains that can be handled/day

Number of tracks inside the port

Number of rakes/train

Time taken to turn around mixed trains

Time taken to turn around pure trains

Time taken to turn around the train (hrs)

Rail Capacity inside port **

30%

33%

67%

(24/(time to turn around the train (hrs))*number of tracks in the port

6

180

loading time + Inactive time (mixed train)

loading time + Inactive time (pure train)

weighted average turn around time

•The ratio of mixed: pure trains is increased to 80:20 after the fourth terminal is on stream in 2010-11



BPort Approach Roads

C+D+EPort Link Roads

(TEU/day * 365 )/ (Loading factor * Peak load factor * roughnessfactor)TEU/Year

1.2Roughness of road and other factors (Inefficiency caused by road conditions)

1.5Peak Load Factor

1.25Loading factor (total TEU traffic/loaded TEU traffic)

PCU capacity per day * commercial PCUs * PCU to TEU converterTEU/day

PCU to TEU Converter

Non Commercial PCUs %age (H)

Commercial PCUs %age (G)

PCU Capacity/day (F)

Other 2 (E)

NH (D)

SH (C)

Port approach road (B)

Traffic per lane (A)

Road

0.325 (based on study of TPA Eng. report on roads near the port)

20% (based on study of TPA Eng. report on roads near the port)

80% (based on study of TPA Eng. report on roads near the port)

Traffic per lane *(Minimum of (port approach roads and port link roads)

None currently

No of Lanes (Currently 4)



PCUs 725 (based on study of TPA Eng. report on roads near the port)



Increase in capacity due to GTI adding RMGCs

Bottleneck faced due to capacity being less than

requirements

Increase due to addition of track outside port


Specific projects were then identified to overcome these bottlenecks. The model also incorporated projects that are already under implementation:

** Rail and Road traffic has been modeled for 10 % excess capacity at all times


6.1 Internal Infrastructure Requirements6.1.2 Introduction to Integrated Capacity Assessment ModelStorage Capacity

The storage capacity assessment module of the ICAM has two sub modules within it. These are:

CFS storage capacity

Empties storage capacity


Import exports that would occur through CFSs this was arrived at through discussions with operations department and various CFS operators in and around the port

TEU output per 100 sqm of CFS warehousing area

Dwell times

Stack heights

Assumption on percentage of CFS requirement that would be fulfilled by CFSs within port area vis-à-vis fulfilled by CFSs outside port area. This has been assumed to be 40% in initial years going upto 70% in latter years due to lack of available land outside the port

The rationale behind setting up CFS and Empties inside the port is explained in Annexure 1.8.

Import warehousing

space

Traffic forecast

Exports through CFS

Imports through CFS

Export warehousing

space

Empties stacking space

required

Import stacking space

Empties traffic

Total warehousing

space

30% of exports

57% of imports

Currently research indicates that around 45% of overall traffic at the port passes through CFS (B. Raghuram report, IIM Ahmedabad). The expected increase in proportion of traffic via railway means that this percentage is unlikely to increase as CFS traffic is dependant on road traffic. It is also expected that over the years proportion of Maharashtra traffic at JNPT is likely to increase. This is primarily LCL cargo arriving through road and needs to be serviced through a CFS network. Further the EPZ would also require CFS support creating the need for CFS infrastructure.



0.85 (based on discussion and analysis of data)Efficiency of space utilization

0.85 (based on discussion and analysis of data)Efficiency of space utilization

Yard capacity (warehousing) * efficiency of space utilizationCFS Storage Capacity (Ex and Imp Warehousing)

420 * utilised warehouse space % * CFS areaYard Capacity (warehousing)

Actual area under CFSs (1362950 sqm currently)CFS area

52% of actual area ( based on discussions)Stack Area

52 (based on analysis and research)Area/ Ground Slot

(CFS area * stack area % )/ (area/ground slot)Ground Slots

3.5Stack height

TEUs at a time

Yard Capacity (Stacking)

Dwell Time

CFS Storage Capacity (Im) Stacking

CFS Area

Utilized Warehouse space

TEU pa per 100 sqm

Import Through CFS

Export through CFS

Ground slots * stack height

(TEUs at a time * 365)/ dwell time

13.0 (based on discussion and analysis of data)

