The Hindu Business Line : JNP container terminal — We can't match Maersk's bid, says Krishna Kotak

FINISHING as runner-up in a competitive bidding process for developing a prestigious project at the premier container port in the country is hardly anything to rave about.

But, not when you have given the successful bidder, and that too a giant such as the Danish firm Maersk A/S a run for its money. That's what United Liner Agencies of India Private Limited (a Kotak Group company) having interests in shipping and related business has done in the just concluded bidding process for developing a new container terminal at Jawaharlal Nehru Port (JN Port).

"It would be an understatement to say that I'm disappointed with the result... I'm dejected", says Mr Krishna B. Kotak, Director, ULA, which teamed up with Hamburg Port Authority and came so tantalisingly close to upstaging Maersk by quoting a revenue share of 31.888 per cent.

"Let us imagine a scenario... " Mr Kotak (Krishna Bhai as he is called by his peers in the industry) told Business Line here in an exclusive chat ... " the Prime Minister, Mr A.B. Vajpayee, calls me up and says Krishna Bhai I've heard that you have emerged the second highest bidder for the new container terminal being planned at JN Port. If I were to give you an opportunity to match the highest bid of the Maersk-Concor combine and take up the contract, what will you do?

"My answer to that would be a definite no," he says with all humility. "The difference between my bid of 31.888 per cent and the highest bid of 35.503 per cent submitted by Maersk is just a few percentage points. But, in quantitative terms, it translates into an amount of around Rs 650 crore. Quite frankly, I don't have that much financial muscle," Mr Kotak chuckles.

"After the result of the bidding process were announced, I was sitting with a senior official of a leading financial institution. I asked him what would be your response if I had submitted a revenue share bid of 36 per cent and whether you would have funded the project? You know what his reply was. Krishna Bhai, I would have considered you a reckless entrepreneur for having submitted a revenue share of 36 per cent. And, as to the second query of funding the project, I would have laughed you out of the bank saying it was kind of a joke," he recalls what the banker had told him.

Given this scenario and with an investment of over Rs 1,000 crore for developing the project, Mr Kotak feels that Maersk's bid was huge. "For a multinational company such as Maersk, it is a strategic investment... a different ball game altogether. Only they could have given such a bid," he said.

"Let me go as high as I could to win the deal." This is how Mr Kotak describes his own revenue share bid of 31.888 per cent, which has come in for lot of praiseOvercoming a mid-tendering crisis when its original consortium partner United Kingdom's CDC Capital walked out moments before the technical and financial bids were to be submitted to the JN Port Trust on December 1 last year, ULA roped in Hamburg Port Authority as its new equity partner with whom it only had a technical services agreement initially.

Enriched by the experience, Mr Kotak is bracing himself up to bid for the fourth container terminal being planned by the Port Trust for which the preliminary work is already on. " I've told the Port Trust officials that six months after the third terminal starts operations, the fourth terminal should come up. For that, the bidding process for the fourth terminal should be wrapped up by mid-December this year. They are on the job. But, I'm not interested in the container terminals being planned at Kochi and Kandla ports", Mr Kotak, whose ULA runs a box terminal in partnership with Dubai Ports Authority at Vizag Port, disclosed.