The promise of a rail link from the Chennai Port to Thiruvalluar (less than 20 km from the HMIL factory), though not part of the state's incentives, was a verbal commitment given when Hyundai decided to set up its plant in the state. The rail link is also expected to help other industrial units in the region to move their cargo to and from the port.
Hyundai, the largest exporter of cars from India, is planning to double its car exports to 300,000 from 150,000 in 2007-08. The current expansion programme with a Rs 4,000-crore investment by Hyundai would in part take care of the increased demand in overseas markets.
Chennai Port officials told Business Standard they would soon discuss the issue with HMIL executives. They, however, made it clear that this will not be at the cost of HMIL's export.
A senior official at the port said, "We are handling (Hyundai) cars for its brand value and not for profit. The port is losing a sizeable revenue due to this." The port has given 60,000 sft of land to the car manufacturer to park the cars on the West Quay for which the company is paying Rs 2.75 crore a year as cargo charges. Whereas for a 40,000-sft land inside the port an iron ore exporter is paying around Rs 47 crore.
The port official added, "Hyundai is using our land as just a storage yard. We are seriously thinking of taking over yard management from the car manufacturer inside the port."
More From This Section
Hyundai's cargo within the port is currently handled by a third party. Port officials said inefficiencies in handling of the cargo had led to longer berthing time for ships and blockage of space for longer period than required. The yard used by Hyundai is not on an exclusive basis. Hence, the port would be in a position to use the space optimally by taking over the yard management.
Reacting to this development, an HMIL spokesperson said, "We are facing difficulties in transporting our cars to the Chennai Port and it can be done only during limited hours in a day, between 10 pm and 8 am. The time is not adequate and it's also congested and we feel that a rail link would help solve the problem."
A senior government official, however, said, "We have not made any such promise to the car manufacturer." The official instead highlighted Hyundai's poor logistics planning for its problems inside the port.
Port officials said HMIL had in the past used power tactics, like threatening to move to the Ennore Port, to draw more incentives from the Chennai port. However, according to this official, this might not be easy considering the company would have to make fresh investments in Ennore Port to facilitate exports of cars.
Attempts to access any other port in the country would only raise the cost of exporting, thus upsetting the financial viability of the exports.