Kamarajar Port Limited: Corporatisation results in efficiency

Corporatisation results in efficiency

The only corporatised major port in the country, Kamarajar has been showing impressive performance over the past few years. During the period 2011-12 to 2015-16, traffic handled by the port grew at a compound annual growth rate (CAGR) of 21 per cent, while operating income witnessed a CAGR of 25.5 per cent. It is also one of the few major ports that has managed to meet and surpass annual traffic targets set by the Ministry of Shipping (MoS) in the last five years. Corporatisation is likely to be the primary reason for this, as it helps the top management take decisions quickly. The corporatised structure also brings in greater uniformity and standardisation, better corporate governance and enhanced delegation of powers. At present, the port has several projects on the anvil, ranging from the development of a container terminal and two coal berths to deepening of berths. Overall, these projects are expected to increase the cargo handling capacity to 80 million tonnes per annum (mtpa).

Background and performance

Located on the Coromandel coast about 24 km north of Chennai port, Kamarajar port initiated its operations in 2001 by catering to the coal demand of Tamil Nadu Electricity Board-operated power stations. It is the only major port that is operated as a corporate entity – Kamarajar Port Limited (KPL). The port has a total of six berths – three dedicated coal berths and one each for handling automobiles and general cargo, petroleum-oil-lubricants (POL) and iron ore, with a combined capacity of 45 mtpa. Road connectivity to the port is via National Highway (NH)-4, NH-5 and NH-45, while rail connectivity is through the Chennai-Kolkata railway line.

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Cargo traffic at Kamarajar port grew at a CAGR of 21.13 per cent during the period 2011-12 to 2015-16. In 2015-16, the port handled 32.21 million tonnes (mt) of cargo, witnessing a year-on-year growth of 6.5 per cent. Of the total cargo, 52.8 per cent (17 mt) was handled by captive users, 39 per cent (12.59 mt) by public-private partnership operators and the remaining 8.2 per cent (2.6 mt) by the port. In April-May 2016, the port handled 5.17 mt, against 5.68 mt handled in the corresponding period of 2015-16.

At present, the predominant commodities handled by the port are POL and coal. Commodity composition of cargo handled at the port has changed over time. Although coal still accounts for the highest share in traffic, its share declined from 87.7 per cent (13.12 mt) in 2011-12 to 79.5 per cent (25.6 mt) in 2015-16. At the same time, the share of POL increased from 3.3 per cent (0.5 mt) in 2011-12 to 12 per cent (3.88 mt) in 2015-16. Coal recorded a CAGR of 18 per cent while POL registered a CAGR of 67 per cent during the five- year period 2011-12 to 2015-16.

The majority of the inbound and outbound cargo at the port is evacuated through roads and inland waterways. In 2014-15, 100 per cent of the inbound cargo was evacuated through roads and around 50 per cent of the outbound cargo was evacuated by inland waterways.

Capacity at Kamarajar port grew at a CAGR of 9.76 per cent during the past five years. Capacity utilisation rates increased from 48.26 per cent in 2011-12 to 72 per cent in 2015-16. The port’s efficiency declined in 2015-16, as reflected in increasing average turnaround times and pre-berthing detention times. The average output per ship berth-day of the port was 31,080 tonnes in 2015-16.

On the financial front, there was an improvement during 2015-16 over the previous year. The operating ratio fell sharply from 32 per cent in 2014-15 to 19.8 per cent in 2015-16.

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Key ongoing and upcoming projects

At present, there are eight ongoing projects, which are expected to add over 34 mtpa of capacity by 2018. These relate to the construction of coal berths, a container terminal and a roll-on roll-off (ro-ro)-cum-general cargo berth, etc. Apart from this, there are four projects worth Rs 8 billion at the planning stage.

Further, in order to handle larger vessels at the port, KPL is undertaking a major capital dredging project. In May 2016, it issued a letter of intent to International Seaport Dredging Limited for the execution of Phase IV of the dredging project  at an estimated cost of Rs 2.57 billion. The scope of the project includes deepening of the outer and inner approach channels from chart datum (CD) 20 metres to 23 metres and from CD 19 metres to 22 metres, respectively, dredging the basin area up to 21 metres and increasing the channel length to 7,680 metres from the existing length of 5,200 metres.

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Overall, projects worth Rs 86 billion involving a capacity addition of over 37 mt are on the anvil. The commodity composition of traffic at the port is also likely to change with the upcoming container and ro-ro terminals. These projects will enable the port to achieve its vision of becoming a mega port on the eastern coast of the country with world-class facilities for providing efficient cargo handling services. However, the timely execution of these projects will be key to this.