If you have a DTH connection, chances are high that you would have had a glimpse of Krishnapatnam Port (Port Code INKRI), thanks to its brand ambassadors Sharmila Nicollet and Narain Karthikeyan hard-selling it and its cargo-handling capabilities every time you switch on the idiot box. So, in order to get a first-hand experience of the ground realities behind the media blitzkrieg, The Dollar Business spent a few days at this fast-growing port on India’s east coast, luckily, just a few days before it received a Golden Peacock award for environment management.

Sisir Pradhan | August 2015 Issue | The Dollar Business

Krishnapatnam Port is located in Nellore district of Andhra Pradesh. Following the state’s bifurcation, the district’s economic importance has increased significantly. Its proximity to the Visakhapatnam-Chennai and Bangalore-Chennai industrial corridors has also fuelled its growth. Although the hub for most of its economic activities is its headquarters – Nellore City – which is also where the offices of the deputy commissioner and assistant commissioner of Customs for Krishnapatnam Port are, most port users, including shipping agents, CHAs and transporters, are located closer to the port at Muthukur. Although as per government records, Muthukur is still a village, Ravi, our local informant tells us that since the commencement of the port project, land prices in the area have gone through the roof. A casual glance out of the cab window validates all claims of such new-found wealth in the area as Muthukur, with its newly-constructed apartments looks more like a city suburb than a village. Ravi, our de-facto travel-guide, delightfully explains how the area around the port which is now well-lit with flood lights, used to resemble a haunted village post-dusk, before port activity picked up. He claims that while a decade back it was rare to sight even a two-wheeler in Muthukur, most locals now own vehicles. And at the heart of such a transformation lies the then Andhra Pradesh government’s decision to develop the minor port at Krishnapatnam into a deep draft seaport.

Proactive

Although Krishnapatnam Port has a long history and has played an important role in the development of trade in the region, until KPCL’s promoter – the Hyderabad-based CVR Group – signed a 50 year concessional BOST (Build–Operate-Share-Transfer) agreement with the then state government of Andhra Pradesh, it used to handle very little cargo. Following the agreement, KPCL completed the first phase of the port’s development within 18 months and it was commissioned in mid-2008. Though in the first phase, KPCL was developed to handle iron ore exports originating from Karnataka, in the very second year of its operations, port officials started working on diversification. Back then, the demand for coal was rising to feed thermal power plants in the region and this was one of the reasons for the diversification efforts of KPCL authorities. So, by the time iron ore mining scams started making headlines, subsequently leading to blanket bans, KPCL was absolutely ready to handle other cargo. This ensured Krishnapatnam Port avoiding the fate of Mormugao Port, which continues to struggle because of its overdependence on iron ore. Today, Krishnapatnam Port has a three-in-one set up. It has a North Port, which handles only bulk and break bulk cargo, a West Port that handles containerised cargo and a South Port, which handles clean cargo and LNG, LPG & POL.

 

Oiled for growth

Starting the mid-1990s, with reduction in import duties, India’s edible oil market saw a tectonic shift and the country soon became one of the top importers of the product. Lower duty on crude edible oil, as compared to that on refined oil, to compensate for refining cost, also aided this surge in imports. And one proof of this is the fact that most of India’s top edible oil refineries are located near ports. So, given the looming threat on iron ore exports, Krishnapatnam Port saw a great opportunity for diversification in edible oil, particularly given the fact that the source of most of India’s crude palm oil imports, which account for over 50% of the country’s total vegetable oil imports, is sourced from Southeast Asia. Luckily for the port, such foresight worked out perfectly as the total volume of edible oil handled by it surged from zero when it started operations in FY2009 to 1.41 MMT in FY2015. And the best testament of this are six massive edible oil refinery plants near the port, including those owned by Adani Wilmar, Saraiwaala Agri Refineries, Gemini Oils and Emami Foods. One of the reasons for the port’s bet on edible oil paying dividends is also its strategic location, with major consumption centres in South India like Hyderabad, Bengaluru and Chennai located not too far away.

