Economic Times reported that Japanese trading houses, Mitsui & Company and Sumitomo Corp, who were planning to invest in the Indian port sector for more than a year to gain from strengthening trade ties, have put their plans on hold recently due to by high asset valuations and corporate changes back home.
Japan's trading houses were interested in picking up a minority stake or in taking up operational control of a terminal to support their trading volumes. They evaluated and visited several ports in India until a year ago.
According to an e-mail statement from Sumitomo, "We look for investment opportunities in Indian port operation because of promising growth in India as well as that of export and import trade business in the future."
Statement said that "However, we slowed down the activities recently because the assets of private Indian ports are generally high compared to other countries."
More than 1,000 Japanese businesses dot the states and union territories along the Indian coastline. The number is expected to balloon as the two Asian economies look for an alternative to China.
L&T's Kattupalli, Gammon Infrastructure's berth at Vizag, MARG Group's Karaikal port are some of the assets that Japan's trading houses were in talks with. But the plans are on hold due to global corporate restructuring and wariness to invest in asset heavy businesses thereafter, said an industry source, who didn't want to be named.
The source said that "Mitsui has now become wary of asset heavy businesses. This is a trend panning all trading houses that have not done well. They are realigning their focus."
According to an e-mail statement from the company, Mitsui is generally looking at potential port investment opportunities on a worldwide basis, but currently does not have any specific project in India they are considering to invest in.
Another person with direct knowledge of the matter, said that "They were looking for assets in South and West India and have been in the market for more than 1 year."
The person said that both these companies were looking for clean assets, something that is hard to come by in India.
Japanese trading houses run ports across the world. Portek, a subsidiary of Mitsui, runs ports in Indonesia, Rwanda, Latvia and in many more geographies. They are able to attract shipping lines to their ports given their experience in the sector and due to huge cargo volumes.
Trading houses, including Mitsui & Co and Sumitomo Corp, are huge conglomerates that control diversified large companies across all sectors. However, most of the Japanese trading houses have faced profit declines in recent past and are selling less profitable assets and moving to lighter assets and high growth areas.
Source:- steelguru.com
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