Mumbai: India’s No.1 container gateway, Jawaharlal Nehru Port Trust (JNPT), has decided to leverage its dollar-denominated income to raise overseas loans for its expansion projects at rates more attractive than those available in India.
The move comes on the back of a directive from the Shipping ministry to major ports, to use their dollar-denominated income for optimal benefit. The ministry is working on a plan to raise $2bn abroad for rail and road connectivity projects.
It is learnt that Yes Bank is advising JNPT in this exercise. Companies that have dollar earnings can raise cheap foreign funds that they can service from earnings without worrying about exchange rate fluctuations. The natural hedge keeps cost of funds low.
The aggregate dollar-denominated income of the country’s 12 major ports is in the region of $400m, and the Shipping ministry intends to use these funds as the 20% margin normally required to raise such a loan.
Major ports have identified nearly 40 projects, including last-mile connectivity projects and internal port rail projects that require an estimated investment of INR23.72bn (380m). The remainder of the targeted $2bn loan will be used for road connectivity projects.