Yard capacity (Stacking) * efficiency of space utilisation

Actual area under CFSs (1362950 sqm currently)

17.33% (1/3rd of area for stacking) based on analysis and interviews

420 ((based on discussion and analysis of data))

57.00% (based on discussion and analysis of data)

30.00% (based on discussion and analysis of data)



0.9Efficiency of space utilization

Empty Yard Areas

Stack Area (usable area)

Area/ Ground Slot

Ground Slots

Stack height

TEUs at a time

Yard Capacity

Dwell Time

Empty

744621.5 sqm currently

80%

45 (based on discussions) sqm

(Empty yard area * stack area (usable area) )/ (are/ground slot)

4

Stack height * ground slots

(TEUs at a time * 365)/dwell time

13.0 (based on discussions)

Yard capacity * efficiency of space utilisation


6.1 Internal Infrastructure Requirements6.1.2 Introduction to Integrated Capacity Assessment Mode


requirements


Specific projects were then identified to overcome these bottlenecks. The model also incorporated projects that are already under implementation:


requirements


requirements.



Overview of Handling of Liquid Cargo at JNPT-

Currently four distinct categories of liquid cargo are handled at JNPT with crude expected to be handled in 2007. The categories currently handled are

• POL products

• Liquid chemicals

• Edible Oil

• Molasses

Each of these categories consists of several products all of which fall under Class A/B/C liquids depending on their flashpoint. Multiple grades of each product are also handled at JNPT.

The first link in the handing of liquid cargo is the discharge capacity of the ship. This capacity varies with the number of pumps and product category carried by the ship. The cargo pumped by the ship is connected to the pipelines via Marine Loading arms/ hoses depending on the category of cargo. Different cargo types (mineral and edible) are handled at the same berths Currently there are 6 Marine Loading arms (3 on each berth) to handle POL products. Hoses are used to create connections between ship and pipelines in case of chemicals and other liquids.

At JNPT there is a disparate network of pipelines of varying diameter owned by individual tank farms used to transfer liquid cargo from the jetty to the tank farms. There are 8 tank operators with tankages of different size that handle certain grades of product. Details on the pipelines and tankages are reproduced in annexure 1.4.

Of the vessel berthing hours some hours are not utilized for discharging operations. These hours have to be considered in the capacity planning exercise. The hours lost are broadly due to the following reasons –

• Sampling time given post berthing for terminal operators to verify quality of sample on ship

• Pigging hours that are used to clear the pipeline for it to either carry a different product or a different grade of the same product

• Time given post loading/unloading to vessels to complete departure formalities

A critical component of liquid handling is the utilization of pipeline capacity. At JNPT there exist certain pipeline inefficiencies that impact the berth handling capacity. These are discussed in the next section.



Pipeline utilization Levels -There exist certain inefficiencies in pipeline utilization in JNPT that seem to be impacting throughput at the berth. The flow rates achieved through the pipelines are impacted by the following factors –

• Limited ship discharge rate especially in products of lower parcel size such as chemicals, edible oil and molasses.

• Pigging hours introduced due to many products/ various grades of particular products being carried by ships

• Certain pipelines are unable to accept a greater vessel discharge rate owing to inability of pipeline to handle greater pressure or due to their limited diameter

• Variable flow rate achieved due to pumping rate at tankages

All of this implies that with a similar product mix and ships oflimited discharge, JNPT will face constraints arising out of thepipelines. In light of the decision to service crude the pipeline inefficiencies might lead to a forced capacity constraint at theberth.Based on discussions with terminal operators we arrived at an achievable flow rate through each of their pipelines. This was further used to arrive at a theoretical weighted flow rate that could be achieved by product category in the absence of any constraint as shown in exhibit 3.2.1. This is compared with the actual flow rates achieved for the year 2004-05 by product category in exhibit 3.2.2.On comparison of the pipeline flow rates we observe that the actual flow rate obtained is lesser than the achievable flow rate indicating existence of inefficiencies in pipeline utilization.

