The Jawaharlal Nehru Port Trust (JNPT), Mumbai, will be fully corporatised by June this year. It will be the first existing port to be corporatised in the country.
Secretary of the department of shipping R Vasudevan said the government had set milestones for meeting this deadline.
This is in line with the port corporatisation plan cleared by the Union Cabinet, last year. JNPT corporatisation is expected to become the model for restructuring the other 10 major ports as well.
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As a first step, the JNPT has been asked to get itself registered as a company. Currently, it is registered as a trust and comes within the purview of the Major Port Trusts Act. Official sources also said, JNPT had already been asked to seek registration with the Registrar of Companies, under the Companies Act of 1956. This would mean that by 2001 JNPT would have an overhauled accounting practice in line with the existing public sector undertaking in the country, complete with an assets and liabilities and a profit and loss account, instead of the existing revenue and expenditure account.
The second milestone is to finalise its memorandum of association and its articles of association, mandatory for all entities coming within the purview of the Companies Act. The third milestone to be achieved is finalising the share holding patterns and the shareholders agreement.
What now remains to be finalised is the debt equity ratio of the company. The sources said that the consultants to the corporatisation efforts, Cornell Group Inc, had recommended a debt equity ratio of 3.6:1, with an equity base of Rs 368 crore. This equity base would imply that the entire World Bank loan to the port would be capitalised. This would mean that JNPT would have a debt of about Rs 960 crore.
However, sources said, that JNPT was not in agreement with consultants recommendation, and had instead sought a debt equity ratio of 1:1. It has also asked the government to assume the repayment liability of the entire World Bank loan component, since it has an accumulated debt service liability of Rs 1,695 crore, for which there is a moratorium on repayment till March 2,000. This debt service liability includes the accumulated interest and principal liability on the World Bank loan and interport loans. Accumulated debt service on the World Bank loan alone is estimated to be in the region of about Rs 825 crore.
The port is also expected to carry out valuation of the assets. However, the exact methodology for such a valuation has not yet been finalised. The current proposal is to value the assets on the basis of the historic cost, since the value of the assets would be more acceptable on the balance sheet.