PPT profit dips 15% as iron ore, coal traffic contracts

The revenue surplus of Paradip Port Trust (PPT), the lone major port of the state, has slumped for the second consecutive year on the back of lower iron ore and coking coal traffic earnings.

The net profit in the year ending March 31, 2012 stood at Rs 230 crore, 15 per cent down from Rs 270 crore posted in the previous fiscal. In 2009-10, it was Rs 296 crore.

The main dampener was iron ore traffic, which fell by more than half to 6.85 million tonne during 2011-12, making it the lowest ever volume handled by the port, due to supply and logistics problems in ore movements from mining areas.

The port also lost 700,000 tonne traffic in coking coal handing in the past financial year as key steel manufacturing companies preferred the newly-opened Dhamra port for importing the fuel commodity, sources said.

Even though the port slashed traffic handling charges by 33 per cent for most commodities during 2011-12 to check the fall in cargo traffic following the guidelines of Tariff Authority for Major Ports, the total traffic handled by Paradip dipped to 54.25 million tonne, way below its target of 64 million tonne and lower than 56 million tonne handled in 2010-11.

Lower tariff charges also attributed to fall in profits, said S K Sahu, financial officer of PPT. But sources said, the port had to slash traffic handling tariff due to lesser demand for export and import trade of iron ore and coking coal arising due to higher prices and duties.

During 2011-12, the Union commerce ministry increased iron ore export duty from 20 per cent to 30 per cent adhering to its policy of preserving this key raw material for domestic steel mills amid supply problems, due to which major Chinese buyers shied away from buying high quality ore fines citing higher cost.

Meanwhile, crunch in iron ore supply and steps taken by the state pollution control board compelled many sponge iron makers to shut down their plants, affecting demand for coking coal, which are normally imported from Australia and Indonesia. Costlier dollar due to depreciating rupee also restricted the demand, trade sources added.

The port authorities, alarmed by slower business activities and sliding profit, last February offered Posco to use its unused facilities for importing capital goods and coal for its proposed steel plant near the area. Though Posco has agreed to accept PPT assistance despite maintaining its stand to build its own captive port, the proposal is yet to take off with no progress on Posco project work.

The port has meanwhile raised its traffic handling capacity by four million tonne in last financial year to 80 million tonne as per its capacity expansion plan, which aims to triple the current capacity to 251 million tonne by 2020. The port intends to build dedicated iron ore and coal berths.

To deal with the future competition from several smaller ports that are expected to come up in next five year on the Orissa coast, the port is planning to depend on other commodities such as crude oil, liquefied natural gas and wants to expand its container traffic business.

Paradip port has also proposed to the state government to develop a smaller port near Bahuda mouth close to Gopalpur and is awaiting government consent on the matter, said G Jagannath rao, chairman of PPT.