Exhibit 3.2.1 : Pipeline theoretical flow rates

381Edible oil and Molasses

425Chemicals

925POL products

Achievable flow rate

(in MT/hour)

Product category

Source: KPMG Analysis, Discussions with tank farm operators, Assumes equal utilization of pipelines

Exhibit 3.2.2: Pipeline flow rates in 2004-05

289Edible oil and Molasses

258Chemicals

583POL products

Achieved flow rate

(in MT/hour)

Product category

Source: KPMG Analysis, Data from JNPT



Assumptions in liquid capacity assessment model


Ship discharge rate - Ships of varying sizes arrive at JNPT with different discharge rates. The ship discharge rate varies acrossships of similar DWT and product composition. In an attempt to use the ship discharge rate in the capacity model we have assumed average discharge rates for various product categories as shown in exhibit 3.2.3.

Parcel size – Parcel size is grown from the current parcel size at 3% annually for each product category based on historical trend at JNPT. Current overall parcel size is 10,738 metric tonnes.

Pipeline inefficiency factor – Pipeline inefficiency factor is arrived at using historical data. It follows from the existence of inefficiencies in pipeline utilization as indicated previously. Current level of pipeline inefficiency is calculated as 1.8 fromhistorical data. This means that theoretical pipeline hours are multiplied by 1.8 to arrive at total hours pipeline used.

Sampling Hours are taken as an average of 3 hours per vessel. Vessel departure hours are taken as 3 hours per vessel.

Pigging Hours – Pigging hours are assumed for each category of product based on discussion with JNPT/BPCL.. The hours assumed are as follows –

• POL – 4 hours per vessel

• Edible oil – 6 hours per vessel (due to various grades of product)

• Molasses – 3.5 hours per vessel

• Chemicals – 3.5 hours per vessel

5000Crude

300Molasses

Exhibit 3.2.3: Assumed Ship discharge rate

300Edible oil

300Chemicals

1500POL products

Ship discharge rate

(in MT/hour)

Product category

Source: Secondary Research, published reports

Dwell time – Tank farm average dwell time for cargo is assumed at 30 days based on discussion with tank farms and port terminal operator



Explanation of the capacity assessment model

The capacity assessment model aims to identify capacity bottlenecks in liquid cargo operations for each year. The starting point of the model is the traffic forecasts arrived at in the earlier chapter. The parcel size for vessels for each product category was arrived at using current forecasts and applying a growth rate as discussed earlier. This along with traffic by product category was used to calculate ship calls by product category.

For each ship of a product category there are certain unutilized berthing hours spent in activities like sampling, pigging etc. These were calculated across ships and adjusted from total berthing hours in a year to arrive at berth hours available for discharge. A pipeline inefficiency factor was factored in to arrive at a realistic number of berth hours available for discharge.

Theoretical ship pumping hours were calculated based on the average ship discharge rate for vessels of each product category as well as traffic forecasted in that category.

Ship pumping hours were compared with total available berth hours to identify capacity shortfall (at 70% berth occupancy) . This was used to arrive at capacity augmentation decisions.

Tank farm storage by product category was used along with an assumed dwell time of 30 days to arrive at tank farm capacity by product ( Dwell times at JNPT vary between 15-45 days)

The capacity assessment model is shown in exhibit 3.2.4 with individual stages illustrated subsequently.



Liquid forecasts

1

Vessel calls by product category

3


Parcel SizeSource: Data from JNPT, KPMG Analysis

2

Unutilized berthing Hours (Pigging + sampling)

4



If Total Pumping Hours < Total available berth

hours

(at 70% berth occupancy)

6

Need additional capacity

Capacity Constraint Point

Exhibit 3.2.4 : Liquid Capacity Assessment model for berth capacity

Total Pumping Hours

5

Source: KPMG Analysis,Ship pumping hours



Berth and pipeline analysis

The details of expected traffic and assumptions as listed were used to identify bottlenecks that would be faced as shown below. For each ship of a product category there are certain unutilized berthing hours spent in activities like sampling, pigging etc. These were calculated across ships and adjusted from total berthing hours in a year to arrive at berth hours available for discharge. A pipeline inefficiency factor was factored in to arrive at a realistic number of berth hours available for discharge. Theoretical ship pumping hours were calculated based on the average ship discharge rate for vessels of each product category as well as traffic forecasted in that category. Total operational hours greater than total available berth hours indicated bottlenecks. This was used to arrive at capacity augmentation decisions.


requirements.

