Pipavav Port clips capital expansion target to Rs 460 crore

MUMBAI: Citing concerns over demand, APM Terminals-run Gujarat Pipavav Port has reduced its capital expansion target to Rs 460 crore and decided not to add any more capacity on the bulk cargo front and container handling.

The company had earlier announced it will infuse $199 million or Rs 1,100 crore for expanding its container handling and bulk capacities.

It said a slew of factors, including question marks over demand, led it to redraw the strategies and stop the capacity expansion on the bulk cargo handling front.

"The documented delays in commissioning of coal based power plants around Pipavav (made) prospects on the expanded bulk capacity unclear in the immediate future," it said in a statement today.

Additionally, a recent change in Indian Railway's tariffs on bulk commodities has also impacted its margins as compared to the competition due to a distance slab based rail freight classification, it added.

Under its original plan, the bulk capacity handling was supposed to go up to 20 million tonnes per annum from the current 4-5 million tonnes at an investment of $44 million, it said.

On the container front, it revised the total expansion to increase the total capacity handling to 1.35 million TEUs as against the earlier plan of taking it to 1.50 million TEUs. Its container handling capacity stands at 0.85 million TEUs.

It said due to its redrawing of strategy, the expansion project will be complete by first quarter of 2016.

The company, however, kept the options of any change in the revised strategy open, saying there may be a change as per the demand.

" APM Terminals Pipavav does not rule out any further expansion of bulk, container or liquid bulk facilities basis developing market conditions," the statement said.