Bitten by the bug of corporatisation, five out of India's 12 government-run ports seem to be the most ripe entities to adapt to the Companies Act given their capacity expansion plans and cargo growth noted since last few years.
With business momentum having built up already, experts are of the view, ports such as Kandla, Jawaharlal Nehru Port,Tuticorin, Paradip and Visakhapatnam are best suited to come under the Companies Act.
In the Budget speech, finance minister Arun Jaitley announced that the government would encourage major port trusts to become companies under the Companies Act, in turn paving the way for the entities to become autonomous.
There are total 13 major ports spread across the 7,500 km coastal line of India. Of this, Tamil Nadu-based Kamarajar Port is the only one under the corporate structure. The remaining government-run ports continue to be under the Major Port Trust Act.
"All these five ports have the potential to double or even triple their cargo traffic going ahead. Connectivity to hinterland, trade spreadout and most importantly not-so-huge labour force are some of the strong parameters that will make it easier for these entities to swtich to corporatisation," Ramesh Singhal, chief executive officer at i-maritime Consultancy said.
Jawaharlal Nehru Port, for instance, has a total work force of just about 1800, of which only 900 employees are part of the Labour Union.
"Since the work force at JNP (Jawaharlal Nehru Port) is already small, it (the port) is not going to cut staff post corporatisation," said N.N. Kumar, former chairman of the Mumbai-based port."Job security has been the major concern of the Unions as corporatisation can lead to retrenchment, but in case of JNP there is no such issue. Due to this, the way towards corporatisation is quite smooth for this port," Kumar added.
However, the labour issue is being handled differently from port-to-port depending upon the workforce size. East coast based Visakhapatnam Port, for instance, will be offering Voluntary Retirement Scheme to its 1,500 employees of the total 4500 work.
"Modernisation of the entire port has been undertaken along with construction of new berths," said M.T. Krishna Babu, chairman of the Visakhapatnam Port. "Thrust is going to be laid on carrying out activities without any manual interface. Moreover, since the port will be handing over one of its iron ore berths to the Essar Group soon, the requirement of workers at the port will come down. Which is why we are offering the VRS," Babu explained.
Post retrenchment, Visakhapatnam is expected to have labour strength of 3,000, which can smoothen the way to corporatisation, said Babu. Paradip, like Jawaharlal Nehru Port, has smaller labour force of about 1,800 workers and so has no plans to cut staff, said Babu who is the in-charge chairman of Paradip.
Apart from job security, Labour Unions have also been asking for representation in the Board of Directors once corporatisation of ports takes place.
"Although the government is yet to issue the guidelines, it has been conveyed that only those with the requisite expertise will be independent directors on the board. There is clear indication from the government that while job security of port workers will be looked into and service conditions will not change, Labour Unions should also keep their expectations in tap," said Babu of Visakhapatnam Port.
Early March, workers of all the major ports had planned an indefinite strike against the government's decision to corporatise the sector.
While tradespread and cargo growth prospects are clearly visible at most of these ripe ports, where ever there is a gap, the entities are making every effort to fill it up.
For instance, though the contribution of container cargo to Paradip's total revenue in FY14 was just about 1-2 percent, the port is looking to grow its presence in the segment and is investing close to Rs 16,000 crore over the next 10 years to up its overall capacity to 270 million tonne from a little over 100 million at present.
"Paradip has good potential to capture the growing container traffic given its well developed hinterland. The port can tap container cargo like prawns and aluminium ingots among others," said Babu also the in-charge chairman of the port.
Currently, most of the container cargo from Bhubhaneswar flows to the Visakhapatnam Port, which 450 km from the city mainly because of lack of relevant infrastructure at Paradip which is only 125 km from Bhubhaneswar. Development of container facility at the Paradip therefore will surely lead to cargo diversion to this port resulting in competition for Visakhapatnam, said industry officials.
In terms of operational performance, the Chidambaranar port has been speeding up since last few years and is already very close to its FY15 target. In the year gone by, the port garnered 29 million tonne cargo nearing its target of 30 million.
"Efficiency of higher level has helped the port get fresh business leading to cargo growth on a year-on-year basis," said S. Anantha Chandra Bose, chairman of Chidambaranar port.
During Apr-Sep FY15, of the 13 major ports Kandla has the largest share in traffic handled as the Gujarat-based port contributed 46 million tonne to the total cargo of 288 million tonne. In terms of capacity utilization, Kandla was second in line in FY14 among the five ports following the Jawaharlal Nehru Port.
With two ports on the west coast (Jawaharlal Nehru and Kandla), one down south (V.O.Chidambaranar formerly known as Tuticorin) and two on the east (Visakhapatnam and Paradip), there will be a good spread of corporate structured ports to begin with, experts opined.
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