Bottleneck faced due to pipeline capacity being less than requirements.



Tankage analysis

The details of expected traffic and assumptions as listed were used to identify bottlenecks that would be faced as shown below. Tankage capacity for each product category was identified based on data from the port. An average dwell time for each category based on discussions with tank farm operators was used to arrive at the annual volume that can be handled for each category through tankages around JNPT. Annual tankage volume below product forecasts for these categories indicate bottlenecks. This was used to arrive at tankages capacity augmentation decisions.


requirements.

Bottleneck faced due to tankage capacity being less than requirements.


6.1 Internal Infrastructure Requirements6.1.3 Mechanism for project identification

As described in the previous section the ICAM was used to identify the bottlenecks that are being faced by the ports across various elements.

KPMG identified projects that can be undertaken to remove the bottleneck and these were discussed with senior management, finance department and the planning department.

The short listed projects were then entered into ICAM which accordingly increased the capacity and identified the next level of bottleneck that is being faced.

An analysis of physical constraints done earlier was used to assess if the port has reached any physical constraint and if, no physical constraints were reached then the process of identification was repeated to identify the next level of projects that need to be undertaken.

Bottleneck Identified by ICAM

Identification of Projects that can be undertaken to

remove bottleneck

Discussions with senior management at port

Discussions with finance team on the

project

Discussions with planning team on future

plans

Project selection and entry into ICAM

Next level of bottleneck Identified

by ICAM

Has port reached a physical

constraint on capacity that cant be overcome

NO


6.1 Internal Infrastructure Requirements6.1.3 Snapshot of project identification through ICAM

As seen below ICAM has identified bottlenecks that will be faced by the port in the year 2008-09 in cargo handling capacity to over come this shortfall an internal brainstorming with subject matter experts and the KPMG team was done. Post this discussions were undertaken with various departments and two projects were identified to increase capacity. These are

1) Increase moves per hour (based on working hours only) of RMQCs to 24 (on main berth)

2) Extend current berth by 330 m to the north


*

**

**


The ICAM illustrates the status before and after the project is undertaken -


ICAM Before the Project AdditionsICAM After the Project (* green boxes

show increase in capacity)


6.1 Internal Infrastructure Requirements6.1.3 Snapshot of project identification through ICA

As shown in the earlier page the projects aid in increasing capacity of the port. The ICAM now presents the picture post the projects being undertaken and highlights the next level of bottlenecks that would be faced. This is shown below


requirements


requirements


requirements.

Projects are further identified to overcome the bottlenecks in discussion with the port. For the above mentioned bottleneck the fourth terminal is identified as a project post discussions with the senior management , finance and planning department.


*

**

**



Similarly projects were identified for all areas covered under the ICAM namely roads, rail, sea side, cargo handling (containers), cargo handling (liquids) and others.

The projects were analyzed and investment outlay for each of them was also identified and was used to build the financial accounts for the port. These projects were clubbed together into public investments, port investments and client related investments.

Apart from this subject matter experts and ports vision statement was used to qualitatively identify projects such as free trade zones.


6.2 Identified projects

The projects identified based on the integrated capacity assessment model enabled the development of an integrated master plan for the port by evaluating various elements of the ports processes together.

The projects identified across the various elements were combined to arrive the integrated master plan which covered the development of:

Terminals

Related Infrastructure


Related projects

The integrated development plan of the port is shown in the following maps. The maps capture the evolution of the port till 2020-21.



