ICRA Ltd has placed the ratings of three port companies Mormugao Port Trust, Krishnapatnam Port and Sical Iron Ore Terminals on rating watch with negative implication following the recent ban on the export of iron ore by Karnataka.

Mormugao and Krishnapatnam ports handle large volume of iron ore from the Bellary Hospet region of Karnataka while the Sical terminal at the Ennore port is expected to handle the cargo from that region.

According to ICRA while the Karnataka Government is reportedly in the process of introducing a new scheme of procedure for granting permits to stop illegal mining of iron ore and its transportation the time period for which these restrictions would be in force is uncertain.

The ports or terminals handling iron ore export cargo originating from Karnataka are likely to witness a substantial shrinkage in cargo volume as the alternate cargo may not be sufficient to fill the vacuum created because of loss of iron ore cargo.

Further at some ports the facilities are specifically designed for handling bulk/iron ore cargo.

ICRA said that thus the cargo volumes and the cash flows may be negatively impacted.

(Sourced from Business Line)