Published on April 12th, 20170
What does the FY17 Performance of 12 Major Ports Reveal?
India’s 12 major ports or those owned by the union government posted a combined net surplus of Rs 2,819.74 crores in the year ended 31 March 2017 on income of Rs 11,894.56 crores from handling 647.63 million tonnes (MT) of cargo.
In comparison, the net surplus of the dozen ports was Rs 1,977.16 crores on operating income of Rs 10,998.70 crores from handling 606.47 MT of cargo in the year to March 2016.
All central public sector enterprises are required to pay a minimum annual dividend of 30% of profit after tax or 5% of the net-worth, whichever is higher, subject to the maximum dividend permitted under the extant legal provisions and conditions, according to the Department of Public Enterprises.
This would have resulted in a dividend income of at least Rs 845.92 crores to the government at the rate of 30 per cent of profit after tax. But, barring Kamarajar Port Ltd, none of the other ports pay dividend to the government because they are run as trusts.
Kamarajar Port, pays dividend because it is India’s only union government-owned port that is run as a company.
This explains why the government is eager to convert the port trusts into companies but with no success so far. Even the bill to convert the port trusts into port authorities, which is now before Parliament, does not solve the dividend issue.
That also explains why the government is stripping the port trusts of some of the surplus accumulated over the years to build new major ports such as the ones planned at Sagar Island in West Bengal, Dugarajapatnam in Andhra Pradesh, Vadhawan in Maharashtra and Enayam in Tamil Nadu.
Accordingly, Kolkata Port Trust has been directed to take a 74 per cent stake in the Sagar Island Port project, Jawaharlal Nehru Port Trust in Vadhawan Port project, Visakhapatnam Port Trust in Dugarajapatnam Port Project and Chennai, Kamarajar and V O Chidmbaranar Port Trusts in Enayam Port project.
JNPT has also been asked to build a dry port at Jalna in Maharashtra.
Since the late 1990s, when the major ports sector was opened for private funds, the Port Trusts have always preferred private investors to set up new cargo handling facilities given the funds crunch and on efficiency grounds. This has been a point of contention between the Port Trust management and the labor unions who wanted the port trusts to develop new facilities from their own internal funds.
At the same time, the workers’ unions have opposed the plan to use Port Trusts funds to build greenfield ports, arguing that the government should directly fund such new projects.
The constant pressure exerted by the workers’ unions has led Kandla Port Trust to build two berths from its own internal resources.
By improving the performance benchmarks to global standards, the average output per ship berth day at the 12 ports rose to 14,583 tonnes from 13,156 tonnes a year earlier. The total average turn-around time dropped to 3.44 days from 3.64 days a year earlier, though the average turn-around time on port account was marginally higher at 2.05 days from 2.02 days last year.
Since the Narendra Modi government assumed power in May 2014, the shipping ministry led by Nitin Gadkari has taken several initiatives resulting in the 12 ports increasing its operating surplus from Rs 2,519 crores in financial year 2014 to Rs 3,599 in FY15, Rs 4,309 in FY16 and Rs 4,919 in FY 17.
The operating margins of the dozen ports rose from 28 per cent in FY 14 to 35 per cent in FY15, 39 per cent in FY16 and 41 per cent in FY 17.
The net surplus of the 12 ports jumped from Rs 1,026 crores in FY 14 to Rs 1,805 in FY15, Rs 1,977 in FY16 and Rs 2,820 in FY17.
The statistics for FY17 prepared by the shipping ministry has an interesting story to tell on Kolkata Port Trust, India’s only riverine port and among the oldest in the country. Kolkata earned Rs 1,924.11 crores, the highest income among the 12 ports, on handling 50.31 MT of cargo, yet it ended the year with a net deficit of Rs 210.01 crores, down from the net deficit of Rs 243.44 crores last year.
Kandla Port Trust, India’s biggest state-owned cargo handler by volumes, earned Rs 1,291.90 crore on handling 105.44 MT of cargo (the only major port to reach 100 MT of cargo a year) and posted a net surplus of Rs 651.02 crores.
Whereas, JNPT, India’s biggest container gateway, earned Rs 1,677.90 crores on handling 62.02 MT of cargo (including 4.5 million TEUs) and reported a net surplus of Rs 1,303.89 crores.
Mumbai Port Trust earns much more than Kandla; still it is a loss-making port.
Mumbai Port Trust earned Rs 1,461.09 crores on handling 63.05 MT of cargo, yet posted a net deficit of Rs 332.77 crores, down from the net deficit of Rs 473.57 crores last year.
How does the 12 major ports stack up against their private rivals? The statistics speaks for themselves.
Adani Ports and Special Economic Zone Ltd (APSEZ), India’s biggest port developer and operator outside state control, handled 152 MT of cargo in the year ended 31 March 2016 (the company is yet to announce the results for the financial year 2017) from eight operating ports, generating an income of Rs 7,941 crores and a profit after tax of Rs 2,867 crores.
APSEZ’s net profit last year was more than what the 12 major ports registered this year.Share Follow