235

330 M extension (2008-09)

32 Hectares of CFS land (2007-08)

Empties yard 50 hectares (2008-09)

EPZ (2009-10)

Two tugs and seven pilots (2007-08)

Three pilots and two launches(2008-09)


GTI to be fully operational (2006-

07)


(2009-10)


(2009-10)

Shallow berth moves increased to 16

moves/hr (2008-09)

Common user pipeline creation

(2007-08)

Dronagiri Link road(2009-10)

Evacuation (EPZ) Road

(2009-10)

Additional Link Road (2009-10)

SH54 4-laning (2007-08)

Grade Seperators at Karal and Gwaan Phata (2008-09)

Conversion of railway tracks to fully operational railway sidings (2006-07)

JNPT developments between 2006-07 and 2009-10




236


3 tugs and 5 pilots (2010-11)

2 pilot launches (2011-12)

3 pilots (2012-13)

4th Terminal Ph 1 & BPCL Relocation

2010-11

MCT Phase 1(2011-12)

Construction of emergency berth

(2011-12)Road for 4th

Container Terminal(2010-11)

Rail ICD 4th Terminal (2010-11)

Link to 4th

container terminal

(2010-11)



Sorting Yard (2011-12)

40 Hectares of Empties yard (2012-

13)

Additional Road Linking Port to highway

(2010-11)

6 Laning of NH 4B(2010-11)




237


2 tugs and 3 pilots(2013-14)

1 launch,1 tug and 1 pilot (2015-16)


4th Terminal Ph 2 (2014-15)

Rail ICD for 4th Terminal Ph 2 (2014-15)

Gate Capacity(2013-14)

Additional Railway track(2014-15)

RMGC Moves increasedto 20/hr (2013-14)








238

Marine Berth(2020-21)

Addition of 3 RMGCS (2016-17)

POL tankage construction (2018-19)

Connection to Additional Link road

(2017-18)




6.2 Identified projects6.2.1 Classification of identified projects

The capacity assessment model identified an integrated master plan for the port. The master plan includes various projects that the port has to undertake to service the expected traffic potential. These projects can broadly be classified into three major categories

Client Related Investment Projects: This would include projects that would be funded through investments made by private players. The mode of financing these projects would primarily be a BOT arrangement wherein the private player would share revenue with JNPT.

Planned public investment projects: This would include projects that would be financed by JNPT and/or by public agencies. The mode of finance for these projects could be directly by public agencies. Alternatively an SPV could be formed by the port and other agencies or through the port internal resources.

Planned organizational improvement projects: This would include projects that would be financed by JNPT. The financing for such projects would be done through internal resources of the port or through debts taken from banks.

A listing of all projects identified within each of the above mentioned category is provided over the next few pages. Significant projects have been covered in detail while others have a summary coverage.

Projects to be taken up beyond the 7 year action plan till 2014-15 have been highlighted in the tabulation.


6.2 Identified projects6.2.1 Classification of identified projects– Planned client investments

8.1.8Detailed CoverageBOT (infrastructure by port, development by pvt. Operator)

Development of 40 Hectares of land for empty yard operations2012-13

Detailed coverage




Detailed Coverage

Detailed Coverage

Summary Coverage

Detailed Coverage

Summary Coverage

Summary Coverage

Level of Detail

8.1.5BOTEPZ setup on port land2009-10

8.1.6BOTDevelopment of Rail ICD for the 4th terminal phase one2010-11

8.1.6BOTAdditional road to be constructed for 4th container terminal2010-11

8.1.6 BOTBPCL Relocation to new terminal2010-11

8.1.7BOTMarine Chemical Terminal - 1 new berth of 300 m 2011- 12





BOT

BOT

BOT

Mode of Financing

8.1.6

8.1.3

8.1.1

Section No.

Development of 4th Container Terminal

330 m Extension of berth

GTI to be made fully operational

Project

2010-11

2008-09

2006-07

Year


6.2 Identified projects6.2.1 Classification of identified projects– Planned client investments

8.1.9Summary CoverageBOT (infrastructure by port, development by pvt. Operator)


Summary Coverage

Summary Coverage

Summary Coverage

Summary Coverage

Summary Coverage

Detailed Coverage

Summary Coverage

Summary Coverage (within 4th container terminal phase 2)

