Haldia Bulk Terminal’s exit highlights the peculiar problems of West Bengal – trade unionism, political interference and cartelisation – that make doing business difficult.
Last Wednesday, Haldia Bulk Terminals, a joint venture between home-grown ABG Infralogistics and French company Louis Dreyfus Armateurs, announced that it was pulling out of its 2010 contract with the Kolkata Port Trust to handle cargo at two berths till 2020 at the Haldia Dock Complex. The premature exit is being seen as West Bengal Chief Minister Mamata Banerjee’s Singur moment. Four years ago, Tata Motors had shut its factory (to make the Nano) at Singur in West Bengal and moved the project to Gujarat. Though the agitation against the factory was led by Banerjee, the blame fell at the doorstep of Buddhadeb Bhattacharjee, the then chief minister. This time, Banerjee can’t deflect the blame.
Though the trigger for the exit was the abduction of three employees, including the family of one of them, it helps ABG and its French partner cut their losses. Their accumulated losses at Haldia, ever since they began operations in 2010, stand at Rs 60 crore. It reported a loss of Rs 34 crore in 2011-12. The Kolkata Port Trust has said it won’t allow Haldia Bulk Terminals to remove its equipment from the sites. Gurpreet Malhi, the chief executive officer of Haldia Bulk Terminals, has said that these assets (six cranes and 50 dumpers) “are owned by the company. Any attempt to prevent us from removing them will be illegal and tantamount to theft.” All told, the company has invested almost Rs 160 crore at the two berths.
It had started on a positive note, though. In 2007-08, Haldia Bulk Terminals sprang a surprise by emerging the lowest bidder for two cargo-handling berths at the dock. The terms were: whoever promised the Kolkata Port Trust the lowest rates for mechanised handling of cargo on berths 2 and 8 would get the contract. Haldia Bulk Terminals had quoted a figure of Rs 75 per tonne, which was lower than the four others in the race. For the company, it appeared to be a lucrative proposition. Business was expected to be good as the dock was part of the Kolkata Port Trust, and the only gateway to the eastern and the northern states of India as well as the landlocked countries of Nepal and Bhutan.
But, the journey was far from smooth from the beginning, alleges Malhi. “From the very start, there was a bias on the part of the Kolkata Port Trust to cripple the project, giving priority to manual berths,” he says. There are 17 berths at Haldia. Three of these, of which two were allocated to Haldia Bulk Terminals, are mechanised, handling dry bulk cargo, and the rest are manual. The company wanted nine million tonnes of the 17 million tonnes of dry bulk cargo handled at Haldia. However, it was allotted 5.5 million tonnes. Actually, the Kolkata Port Trust could have saved a lot of money by utilising the mechanised berths to capacity. The non-mechanised berths were working on a much higher rate of more than Rs 150, while Haldia had quoted a price of Rs 75. But, the preference for manual berths continued.
A company called Ripley handles more than 50 per cent of the non-mechanised work at Hadia . “We handle 4B, 5, 6, 7, 9, 10 and 13,” says Dhruba Dutta, senior executive, operations, of Ripley, who refuses to divulge further details. This is where politics comes in. “Ripley has a monopoly over the manual operations and is close to the ruling Trinamool Congress. Moreover, the onshore operations are handled by these companies without any proper tendering process, ” says a senior Kolkata Port Trust official who does not want to be named. Ripley’s promoter, Swapan Sadhan Bose, is a former Rajya Sabha MP from the Trinamool Congress, and his son, Srinjoy Bose, is a sitting Rajya Sabha MP. There are also allegations that of the 19 board members of the Kolkata Port Trust, seven are directly or indirectly linked to Ripley. Shoumik Bose, who is in charge of operations at Ripley & Company, refuses to comment on the issue. The state Congress has demanded the dismantling of the Kolkata Port Trust board, alleging nexus between its members and the Trinamool Congress.
Haldia Bulk Terminals, which started operations in September 2010, had been complaining about low volumes now and then. In August this year, it wrote to the Kolkata Port Trust accusing it of failing to make good on its promises, resulting in the company paying through its nose for keeping the berths operational. It said it would be forced to suspend operations if the cargo allocation didn’t change. It stopped work soon after that. The Kolkata Port Trust, in turn, moved the Calcutta High Court seeking a direction to Haldia Port Terminal to resume work.
Politics at play
Allocating more cargo wouldn’t have been easy. The Kolkata Port Trust (it has two docks: Haldia and Kolkata) has seen cargo fall from 57.3 million tonne (mt) in 2007-08 to 43.2 mt in 2011-12, largely as a result of the global slowdown, lower draft and the rise of rival ports on the eastern coast. The court had said cargo could be diverted to other berths only if the mechanised berths were engaged. But diversion of cargo to the mechanised berths spurred a workers’ agitation at the manual berths, worsening the law and order situation in Haldia.
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In September the company was forced to retrench 275 workers. They were in excess of its requirement. It had hired these workers in 2010 pandering to requests from Lakshman Seth of the Communist Party of India (Marxist), the largest component of the ruling Left alliance. Later, it hired about the same number again, this time upon requests from Trinamool Congress MP Shubhendu Adhikari. The retrenched workers, playing into the hands of their political backers, launched into an agitation and made things more difficult for Haldia Bulk Terminals. The company moved the Calcutta High Court for maintenance of law and order. But despite paying Rs 17.5 lakh for the deployment of police personnel to maintain law and order, Haldia Bulk Terminals officials were attacked at Haldia. On September 28, a mob of 50 workers attacked the employees and injured four of them. On Sunday, three officials — Manpreet Jolly, Jagadish Behara and Bushan Patil along with his wife and 1-year-old daughter — were abducted at gunpoint by an unidentified mob, allegedly backed by the Trinamool Congress. This proved to be the proverbial last straw, leading the company to shut operations. Chief Minister Mamata Banerjee only added fuel to it when she labelled it a “conspiracy by the media to tarnish the image of the government”.
Haldia Bulk Terminals’ exit will hit the Kolkata Port Trust hard. “We were making a net gain of Rs 152 per tonne at the mechanised berths against Rs 65 per tonne from other berths,” an official said. Suspension of operations at the mechanised berths will cause an immediate revenue loss of 75 per cent on dry bulk cargo, amounting to Rs 90 crore annually. Haldia Bulk Terminals is now expecting a long arbitration with the Kolkata Port Trust as it is moving the court for compensation. The Kolkata Port Trust, too, is gearing up for a legal battle. “It was a global tender and we never dealt with them in a biased manner. We persuaded them to stay back at Haldia. We will also claim for compensation for the losses that we may suffer in the next eight years,” says Manish Jain, the acting chairman of the Kolkata Port Trust.
A long-drawn battle is on the cards.