>INDIA INFRASTRUCTURE: JNPT(Jawaharlal Nehru Port Trust) CT-4 () & DFCC Western Corridor: expect project awards of USD5b-7b in FY13/14

JNPT's expansion plans to nearly double capacity: The Jawaharlal Nehru Port Trust (JNPT) has selected (in September 2011) the consortium led by Port Authority of Singapore to construct and operate its fourth container terminal (CT-4). JNPT currently has a capacity of 4.1m TEUs and CT-4 will add a further 4.8m TEUs. The concession agreement is expected to be signed shortly. Phase-1 of CT-4 (2.4m TEUs) is likely to be completed by 2015/16 at an estimated cost of ~INR38b.


CT-4 / Western Corridor project viability interlinked: JNPT's CT-4 operations are strongly interlinked with Dedicated Freight Corridor Corporation's (DFCC) Western Corridor project, given the constraints in terms of railway capacity. The Railways account for ~27% of the hinterland transport for JNPT and the existing network is congested, with limited room for expansion. Hence, the near doubling of container capacity post commissioning of CT-4 is largely dependent on DFCC for evacuation. The economic viability of DFCC's Western Corridor project is also linked to JNPT expansion, as containers will account for 75-80% of
traffic. Land acquisition in the JNPT-Vadodara section has been significantly behind schedule (near nil land acquired around Mumbai, Surat), while the Vadodara- Rewari section has witnessed 83% land acquisition.



Expect project awards of USD5b-7b in FY13/14: We expect substantial parts of the project awards for both CT-4 (INR38b, phase-1) and DFCC Western Corridor (~USD8b) to be completed in FY13/14. This will entail interesting opportunities for construction players. Both the projects are expected to be commissioned by FY16/ 17. We believe that DFCC could provide a 'multiplier effect' for India in many ways, and successful implementation will lead to several benefits.


How to play the theme - L&T is the best bet: We believe L&T (Buy) will be a clear beneficiary of the project awards of USD5b-7b expected in FY13/14 for CT-4 and the Western Corridor. L&T is also one of the two consortiums pre-qualified to submit price bids in two packages of the Western Corridor (size ~USD1b). Adani Port (Not Rated) will also be a beneficiary of the shift in the northern hinterland container cargo from Maharashtra to Gujarat - JNPT's capacity is largely saturated till CT-4 / western DFCC becomes operational and the recent TAMP (Tariff Authority on Major Ports) tariff reduction for private operators at JNPT will lead them to lower volumes, as efficiency gets punished. Adani Port already accounts for ~25% of the western region container traffic and the transition is expected to be rather quick over the next 3-4 years.


To read report in detail: INDIA INFRASTRUCTURE