Gammon Infrastructure Projects, the infrastructure arm of Gammon India, is in discussions with Mumbai Port Trust (MbPT) to start roll-on roll-off (RORO) operations, putting the much-delayed Indira Container Terminal (ICT) project to alternative use.
The port had conducted a trial run with the company for RORO operations last year. However, sources say the operations could not take off on a regular basis because Gammon and Mumbai Port could not reach an understanding over the revenue-share model for these operations.
Gammon Infrastructure managing director KK Mohanty confirmed the talks with MbPT.
“MbPT has given an approval for RORO operations and now negotiations are on for the revenue share,” Mohanty told FE. He refused to share any further details.
“Mumbai Port is proposing that 70% revenue from the RORO operations be its share and Gammon take 30%.
However, Gammon is keen on a larger share,” said a source, adding that an agreement could be in place in a month.
If a favourable agreement is reached, it will offer relief to Gammon Infra in terms of earning cash flow from a project, which is otherwise becoming a drain on the company’s balance sheet. For the nine-month period ended September 2014, the SPV formed for ICT defaulted in meeting its debt obligations of Rs 37.6 crore, as per Gammon Infra’s 2013-2014 annual report.
According to Mohanty, market size of the RORO operations out of Mumbai ports is at Rs 100 crore. “We will have to see how much we can garner,” he said.
The ICT at Mumbai Port was awarded to Gammon Infra and Spanish firm Dragados SPL in 2007 and was slated to be commissioned by 2010. However, due to MbPT’s inability to get the dredging work complete, the project remained a non-starter. The project missed several deadlines, which was originally awarded a concession period of 30 years including 3 years of construction & equipping period.
Gammon Infrastructure posted a net profit of Rs 7.37 crore at the consolidated level for the quarter ended March 31, 2015, against a net loss of Rs 40 crore in the corresponding period last year, due to tax writeback of nearly Rs 11 crore on provisions made earlier. The company’s consolidated total income from operations remained flat at Rs 214 crore, on a year-on-year basis.
The shares of Gammon Infrastructure Projects closed 13.13% higher at Rs 12.58 on BSE on Monday.