Citizens’ Research Collective on SEZ

Mumbai, November 27, 2007: India’s largest non-government cargo terminal Mundra Port & SEZ Ltd, whose share price crossed the Rs 1,000 mark on its debut at the bourses on Tuesday, is planning to borrow Rs 1,200 crore for a coal terminal.

“We are now looking at raising Rs 1,200 crore through borrowings for a coal terminal, that is to be on the balance-sheet of Mundra Port. That’s a major debt we have planned, which is of a long-term nature of 11-12 years,” company’s Executive Director Ameet Desai said on the sidelines of its listing ceremony.

The stock opened at Rs 770 on the BSE as against the issue price of Rs 440 a share. It was quoted at Rs 958 after touching Rs 1,150 in the early morning session.

Of the Rs 1,700 crore that the company has raised in the initial public offer, Rs 400 crore will go toward development of the coal terminal, Rs 700 crore for infrastructure of SEZ, Rs 200 crore will be spent for equity contribution for the Dahej Port, while Rs 76 crore will be invested in container train and container depot operations.

The remaining Rs 300 crore will be used for other corporate purposes, Desai said.

“Out of approximately Rs 2,500 crore invested today, our debt is about Rs 1,500 crore, which means our debt equity is pretty low. With this Rs 1,700 crore raised, we have total owner’s fund of around Rs 2,700 crore and debt of Rs 1,500 crore,” he said.

Commenting on its container terminal operations, Desai said, “For future expansion, we have to tie-up with shipping lines for allocation. We can handle 25-million tons of crude. Last year, we did 3.6 MT and this year we would do about 7-7.5 MT of crude.”

The company has entered into a contract with HPCL. It will start flowing crude for HPCL’s Guru Gobind Singh Refinery, expected to be operational by FY 11, Desai said.

Mundra Port would be able to sustain a CAGR of 30 per cent. Coal and crude will contribute almost 50-60 per cent of growth going forward, Desai said, adding that the container cargo, fertiliser, minerals and steel products are also seen as drivers.

Asked about SEBI’s decision to put on hold F&O trading, Desai said, “Our application for F&O is kept in abeyance. We are working through the book-running lead manager and stock exchanges. We will comply with whatever their requirements. One doesn’t see much of a problem (because of this).”

Source: Daily News & Analysis