Detailed Coverage


8.1.14BOT (existing player)Reduce pigging hours by 1 for each product 2019-20

8.1.10BOTDevelopment of 4th Container Terminal – 2nd phase2014-15

8.1.10BOT Development of Rail ICD for the 4th

terminal phase two 2014-15

8.1.15BOTMarine Chemical Terminal - 1 new berth of 300 m 2020-21


8.1.17BOTReduce average chemical tankage dwell time to 25 days 2024-25







6.2 Identified projects6.2.1 Classification of identified projects– Planned public investments

9.1.1 and 9.1.2

Summary CoveragePort InvestmentHiring of 2 tugs and 2 pilots2008-09

9.1.2Summary CoveragePort InvestmentHiring of two tugs2007-08

9.1.11Summary CoveragePort Investment Dronagiri Link road2009-10

9.1.10Summary CoveragePort InvestmentAdditional Evacuation road (EPZ Road)2009-10

Summary Coverage

Detailed Coverage

Summary Coverage

Summary Coverage

Summary Coverage

Detailed coverage

Summary Coverage

Level of Detail

9.1.9Public InvestmentDevelopment of an additional road linking the port to highways2009-10

9.1.6SPVSH54 to be converted to a four lane road2007-08

9.1.7SPVGrade separators to improve the efficiency of the approach road to the port2008-09

9.1.4Port InvestmentConversion of one of the tracks to full operational railway siding. 2006-07

9.1.5Port Investment/ BOT financingAdditional pipelines for select products2007-08

9.1.8Port InvestmentIncrease shallow berth moves to 16 moves per hour2008-09

9.1.12Port InvestmentDredging to enable fully loaded 6000 TEU ships and 7500 TEUs partially laden ships during tidal window, channel deepened upto 12.5 m

2009-10

Mode of Financing Section No.ProjectYear



9.1.24Detailed coveragePort InvestmentCreation of emergency berth2011-12

9.1.3 Summary CoveragePort InvestmentHiring of 2 pilot launches2011-12

9.1.17Detailed coveragePort InvestmentReduce non discharging hours per

vessel from 6 hrs to 4 hrs 2010-11

9.1.18Detailed CoveragePort Investment

Sorting Yard to Reduce Mixed trains and development of processes and systems between the port and the sorting yard

2011-12

9.1.16Summary CoveragePort Investment 4th container terminal link2010-11

9.1.15Summary CoveragePort Investment Additional road linking port and

highways2010-11

9.1.14Summary Coverage SPVSix Laning of NH4B2010-11

9.1.2

9.1.1 & 9.1.2

9.1.13

Section No.

Summary CoveragePort InvestmentIncrease RMQC moves at JNPT to 24

moves per hour 2009-10

Summary CoveragePort InvestmentHiring of 3 tugs and hiring of 2 pilots2010-11

Level of Detail

Mode of FinancingProjectYear

Summary CoveragePort InvestmentHiring of two pilots2012-13




Increase in productivity of RMGCs by increasing the moves per hour2013-14

9.1.1 & 9.1.2Summary coveragePort InvestmentHiring of two tugs and two pilots2013-14

Summary Coverage

Summary Coverage

Summary Coverage

Detailed Coverage



Dredging to enable fully loaded 6000 TEU ships at all times, channel deepened upto 14 m

2015-16


Road to be constructed to connect the Aamra Marg link road to the port2017-18


Increase RMGC Capacity through addition of RMGCs2016-17

9.1.20Public Investment

New rail track to be laid outside the port2014-15


6.2 Identified projects6.2.1 Classification of identified projects–Organizational improvements

10.1.6Detailed coverage Port investmentStrengthening of project

management capabilities2009-10

10.1.3Detailed CoveragePort InvestmentTraining for double moves

(twin lift)2011-12

10.1.3Detailed CoveragePort Investment Training for managerial staff2011-12

Summary Coverage

Summary Coverage

Detailed Coverage

Detailed coverage

Level of Detail

Port Investment

Port Investment

Port Investment

Port Investment

Mode of Financing

10.1.1Strengthening of the marketing Department2009-10

10.1.5Development of Maintenance SLAs for the roads2013-14

10.1.4Automation between sorting yard and port operators2013-14

10.1.2Automation between gate and terminal operators2009-10

Section No.ProjectYear


Chapter 7

External connectivity requirements


7.0 External connectivity requirements

As illustrated in the previous chapter, an integrated capacity assessment model was used to identify projects needed to be undertaken by the port and other agencies. The quantitative nature of the ICAM allowed analysis of rail and road connectivity in the form of immediate linkages to the port.

