Vizag port faces cash crunch

By Shakeel M. Rasheed

VISAKHAPATNAM, MAY 11. In what appears to be a paradoxical situation, the Visakhapatnam Port Trust, which emerged as a premier port in the country by accounting for the highest cargo throughput during the just-ended fiscal, is facing a "critical financial crunch".

For the first time in its history, the VPT is poised to raise loans, the only time earlier it had benefited from external aid being from Japan for executing the mechanical ore handling system in the mid-seventies to facilitate export of iron ore consequent on an agreement signed between the Minerals and Metals Trading Corporation and Japanese steel mills.

Official sources told The Hindu that the VPT had drawn up a borrowing programme involving loans of Rs.250 crores from the money market primarily to finance its voluntary retirement scheme (VRS).

During 2000-01, nearly 2,100 employees of the port left under the new VRS, the financial implications per employee on an average, towards ex gratia and terminal benefits, working out to Rs.9 lakhs. The total commitment on the part of the VPT is estimated at a whopping Rs.190 crores.

Apart from the financial burden in executing the VRS, the port management has cited the capital plan outlay of Rs.90 crores for both continuing and new schemes besides non-Plan outlay of Rs.9 crores approved by the Ministry of Shippping for 2001-02 as justification for the borrowing programme. In all, the VPT is committed to spend Rs.99 cores on various development schemes during the current fiscal and Rs.190 crores for the VRS alongwith current liabilities from its internal resources alone.

The Vizag port has expressed its inability to meet the total commitment of Rs.290 crores from the anticipated resources to be generated during the current fiscal and is faced with the inevitable choice of seeking borrowings from an "outside organisation".

The VPT has proposed borrowing loans to the extent of Rs.200 crores during the current fiscal in addition a loan of Rs.50 crores already approved by its board and given the go-ahead by the Centre for raising from nationalised banks for a period not exceeding six months. The port intends raising the Rs.200-crore loan from scheduled banks or from "other organisations" and intends repaying it in three to five years.

Official sources said that the VPT toyed with the idea of obtaining dollar loan for the benefit of lower rate of interest but found that though such loans were economical at the beginning repayment of the principal could prove expensive given the fluctuations of the dollar rates. It was felt that by the time the loan amount was cleared, the interest and foreign exchange variation could well exceed the interest rates being offered on the Indian currency loan.

The VPT's borrowing programme has apparently not found all-round acceptance in port circles given that one its board trustees, Mr. D.K. Sarma, has differed with the loan plan and submitted in his dissent note that the port could be better off realising the outstanding dues of Rs.200 crores from Indian Railways towards terminal charges and Rs.17 crores from the Hindustan Petroleum Corporation Limited.

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