JAWAHAR LAL NEHRU PORT TRUST
Non convertible Debenture issue
Rating
CARE has retained ‘CARE AAA’ [Triple A] rating
assigned to the outstanding NCD issue of Rs.55 crore
of JNPT. Instruments carrying the above rating are
considered to be of the best quality, carrying negligible
investment risk. Debt service payments are protected
by stable cash flows with good margin. While the
underlying assumptions may change, such changes as
can be visualised are most unlikely to impair the strong
position of such instruments.
The NCD rating draws strength from JNPT’s eminent
position amongst Indian ports in handling containerized
cargo, stable revenue streams and comfortable liquidity
position. Key rating sensitivities include continued high
growth in container traffic and increasing level of
competition amongst ports along the west coast in India.
Background
JNPT was formed under the Major Port Trusts Act, 1963
and operates the Nhava Sheva port in New Mumbai
situated across Mumbai port. Core activity of JNPT is
handling containerized cargo and providing requisite
infrastructure to terminal operators. JNPT’s operations
are highly automated and its productivity and efficiency
parameters are the best amongst Indian ports. JNPT
has excellent connectivity with rest of India and is
integrated with the national network of roads and
railways. It has vast back up infrastructure with strong
potential for developing additional facilities ideally suited
for future maritime requirements of the country.
Operations of the Company
JNPT operates a dedicated container terminal, which is
presently equipped to handle 9,00,000 TEUs of
container traffic per annum. It also operates a multi
purpose terminal for shallow draft vessels. This terminal
is capable of handling containerized and general cargo
of upto 1.2 MTPA. Apart from this, two other terminals
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CARE AAA
at JNPT, a container terminal and a liquid terminal are
operated by private operators on BOT basis. The
container terminal is managed by Nhava Sheva
International Container Terminal (NSICT), a subsidiary
of P&O Ports, which operates around 30 ports
worldwide. NSICT has a capacity to handle 1.2 million
TEUs of containerized cargo per annum. The liquid
terminal is managed by a consortium of Bharat
Petroleum Corporation Ltd., Indian Oil Corporation Ltd
and other Public Sector Oil Companies. This terminal is
equipped to handle 5.50 Million Tonnes Per Annum
(MTPA) of liquid cargo.
The terminals operated by private operators led to
diversion of traffic from JNPT’s own terminals.
However, this is a part of JNPT’s changing business
model from being a service port to a landlord port. As
a landlord port, JNPT would only develop the basic
infrastructure and will let the private operators develop
and manage the terminal. This business model would
ensure higher level of efficiency at the port and would
free JNPT from making high capital investment in
developing terminals. This business model would also
give JNPT stable source of revenue in the form of
royalty income from BOT operators. JNPT would also
earn revenues in the form of Vessel Related charges
(VRC) from all vessels calling on the terminals of BOT
operators. The adverse impact of the traffic diversion
on JNPT’s profitability is expected to be more than
offset in the later years through royalty income and
higher VRC.
JNPT has discontinued operations of its bulk terminal
as per its plans of becoming a landlord port . It has
awarded the license to develop the terminal in to a
container terminal to Gateway Terminals India (GTI), a
joint venture between APM Terminals (74 per cent stake)
and the Container Corporation of India (CONCOR; 26
per cent), on BOT basis, to cater to increasing container
traffic. The bulk terminal had been making losses for
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some time. GTI will develop a modern 1.3- million TEU Financial Results
capacity container terminal with 712-metre quay by Financial performance of JNPT in the last 3 years is
August 2006. Once this terminal becomes fully presented below:
functional, JNP’s aggregate container handling capacity (Rs. lakh)
will be enhanced to about 3.7 million TEUs per annum. For the year ended 31 March 2002 2003 2004

Over the last six years, traffic at JNPT (together with Container handling & storage income 184 215 309
the traffic handled by BOT operators) has increased at Total Income 398 460 580
a CARG of 22% from 11.72 mn MT in FY’99 to 31.19 PBILDT 216 283 375
mn MT in FY’04. In view of increased traffic, JNPT would Depreciation 39 37 29
be required to intensify its efforts to enhance the Operating PBIT 177 247 346
capacity. Add: Finance & Misc. Income 103 86 66
Container Terminal Less: Interest 147 113 140
Less: Misc. Expenses 22 100 38
JNPT together with NSICT handled 58.4% of the total PAT 113 128 203
Indian container traffic. Container traffic at the port has PBILDT/Total Income (%) 54.2 61.6 64.6
increased at an impressive CARG of 28% over the last
PAT/Total Income (%) 28.4 27.8 35.1
six years. In the last few years, NSICT accounted for a
ROCE (%) 18.1 25.7 31.3
majority of this growth, though JNPT benefited from
RONW (%) 10.0 15.9 36.1
higher container handling & storage charges, port & dock
Debt Equity ratio 0.7 3.0 1.5
charges and royalty income as per revenue sharing
Interest Coverage 1.3 2.2 2.5
agreement. During FY’04, NSICT handled 1.2 million
TEUs, whereas, JNPT’s own container terminal handled Current Ratio 2.3 1.3 5.3
traffic of 1.04 million TEUs.
