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Group: STANDALONE COMPANIES
Segment: REVENUES Rs 500-1,000 crore
The first thing that strikes a visitor to Kamarajar port at Ennore, about 20 km from North Chennai, is that is it spotlessly clean. This is a remarkable achievement considering that this government-run facility handles nearly 25 million tonnes of one of the world's dirtiest fossil fuels - coal - every year.
No, Kamarajar Port Ltd (KPL), the company that runs the port, has not been inspired by the government's recently-launched 'Swachh Bharat Abhiyan'. In fact, the credit for the port's smooth running goes to its leaders who completely mechanised operations early on. The port, for example, decided to use covered conveyor belts to ferry coal right from the moment it is unloaded to be carried to the power stations nearby. Power plants around the port, with 7,000 MW capacity, meet a large part of Tamil Nadu's requirements.
KPL was conceived in 1996 when courts passed judgments about pollution at the Chennai port because of the huge amount of coal it was handling for meeting the state's thermal power requirements, says Sanjay Kumar, Director (Operations), KPL. The port, since day one, enjoyed some advantages. It was on the Coromandel coast and had a natural creek. Plus, it was incorporated as a company under the Companies Act, which meant it could set tariffs on its own and not be governed by the Tariff Authority for Major Ports. It also had a captive customer in Tamil Nadu Electricity Board.
It started operations in 2001 as the 12th major port in India with two berths for handling coal. Right at inception, it decided to outsource most services, including piloting, towing, loading, unloading, tug assistance, dredging, stowage, operations and maintenance. It decided to follow what is called in industry parlance a 'landlord port' model. Mechanisation kept workforce to a minimum (labour trouble is a big issue at most ports) and ensured efficiency and good turnaround time. It was also helped by the fact that it got 2,000 acres of surrounding land and so could expand without the usual land acquisition challenges, though it has in the recent past acquired a few hundred acres more at market rates.
In spite of all these factors, a lot of credit goes to the management as well. For instance, in 2008, when Nissan was looking to export cars from India, it was scouting for a port. The KPL brass not only wooed Nissan but, once it agreed to sign a Memorandum of Understanding, it also worked overtime and built a berth with a capacity to handle three lakh cars annually in just two years.
M. Gunasekaran, General Manager (Finance), says the company invested close to Rs 150 crore to build the berth at a time its revenue was in the same region. "We liaised with government authorities to ensure all customer needs were met. We walk step in step with customers' requirements," says Kumar.
Last year, more than 1.8 lakh cars were exported from the port. As Chennai is home to a number of auto companies like Ford and Hyundai, others have also approached KPL for exports.
So, is KPL taking away business from the Chennai port? "We don't compete with them but complement them. We don't have a deliberate strategy to go after somebody else's customers. There is enough room for everybody to grow. After all, they own a third of our equity," says Kumar.
An employee of Adani Ennore Container Terminal Pvt Ltd, who spoke on condition of anonymity as he is not an authorised spokesperson, said: "We were supposed to operationalise the terminal in January 2017 but as the CMD of KPL, M.A. Bhaskarachar, has pointed out, we may start it in April 2016, nine months ahead of schedule. While a private company executing a project ahead of schedule is not surprising, I am impressed that in things like dredging and other areas, KPL has proactively kept pace with our progress. Full credit to their team, too." He credits the management with using the available land cleverly. "They don't allow the port to be used as a place for storage and ensure that it remains a place for transit."
Kumar says KPL has been able to do that because it is nimble. "There are no layers of bureaucracy here. Any customer, prospective or current, can reach out to the chairman or me or anybody in the organisation." One reason for this is that KPL has hired talent from the market. Kumar himself held a senior position in the Central Industrial Security Force before taking up his current role.
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The port has had its share of troubles, too. When Sical Logistics set up a berth for exporting iron ore, nobody anticipated the coming demand collapse. The berth is now being redesigned so that it can handle other things as well. "We have learnt valuable lessons from this. We will now ensure that we take all factors into consideration. If not for this setback, our top line would have exceeded Rs 1,000 crore this year," says Kumar.
A large land bank, assured business, good revenue visibility and a proactive management helped KPL earn Mini Ratna status within eight years of launch. Apart from the terminal that Adani is constructing, the Chettinad Group is building a multi-cargo berth, Indian Oil Corp is building an LNG terminal at an investment of Rs 5,000 crore and TNEB is investing an additional Rs 400 crore to ramp up facilities at the port. "We have visibility of at least Rs 8,000 crore investment over the next five years," says Gunasekaran.
In March 2014, KPL raised long-term debt of Rs 500 crore to fund some projects. That time, CARE Ratings had said that while KPL had several strengths, it faces stiff competition from non-major private ports like Krishnapatnam port, Karikal port and L&T's Katuupalli port. L&T's Kattuppali port is within a few kilometres of the KPL facility. While Kumar and his team are sanguine about KPL's prospects, they will have to keep executing flawlessly to stay ahead of the competition.
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