• Key Aspects
  • Methodology
  • Process

India has 7,517-km long coastline with 13 major ports and 187 minor/intermediate ports, which handle bulk of India’s international trade. The primary responsibility of development and management of major ports is with Central Government. These ports are governed by the Major Port Trusts Act, 1963. The non-major ports are administratively under the state government and are governed by the Indian Ports Act, 1908. Operations of the Indian ports are characterised by full utilization of capacities at the major ports, inefficient handling, poor maintenance, labour issues and draft constraints. On the other hand, development of new minor ports have been affected by inadequate connectivity with the hinterland, absence of multi-modal connectivity to and from ports and the differential royalties and revenue-sharing models of ports. Permission for 100% FDI in port sector and encouragement for PPP in non-major ports has helped in growing private participation in the sector. Besides, Government of India is working towards corporatization of a few ports.

With a view to streamline the operations of the ports and to enable India increase its share in global trade, the port sector requires huge investments over the next few years. Most of this investment is envisaged from the private sector depending upon the commercial viability of the project.

CARE has developed a rating methodology for port projects keeping in view the operating environment for Indian ports.

Project overview

CARE examines the broad parameters of the project based on the detailed project report submitted by the client. The major areas covered are:

Project Implementation Risk

The risk associated with the completion of a greenfield project on time is generally high due to long set-up time and large financial outlays. In this regard, the following issues are examined.

During project implementation, CARE would monitor the progress vis-a-vis the initial cost and time estimates to determine the effect of variations from schedule on the ability to meet debt servicing obligations.

Demand Analysis

Focus on demand and potential variation of demand due to economic changes, is the most essential ingredient for commercially viable operations. The aspects examined are:

Evaluation of cargo-mix

CARE evaluates the cargo-mix closely to assess the port’s vulnerability to competition and the stability of revenue streams.

Regulatory Framework

Financial Structure

Management Evaluation

CARE evaluates the management from different perspectives like

Operating risks

Port operations carry the following unique operating risks which CARE analyses in detail:

Financial Analysis

An in-depth analysis of the projected operations is undertaken to assess the ability of the port operations to service its debt obligations. This would also entail a critical examination of the underlying assumptions in context of the above factors. CARE would also examine the following as part of its financial evaluation:


CARE analyses each of the above factors and their linkages to arrive at the overall assessment of credit quality. The reduction in credit risk due to any credit enhancement provided is carefully evaluated before assigning the final rating.

While the methodology encompasses comprehensive analysis of the project implementation risks, demand analysis, regulatory framework, management evaluation and financial analysis, the credit rating is awarded on the basis of an overall assessment of all aspects.


CARE’s ratings are opinions on credit quality and are not recommendations to sanction, renew, disburse or recall the concerned bank facilities or to buy, sell or hold any security. CARE has based its ratings on information obtained from sources believed by it to be accurate and reliable. CARE does not, however, guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. Most entities whose bank facilities/instruments are rated by CARE have paid a credit rating fee, based on the amount and type of bank facilities/instruments.

The rating process takes about two to three weeks, depending on the complexity of the assignment and the flow of information from the client. Ratings are assigned by the Rating Committee.

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