The last four years have seen a transition in JNPT’s
Cont ainer s ha n d l e d b y J N P T d e c l i n e d post business model from a “Service port” to a “Landlord port”
commencement of operations by NSICT in FY 2000 model, in a bid to keep ahead of increasingly intense
and in FY 2001, but the trend reversed thereafter as competition. As per its plans, port and dock charges and
NSICT reached its maximum limits of operations. The royalty income are expected to form a significant
capacity utilization of JNPT’s facilities improved component of its total income in the coming years. JNPT
si gnif ic ant ly in th e l a s t tw o y e a rs w i th greater has discontinued its bulk terminal operations from
operational efficiency. This is evident from shorter October 2003 and diverted liquid bulk cargo operations
turnaround time, shorter pre berthing waiting time and to new liquid cargo berth of M/s BPCL. The private
higher output per ship berth day. Also, NSICT has been operators pay royalty to JNPT based on quantum of
plagued by congestion problems, which, to a certain cargo handled by them. Royalty from BOT operators
extent, has diverted the traffic to JNPT’s own terminal. increased from Rs.186 crore in FY’03 to Rs.403 crore
in FY’04. Also about 53% of total port and dock charges
Financial Performance
of JNPT in FY’04 originated from the two BOT operators.
JNPT’s total income has grown at a CAGR of 14% since JNPT has witnessed all round improvement in its
FY’00. However, this growth has been inconsistent over financials during FY’04; this is reflected in improved
the last 5 years. Total income experienced a fall in FY’01 interest coverage, ROCE and higher profit margins.
due to commencement of operations at NSICT and
subsequent cannibalization of JNPT’s container traffic. JNPT was not liable to pay income tax u/s 10 (20) of the
Subsequently, during FY 02 and FY 03, there had been IT Act, till FY02. This exemption is not available from
a steady increase in container traffic at JNPT. In FY’04 FY’03. In FY’04, JNPT has not made any provision
also, total income increased by 26% mainly due to higher towards taxes because of substantial depreciation
income from container traffic. benefits.

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Overall improvement in financials of JNPT is backed by
strong business fundamentals of high growth in
container traffic, greater containerization of cargo and
higher economic growth.
Financial Position and Capital Restructuring
JNPT has been funded entirely by loans & retained
profits. As on March 31, 2004, JNPT had loans
outstanding from Government of India (GoI) and
investors in its bonds aggregating to Rs.1074 crore and
had a networth (retained profits) of Rs.703 crore.
On JNPT’s request, GoI has approved a capital
restructuring plan for JNPT which includes prepayment
of principal outstanding on account of WB and GoI loans
of Rs. 468.2 crore and conversion of balance liability of
Rs. 727.3 crore into a fresh non plan GoI loan at
prevailing market rate of interest. JNPT prepaid principal
outstanding pertaining to GoI & World Bank loans
amounting to Rs.468.2 crore as also Rs.90.9 crore
(along with Rs.12 crore premium on prepayment) loan
outstanding to Kandla Port Trust in FY’04.
The capital restructuring has benefited JNPT in the form
of substantial interest rate reduction and improved debt
/equity ratio. After capital restructuring, JNPT’s gearing
improved to 1.53 times as on March 31, 2004 from 2.96
times as on March 31, 2003.
JNPT has an investment portfolio of Rs.517.8 crore as on
March 31, 2004. Almost 30% of the investments as on
March 31, 2004 were parked in UTI Tax Free Bonds.
According to the new policy adopted by JNPT, new
investments from FY’03 onwards would be parked only in
AAA rated instruments. High level of available free
investments provides sufficient liquidity comfort to JNPT.
Industry & Prospects
The growth in container traffic over the past decade is
higher than the overall growth of aggregate cargo traffic
in the port sector (including minor and intermediate
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ports), during the same period. Several factors specific
to development of container cargo trade in India,
together with other positive macro economic and trade
performance indicators have brought about this rapid
growth in the national container traffic and are likely to
influence the future course of container business.
JNPT, which handled 58% of the national container
traffic, has been the major beneficiary of this growth.
Despite this growth, national container cargo market in
India can still be termed as being in a formative phase.
Level of containerization in India is estimated at a low
40-45%. This scenario would change once ports
facilitate movement of larger container ships by
converting themselves into deep draft ports over the next
10 to 15 years, and result in accelerated pace of
development in the Indian port sector.
Establishment of JNPT and the NSICT had a catalytic
role in the growth of container cargo trade in India and
created a model for other ports to emulate. New
container ports at Mundra and Pipavav to the north of
JNPT have commenced operations and are expected
to stimulate competition among ports in attracting
container cargo bound to and from northern hinterland.
In order to further augment its capacity, JNPT has
firmed up capital expenditure plans of Rs.4000 crore
over the next ten years. These expenses are aimed at
increasing draft, purchase of additional equipments and
development of infrastructure facilities. JNPT will meet
this capital expenditure through available free
investments, additional borrowings and internal cash
accruals. Ports being a strategic sector and JNPT being
a premier port of the country, GoI is expected to
continue supporting JNPT in future.
Overall JNPTs revenues are expected to show high
degree of stability in future. The effects of traffic and
tariff downsides on JNPT’s revenues get mitigated to
some extent by sizeable revenues from the BOT
operators in the form of royalty income and VRC.
February 2005
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based its ratings on information obtained from sources believed by it to be accurate and reliable. CARE does not,
however, guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors
or omissions or for the results obtained from the use of such information. Most issuers of securities rated by CARE
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