 

Setting examples

The port boasts of end-to-end services with zero cargo loss and high discharge rates of up to 600 TPH. Apart from its modern infrastructure, a team of dedicated professionals, aggressive marketing campaigns and holding trade meets at major cities and industrial locations in its hinterland have helped the port win attention of importers and exporters. And the best example of the dedicated team of professionals at Krishnapatnam Port is its CEO Anil Yendluri. While the senior managements at most other private ports shy away from media interactions and are hardly accessible to small traders, Yendluri, a former IPS officer, is a welcome relief. We learnt this the very day we reached the port with a scheduled appointment with Yendluri. It was one of those hectic days for the top boss of the port. But as the clock kept ticking, we were pleasantly surprised by the beeline of port users walking into his office, and him personally addressing every individual. So, although our scheduled pre-lunch meeting with Yendluri turned out to be a chat over dinner, no one was left complaining.

 

Keeping up

In many ways, Krishnapatnam Port is a great example of the need to adapt to become successful. It was commissioned primarily to cater to booming iron ore exports. But it was quick to foresee the mess that India’s iron ore mining industry was to become and hence, quickly transformed itself to cater to the then upcoming coal rush. The commissioning of 1.2 million TEUs container handling capacity, within just a few years of starting operations, also helped it attract customers from Chennai Port, which was already battling with road connectivity and congestion issues. The early commissioning of its container handling capacity also gave it a first mover advantage over L&T-operated Kattupalli Port, which incidentally also has 1.2 Million TEUs capacity.

 

And among many of Krishnapatnam Port’s fans is the world’s largest container liner Maersk Line. “Maersk Line is calling Krishnapatnam Port since 2013 and the journey so far has simply been great! The port, apart from being a container terminal, has facilities to handle OOG (Out of Gauge) and special cargo too. It has warehousing facilities inside the terminal, which is used by our customers. The weekly rail facility connecting it with Hyderabad and Bangalore helps us a great deal in maintaining our schedule reliability. The people, including the top management, at Krishnapatnam Port are accessible, which plays a vital role during contingencies. Overall, the port is futuristic with its six-lane roads and a capacity to handle 40-60 rakes per day,” Maersk Line’s Trade & Marketing Executive Rohit Gawali tells The Dollar Business. Similarly, a Sitara Shipping official says, “Though we have had no direct dealings with this port so far, when we once negotiated with it on behalf of our principles for the discharge and storage of woodchips, we were offered very competitive rates.” Like Sitara Shipping, even Shipping Corporation of India doesn’t have any direct dealings with Krishnapatnam Port. But it is an admirer too. “Though our vessels are not calling the port, last year, one of our vessels went to it for Bollard pull, which was completed successfully on time,” Shipping Corporation of India’s SVP (T&OS) Capt. S. K. Yadav tells The Dollar Business.

 

Usual woe

While Krishnapatnam Port ticks on most of the requirements to be a successful port, continuation of its recent growth rates will depend, in large parts, on how it convinces exporters and importers, particularly those who use container cargo, to use its facilities. For when it comes to ports, it’s mostly a chicken and egg story. Until high volumes of cargo are generated at a port, mainline shipping liners avoid calling it, but until vessel frequency increases, traders refrain from using its facilities. It also suffers from connectivity concerns. For, while it has developed a dedicated 19 km railway line connecting it with the Chennai-Kolkata main line, and a dedicated 26 km four-lane road connecting it to NH5, some users believe there is scope for improvement. Similarly, the Indian government’s plan to set up a major port at Dugarajapatnam, located within Nellore district limits, might also lead to increased competition for Krishnapatnam Port in the future.

An ear for all

Other than some minor issues that even the best new ports suffer from, almost everything is in place at Krishnapatnam Port. And to handle any future contingencies, it has an incredible team of professionals. The ease with which it could take iron ore mining ban in its stride is a testament to this. Big smiles on the faces of two engineering students, who had also come to meet the port’s CEO to seek permission for summer internship at the port the day The Dollar Business met him, reaffirms this.

 

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