Delays due to litigations, regulations and clearance requirements of all sorts have taken a toll on the pace of growth of major ports, which are administratively under the Central Government.
Owing to many such reasons, out of the 23 port expansion projects that were slotted to be awarded this fiscal to increase capacity of major ports, only one has been awarded till date.
The beneficiaries have been ports under the State Governments, with private firms increasingly looking to develop and operate ports that provide more functional and operational liberty.
Non-major ports handled 35 per cent (315 million tonnes) of total cargo in 2010-11. By 2020, the non-major ports are projected to handle more cargo than major ports.
wide gap in growth data
The wide gap in growth data of these two categories of ports - notwithstanding a low base effect for ports under the State Government – reflects their story.
In the last five years, the non-major ports have grown at a compounded annual growth rate of 15 per cent, while major ports recorded a CAGR of six per cent.
Cargo handling
In 2010-11, major ports together handled 570 mt cargo, registering a 1.6 per cent growth over 2009-10. Non-major ports handled almost 315 mt cargo, recording close to nine per cent growth over previous fiscal (289 mt). The story was no different in 2009-10 with growth in cargo handled at major and non-major ports being 5.8 per cent and 35.4 per cent respectively.
Such has been the growth of these ports that the industry was forced to rechristen their category as “non-major ports” from “minor ports”.
Also, all port companies that trade on stock exchanges, such as Mundra Port SEZ, Gujarat Pipavav Port, Marg Karaikal Port (subsidiary of listed firm Marg Group) and Essar Ports, have most of their operations in ports under the State Governments.
FINANCIALS
On the income front, 12 major ports together recorded an annual growth of four per cent growth in fiscal 2011, with a total income of Rs 9,059.6 crore. Their net surplus – comparable to net profit – was up by 9.4 per cent, with the port registering a profit of Rs 1,923.6 crore.
The growth of non-major ports – equipped with flexibility in tariff setting, modern equipment and lower manpower costs – was much better.
For instance, Mundra Port and SEZ (MPSEZ) grew by 35 per cent with a total income of Rs 1,934 crore in fiscal 2011. The company's net profit, at Rs 986 crore, was up by 40.7 per cent during the period.
Similarly, Essar Port's revenues recorded a 58 per cent growth in first half this fiscal supported by higher tariff and commissioning of higher capacity at Vadinar, with the net profit multiplying to Rs 80 crore from Rs 8 crore.
In this context, major ports have to be strengthened fast through modernisation, and delegation of power to make them bigger beneficiaries in the country's growth story.
The Shipping Ministry has been working on several proposals for improving the functioning of major ports - such as captive port policy, relook at the regulatory environment, corporatisation, and the need to allow major ports' funds to be invested into other private ports - which await a final nod from the Government.
The sooner a decision is taken on these, the better it would be for the ‘major ports' – which employ 57,000 employees.