This included analysis of capacity on following rail and road corridors –

• Road networks linking to the port : Included analysis of capacity on SH54, Aamra Marg and NH4B as well as alternatives needed for the same

• Rail network linking to the port : Rail line connecting port to Holding yard at Jasai and Panvel

•However as illustrated in the chapter on hinterland connectivity, key rail corridors and road networks outside these links also face capacity pressures. Keeping this in mind, a section has been included to indicate external support infrastructure requirements beyond the port that would need to be executed by other agencies to allow the port to fulfill its potential. This section highlights proposed projects that would ease capacity pressures on both rail and road linkages extending from the vicinity of the port to the hinterland. It follows from the introduction towards hinterland connectivity provided in section 2.


7.0 External connectivity requirements 7.1 Rail Connectivity

As indicated in section 2 on hinterland connectivity, there exist pressures on key rail corridors. Going ahead with the growth in traffic certain key measures need to be taken to meet rail traffic at JNPT. These include -

Implementing Automatic Block signalling on the Panvel-Vasai Rd,Dahanu - Vadodara and Vadodara –Mathura Jn segments of the route. Undertaking doubling of the Mehsana –Palanpur – Ajmer – Jaipur and Rewari –Delhi sections.

As can be seen in exhibit 7.1.1 there is also a need to enhance capacity on the Delhi Mumbai route, as the current route is facing over 100% capacity utilization levels.The shortage of capacity on these key rail corridors highlights the need for a dedicated freight corridor (DFC) between JNPT and the northern hinterland the foundation stone for the same having been laid recently. The DFC could connect JNPT to the primary ICDs of Tuglakabad, Dadri and Ludhiana while passing through Vadodara and Ahmedabad. The quick and successful execution of the DFC might be critical to the success of future container terminals at JNPT. The DFC project has been taken up as a measure to alleviate the excess capacity utilization on stretches of route to Mumbai. The foundation stone for the DFC was recently laid.

Exhibit 7.1.1: Capacity utilization of Major sections of Delhi Mumbai Route

129.5115.363.8DAHANU ROAD-VIRAR154.8136.974.4VALSAD-DAHANU ROAD153.4137.564.55UDHNA-VALSAD156.8139.64.01SURAT-UDHNA162.4138.458.94BHARUCH-SURAT160.4138.270.12VADODARA (D)-BHARUCH

115.692.22.11VADODARA (Z)-VADODARA (D)

136.611467.04GODHRA-VADODARA (Z)

165.7137.1185.21RATLAM-GODHRA166.2137.741.35NAGADA-RATLAM137.5110.9224.95KOTA-NAGADA190.7159.65.56GURLA-KOTA157.5128.2102.2SAWAI MADHOPUR-GURLA157.5123.2140.83BAYANA-SAWAI MADHOPUR104.18475.4MATHURA-BAYANA145.2131.9183.4PALWAL-MATHURA192.7151.729TUGLAKABAD-PAWAL

(2003-04).

Projected %

utilization

2006-07

% Line capacity utilization

with maintenance

Lengthin

KmsName of Section


Dedicated Freight Corridor – Impact on JNPT

Given the sharp increase in utilization of the tracks on the Delhi- Mumbai route, Indian railways has set up an special purpose vehicle to develop the western rail freight corridor. The dedicated freight corridor will extend across 1440 km and attempt to connect the northern and north-western hinterlands to the ports of the West coast such as JNPT, Mumbai, Mundra, Kandla and Pipavav.

The DFC project is imperative for JNPT to expand its capacity. This is because capacity constraints on existing rail routes could dramatically reduce the traffic to new terminals at JNPT from the northern hinterland. It is essential that the DFC project is completed by targeted date of 2010-11 as this is the period when 4th container terminal at JNPT is set to begin operations.

