Ennore Port, officially renamed as Kamarajar Port Limited (KPL) early this year, has come a long way since its inception as a satellite port to the Chennai Port in 2001. The port has not only registered steady growth year over year, but is also planning to start its first container terminal very soon. The Dollar Business caught up with M. A. Bhaskarachar, Chairman-cum-Managing Director of Kamarajar Port Ltd., to find out how the port has managed to remain efficient and what’s the way forward for India’s first and only major corporate port.

Sisir Kumar Pradhan | @TheDollarBiz    

TDB: Kamarajar Port Ltd. (KPL) is the first and only major port in the country to be set up under the Companies Act. Operation-wise, how does it help you score over other major ports?

M. A. Bhaskarachar (MAB): We are a ‘Miniratna’ company. So, the powers delegated to such companies and its officials are available to us as well. Delegation-wise, we are far better than Port Trusts and are able to take quick decisions. We can easily enter into agreements with private parties for business, without going through the process of government approval. Moreover, we have authority to appoint people below the board level. In terms of administration too, there aren’t many government interventions. We have defined power which gives us the freedom and flexibility to take timely decisions in the interest of the company. Further, we operate on the ‘Landlord Port’ model, wherein the port provides basic infrastructure and manages resources. The port has licensed the development and operation of cargo handling terminals on build–operate–transfer (BOT) basis through public–private partnership (PPP). The obligation to bring in capital related to cargo handling operations and ensure efficiency in operations and management lays with individual BOT operators and captive users.

TDB: There are several instances of private partners complaining of not getting adequate support and facilities like railway connectivity, water and adequate storage area. Is this the reason why in recent times some private players, even after getting the approval to start operations, have backed out?

MAB: Private operators at KPL are getting a share in revenue. Under the PPP mechanism, a concessional agreement has been finalised and on the basis of bidding, an operator has been selected. As per the agreement, there are some obligations on the Port and some on the private operators. So, as per the concessional agreement, if the Port has agreed to provide some facilities, then it is compelled to provide it. If the Port doesn’t fulfills its obligation, the private party can impose a penalty or seek legal aid. As far as revenue sharing is concerned, land, waterfront and basic infrastructure is owned by us. So, we have all the rights to take a share in the revenue.

TDB: Private ports in India are being managed with a low manpower. Why is the same not possible in the public sector? Being a corporate port, you can set up and operate mechanised cargo handling without hiring too many people. So, why do you want third parties?

MAB: Here again the willingness to take risks is involved. The preference of the government is the PPP model, which means you are less involved in day-to-day operations. In private sector you are answerable to one individual, but in public sector that is not the case. Too many agencies are involved and you are accountable to all of them. If you take commercial decisions, they will be questioned. The problem is not with the officials or their competency, it is with the system. We are covered under CBI, CVC, RTI and many more audit requirements. So, while working for a government organisation, one has to be very transparent and follow a lot of procedures, which is really time consuming. For instance, if there is a requirement for a crane, I can’t just go ahead and buy it. Although I don’t need to go to the government or the Ministry of Shipping for approval, I do need approval from the Board for any big investment. Moreover, there are certain time consuming procedures that needs to be followed, like tendering which includes prescribing specifications, going for open tender etc.

TDB: Last year you registered a growth of 30% in revenue but your operating expenditure increased by just 1.6%. How do you manage to keep expenses under control?

MAB: One of the biggest reasons for this is that we operate with very few employees (just 100). We don’t really incur any expenditure in running the Port as most of its operations have been privatised or outsourced. In other major ports there are legacies of huge employee base and a major part of their expense consists of payments towards pension and other retirement benefits. In fact, ports like Kolkata, Chennai and Mumbai have huge numbers of pension holders, somewhere in the range of 20,000-30,000.

TDB: Chennai Port Trust has 33.33% stake in KPL. Does that put any kind of pressure when you compete with them?

MAB: We are not a competitor to them. In fact, we want to grow together. KPL pays huge dividends to Chennai Port Trust, which is increasing every year. By now, we must have paid them more than their initial investment. We also have a very good synergy with them. For example, for cars, we handle a particular customer and they handle some other. We have not dragged anybody from Chennai Port. The user has selected us.

TDB: Tell us something about the container terminal construction allocated to Adani? L&T has an operational container terminal very close to Kamarajar Port. There is demand and supply mismatch. Do you think there is enough cargo to feed both the container terminals?

MAB: Adani will start work on the container project this month and it is expected to be completed by mid-2016. The container cargo growth is there to feed all the ports, and in the next 4-5 years it will double. Recently when Chennai Port Trust also decided to upgrade its container handling capacity, it carried out an extensive survey to assess the containerised cargo volume. Only after it did they give the green signal to the project. However, that project seems stalled as of now. So, we are taking up that opportunity. We have conducted market surveys and the consultants have found out that the container traffic, as studied by Chennai Port, will be available in a year or two. Temporarily, there is a feeling of excess of supply compared to demand because of recession in developed economies.

TDB: When you picture KPL long-term, what do you see?

MAB: We are going to construct one more car terminal, one common user coal terminal and a liquid cargo terminal. These three projects will be taken up during 2016. An LNG project has been awarded to Indian Oil Corporation though the construction work has not yet started. Some other projects which have been awarded are: four new berths including one container terminal, one multi-cargo terminal, one LNG and one coal berth for TNEB. Discussions are also on with the government to make use of the iron ore facility for other cargo.