The Hindu Business Line : Ennore Port hopes to wipe out losses — Centre may disinvest stake next financial year

ENNORE Port Ltd, which manages Ennore port located north of Chennai, has reported a net profit for 2004-05 and is confident of wiping out its accumulated losses this financial year.

The company, which is two-thirds owned by the Government and one-third by Chennai Port Trust, will then be ready for the disinvestment of the Centre's stake next financial year. The turnaround this year was facilitated by financial re-engineering — swapping and pre-paying high cost loans with both the Government and Chennai Port Trust, which brought down the interest cost by at least Rs 10 crore and increased the cargo handled. Its revenues have also been increasing steadily, consistent with improvements in various operating parameters, according to company officials.

For 2004-05, Ennore Port Ltd (EPL) is likely to report a net profit of Rs 12.03 crore on income of Rs 91.94 crore against a net loss of Rs 5.79 crore on income of Rs 85.64 crore for the previous year. At the end of 2004-05, EPL is likely to carry forward an accumulated loss of Rs 22.59 crore.

During 2004-05, the port handled 9.479 million tonnes (mt) of cargo — 8.856 mt of coal for the Tamil Nadu Electricity Board (TNEB), 0.104 mt of petroleum products for Reliance Industries Ltd and 0.519 mt of iron for MMTC. In the previous year, it handled a total of 9.277 mt of coal for TNEB.For the current financial year, the port expects to handle 11.5 mt of cargo, with an anticipated increase in all the three commodities it handled last year. In line with this, EPL has projected its income to go up to about Rs 105 crore and net profit to about Rs 30 crore, which will wipe out its accumulated loss.

The average pre-berthing detention time has been reduced from 1.56 hours in 2002-03 to 0.417 hours in 2004-05. The average turnaround time has come down from 2.22 days to 1.63 days in this period, while the average berth day output has increased from 26,779 tonnes to 38,870 tonnes.

According to Mr M. Raman, Chairman and Managing Director, EPL, financial re-engineering involved front loading of equity in line with actual dates of investment, which resulted in the company reducing loans to the extent of Rs 100 crore and savings on interest during construction. Interest rates on loans from the Chennai port were reduced in line with market rates. Consequently, the interest charges have been coming down — from Rs 49.59 crore in 2002-03 to Rs 42.32 crore in 2003-04 and Rs 36.37 crore during 2004-05.

EPL swapped Rs 85 crore of high cost debt last year, with its average cost of borrowings from Chennai Port Trust coming down from 14 per cent to 9.75 per cent. Discussions are on with Chennai Port Trust to swap some more loans. EPL swapped Rs 50-crore loans with Chennai Port Trust and pre-paid Rs 75 crore to the Union Government. This was possible through borrowings from Canara Bank and Union Bank of India at an average rate of 7 per cent.

With EPL poised to wipe out its accumulated losses this financial year and carry forward a profit of about Rs 8 crore to the balance sheet, the company can expect to declare a dividend this year.

The Centre might think of disinvesting 10 per cent of its equity next financial year. Of the Rs 300 crore equity of EPL, the Union Government has pumped in Rs 200 crore and Chennai Port Trust Rs 100 crore.

EPL is going ahead with its development projects. It has granted licence to a consortium comprising IMC Ltd and L&T Ltd for a 3-mt-per-annum (mtpa) marine liquid terminal at an estimated cost of Rs 200 crore, which is expected to begin operations by 2007.

The company has initiated bid processes for an 8-mtpa coal terminal and a 6-mtpa iron ore terminal and is planning to put up a container terminal to handle 1 million twenty-foot equivalent units.

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