The Dedicated Freight Corridor Corporation of India Ltd (DFCCIL) , the SPV of the Indian railways is examining two routes for the western corridor as seen in exhibit 7.1.2 –

• JNPT to Dadri via Vadodara, Ahmedabad, Palanpur, Jaipur and Rewari (Blue line)

• JNPT to Dadri via Vadodara, Nagda, Kota, and Mathura (Orange line)


Mumbai

JNPT

KandlaMundra

Pipavav

DadriMathura

Kota

Nagda

Tuglaqabad

Jaipur

Palanpur

VadodaraAhmedabad

Exhibit 7.1.2: Western Dedicated Freight Corridor –Routes under consideration and Ports to be

connected

PortCity/location enroute

Route 1Route 2



The route via Ahmedabad to JNPT has a distance of 1373 kms while that via Mathura has a distance of 1440 kms.

Of the two routes under consideration, the route via Ahmedabad will offer substantial advantages to Gujarat ports as compared to JNPT. This is because currently the route used from Delhi to Gujarat ports is via Mathura and Kota and branches away to Gujarat ports at Vadodara.

As per the Wala committee report on the Techno-economic feasibility of the DFC, the route via Ahmedabad will have average cost per TEU as illustrated in exhibit 7.1.3. This shows that the generalized cost of transportation will be lower for Gujarat ports along the route via Ahmedabad as compared to the route via Mathura. The DFC via Ahmedabad may result in JNPT losing market share to Gujarat ports due to lower cost of rail transportation from northern hinterland.

* - Costs based on apportioning of distance

Exhibit 7.1.3 : Avg cost per TEU for using DFC along the Dadri-Ahmedabad-JNPT route *

Rs 2459500Sabarmati

(Ahmedabad)

JNPT/Mumbai

Rs 1462200Sabarmati

(Ahmedabad)

Pipavav/ Mundra/ Kandla

Rs 5387800Delhi regionPipavav/ Mundra/ Kandla

Rs 84571300Tughalakabad/ Dadri

JNPT/Mumbai

Avg. cost per TEU

Avg. distance

DestinationPort


There is need for road connectivity schemes to be taken up to improve accessibility of JNPT beyond the projects identified in the form of SH 54 , NH 4B and Aamra Marg. Some of these are outlined in a note prepared by JNPT and shown in exhibit 7.1.4 as follows -Six laning of NH4 from Kalamboli to Mundra

The traffic to and fro from northern and central parts of India via NH-8 and NH-3 has to use part of NH-4 between Kalamboli junction and Thane to reach JNPT. This is presently a 2 lane road which is heavily congested and results in slow movements and accidents. Hence there is need to create additional lanes, Currently this is being widened to 4 lanes under BOT basis by MSRDC. However to cater to additional traffic it would need to be widened to 6 lanes. The total length of this road is 20 km and the block cost of the project is about Rs 45 cr. The matter has been currently referred to Public Works Department. Linking of NH4 and NH8 bypassing Mumbra

Currently the port traffic moves through Mumbra and Thane city resulting in slow movement of traffic , accidents and congestion on roads. In the recent monsoon of 2004, this road was heavily damaged. There is a need to have a separate access, bypassing Thane and Mumbra city, connecting Nasik and Ahmedabad highway NH3 and NH8 respectively. Public works department has identified a scheme to connect the two highways through roads stretching over 30 km and costing Rs 72 cr. The matter has been referred to PWD Maharashtra. Strengthening of Khopta-Khopoli Link

At present, traffic to and from southern states of India has to take circuitous route via NH4B from Panvel to JNPT. This traffic to JNPT by NH17 needs a direct link from the port. The existing shortest link from JNPT to NH17 can be used provided Khopta bridge is strengthened and the Khopta-Khopoli link be widened. PWD has prepared the detail plan and estimates for this project comes to about Rs 53 cr. PWD Maharashtra has currently requested for funding for this project from the Commerce Ministry.Extension of NH4B to south

At present there is no direct access to NH4B for the various container freight stations in Dronagiri node of CIDCO. Truckers are compelled to use a tedious route, using the same approach road to the port. It is necessary to extend NH-4B towards these CFS to reduce congestion on the main approach road of the port. CIDCO has currently requested for funding for this project from the Ministry of Commerce.

7.0 External connectivity requirements 7.2 Road Connectivity


Exhibit 7.1.4 :

jnpt final volume1v2

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