Kakinada Sea Ports records Rs 12-crore turnover in Q1

Improved marketing efforts buoy performance

The private sector Kakinada Sea Ports Limited (KSPL) has achieved a record turnover of Rs 12 crore in the first quarter of the current financial year. This is an all-time high revenue for the company which has been operating the Kakinada Deep Water Port since 1999.

The ship-to-ship (STS) operations are the main contributing factor to this development. KSPL handled STS cargo of 37 lakh tonne and general cargo of around 10 lakh tonne in the first four months of the current fiscal.

According KSPL director M Srinivas, the cargo handled during the first quarter period amounted to almost 85 per cent of the cargo handled during the last financial year.

The turnover was never beyond Rs 5-6 crore in all the quarters in the last five years, he said.

During 2003-04, the port handled a total cargo of 55.59 lakh tonne, including a general cargo of 23.19 lakh tonne and 32.4 lakh tonne of STS cargo (crude oil). The total cargo handled by KSPL during 2002-03 was only 34.58 lakh tonne.

The growth in performance was on account of improved marketing efforts besides the concessional profit sharing allowed by the government for the first two years of STS handling, Srinivas said.

As per the original concession agreement, the operator has to share 20 per cent of its gross revenue in the first five years up to 2003-04, and 22 per cent of gross revenue from the current fiscal.

In 2001, the KSPL management urged the state government to share the revenue at lesser percentage on transhipment operations (STS) to encourage the crude handling from the Kakinada Port.

Then TDP government agreed to share seven per cent revenue on STS operations for a period of two years, ie, 2002-03 and 2003-04.

KSPL had handled 1.7 million tonnes of crude oil in 2002-03 and 3.2 million tonnes of crude oil in 2003-04 before Hindustan Petroleum Corporation Limited and Indian Oil Corporation shifted their operations from Vizag port to KSPL on account of competitive handling charges and other advantages from 2004 onwards.

KSPL has recently signed an MoU with HPCL, IOC and other oil companies to handle about five to six million tonnes of crude oil annually from this year onwards.

The state government and KSPL stand to gain from this migration of STS operations, but Vizag seems be the loser as this STS cargo has been diverted from the Vizag port because of competitive rates offered by KSPL.

KSPL came forward to share 22 per cent income with the government as per the concession agreement from this year onwards.

The gross income of the company rose from Rs 13.2 crore in the first year of takeover of the port in 1999-2000 to Rs 20.5 crore in 2003-04, according to company figures.

At the current rate of cargo operations, more than three million tonnes of crude oil and around six million tonnes of general cargo are expected to be handled during the current financial year. The work on rail connectivity is expected to be completed by the year end, which will further boost the general cargo shipment, according to Srinivas.

The cargo being handled by the Kakinada Deep Water Sea Port include ammonia, bentonite, cement clinker, vegetable oil, iron ore, molasses among others.

According to the company director, KSPL paid the sale value of movable assets of Rs 26.4 crore besides furnishing all the bank guarantees relating to performance security and minimum guaranteed amount of Rs 15 crore to the state government on August 11, 2004.

N P Ramakrihana Reddy, additional secretary of transport, roads and buildings department, confirmed the payments and also acknowledged the dramatic growth in KSPL's cargo handling operations.