Kattupalli Container Terminal in TN: Manila firm cancels contract with L&T Shipbuilding

International Container Terminal Services said the contract was not beneficial to either party in its current form

Manila-based International Container Terminal Services, Inc (ICTSI) has cancelled an agreement for management and operation of L&T Shipbuilding Ltd's (LTSB) Kattupalli Container Terminal in Tamil Nadu.

"The mutual decision for the contract cancellation came after lengthy discussions and thorough consideration by both ICTSI and LTSB. Both concluded that the existing contract is not beneficial to either party in its current form," ICTSI informed the Philippines Stock Exchange and Securities and Exchange Commission.

The company will be reimbursed for the licence fee it paid to operate the terminal.

ICTSI has said the cancellation of the contract would not have any impact on the company's other operations and the group would continue to actively search for opportunities in India. However, whether this would have an impact on the Kattupalli project is not known.

LTSB is a joint venture between Larsen & Toubro Ltd and Tamil Nadu Industrial Development Corporation (Tidco). The container terminal was built with around Rs 2,000 crore. According to reports, the port has not been receiving enough orders and traffic. It handled around 5,900 TEUs of containers last year as against its capacity of around 1.2 million TEUs.

The facility was expected to attract some of the container traffics from Chennai port. Experts had said one of the major advantages would be free movement of containers. Due to congestion at Chennai port, export boxes take 1.5 to 3 days to reach the terminal. However, since Kattupalli is located outside the perimeter of the city, the traffic would come down drastically and it could save a day or two for the exporters, leading to price reduction.

Kattupalli can handle up to 400,000 containers per annum and can touch half-a -million-capacity with a single berth. The three-berth container terminal is part of L&T's around Rs 4,000-crore port-cum-ship building project set up jointly by L&T and Tidco in two phases on a 1,200-acre land at Kattupalli, 35-40 km from Chennai.