ICRA projects 12-15% container trade contraction in FY 20-21

Noted credit rating agency ICRA’s latest report on the Indian port sector has projected a 12-15 percent decline in the container trade and 5-8 percent dip in bulk cargo in FY20-21. The report mentions the steep throughput decline of 21% during April 2020 resulting from dip across major cargo categories, POL, thermal coal and container segment. According to ICRA, the outlook for Port sector remains negative in near to the medium term.

Regarding the impact on the credit profile of port sector entities, K. Ravichandran, Senior VP and Group Head, ICRA Ratings, mentioned: “The credit profile of port sector companies is expected to witness pressure in the near to medium term, due to the impact of Covid-19 outbreak and the subsequent lockdown imposed. Further, entities that have recently commenced operations or concluded debt funded capacity expansions or have concentrated cargo profile like containers could come under severe pressure. Nonetheless, well diversified players (cargo-wise) and SPVs promoted by stronger sponsors should have higher financial flexibility to weather this downturn and their debt servicing is unlikely to be materially impacted.”

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