Kolkata port earns the highest income, but ends year with ₹210-cr net deficit

Kolkata Port Trust, India’s sixth biggest state-run port by volumes, earned more income than what Kandla Port Trust, the biggest state-owned cargo handler, generated from handling double the cargo volumes of the eastern coast port in the year ended March 2017 (FY17).

Yet, Kolkata Port Trust reported a net deficit, highlighting the complexities facing legacy ports saddled with large number of pensioners compared with modern, highly mechanised private ports.

India’s 12 major ports, or those owned by the Centre, posted a combined net surplus of ₹2,819.74 crore in FY17 on income of ₹11,894.56 crore from handling 647.63 million tonnes (mt) of cargo.

Since the Modi government assumed power in May 2014, the Shipping Ministry led by Nitin Gadkari has taken several initiatives resulting in the dozen ports increasing their operating surplus from ₹2,519 crore in FY14 to ₹3,599 crore in FY15, ₹4,309 crore in FY16 and ₹4,919 crore in FY17.

The net surplus of the 12 ports jumped from ₹1,026 crore in FY14 to ₹1,805 crore in FY15, ₹1,977 crore in FY16 and ₹2,820 in FY17.

The statistics for FY17 prepared by the Shipping Ministry reveals an interesting insight on Kolkata Port Trust, India’s only riverine port and among the oldest in the country. Kolkata earned ₹1,924 crore, the highest income among the 12 ports, on handling 50.31 mt of cargo, notching an operating surplus of ₹523.34 crore.

Yet, it ended the year with a net deficit of ₹210 crore, mainly due to higher provisioning for funding pension liabilities and retirement benefits of some 30,000 retired workers and higher dredging costs.

Kandla Port Trust earned ₹1,291.90 crore on handling 105.44 mt of cargo and posted a net surplus of ₹651 crore. In other words, Kandla earned less than Kolkata and still made a net surplus.

The higher revenue of Kolkata is attributed to its higher cargo handling rates compared with Kandla, which has one of the lowest rates among Indian ports, a ministry official said. Mumbai Port Trust earns much more than Kandla, yet it is a loss-making port.

Mumbai Port Trust earned ₹1,461 crore on handling 63.05 mt of cargo, yet posted a net deficit of ₹332.77 crore.

In comparison, Adani Ports and Special Economic Zone (APSEZ), India’s biggest port developer and operator outside state control, handled 169 mt of cargo (about one-fourth of the total volumes of the 12 major ports) in FY17 from eight operating ports/facilities, generating an income of ₹8,439 crores and a net profit of ₹3,920 crore. Thus, APSEZ’s net profit last year was more than what the 12 major ports registered during the period. All central public sector enterprises are required to pay a minimum annual dividend of 30 per cent of profit after tax or 5 per cent of the net-worth, whichever is higher.

This would have resulted in a dividend income of at least ₹845.92 crore to the government at 30 per cent of profit after tax from the 12 ports. But, barring Kamarajar Port, none of the other ports pay dividend to the government because they are run as trusts.

Kamarajar Port pays dividend because it is the only Central 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 further explains why the government is stripping the port trusts of some of the surplus cash accumulated over the years to fund construction of new major ports.

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