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Ports' earnings look up on falling rupee - 2011-12-19

A marginal dip in cargo handling notwithstanding, the depreciating rupee has brought some cheer for ports. This is because most major ports make up to a quarter of their earnings in dollars. The share of dollar-linked earnings varies depending on the extent of export import (EXIM) cargo handled by a port because specific charges of the EXIM cargo are billed in dollars. The dollar earnings range from five-25 per cent of total earnings, which means an appreciating dollar, marks a significant upside. “JNPT has 90 per cent EXIM cargo, whereas on the other extreme end, Ennore handles only 25 per cent EXIM cargo,” Mr Anand V. Sharma, Director, Mantrana Maritime Advisory, said. Within the EXIM cargo, ports book all ship-related charges for foreign ships in dollar terms. So, charges such as port tariffs, towage, ship berthing, pilotage and anchorage from export-import shipping firms are received by ports in dollars. “The vessel-related charges constitute close to 25 per cent of total charges, remaining would be cargo handling charges which are in rupee terms,” Mr Anand said. “To the extent rupee slides, Mormugoa port gains in terms of vessel-related income. Roughly we may estimate to gain 10 per cent provided rupee does not slide further,” Mr P. Mara Pandiyan, Chairman, Mormugao Port, told Business Line. The Mormugao Port Trust's vessel-related charges are denominated in dollars. The port does not technically “book” its earnings in dollars as earnings are collected in rupees only, based on the exchange rate on the date of arrival of vessel, Mr Pandiyan explained. The income gain to the Kolkata port due to rupee depreciation is relatively limited. “About five per cent of our total income is linked to the dollar,” Mr M.L. Meena, Chairman, Kolkata port, said. MPSEZ declined to comment on the issue stating that this is “commercial information”. Essar Ports also did not comment stating that their port is used primarily for captive purpose.

The Shipping Ministry has not studied the net impact. “For ports earnings, rupee depreciation is a positive. But, on the expense side, there could be a negative impact through expenses in dredging. We have not studied closely the net impact on major ports,” Mr K. Mohandas, Secretary, Ministry of Shipping, said. Since November, rupee has fallen by 10 per cent against the dollar. In terms of cargo handling though, major ports registered a marginal dip in cargo handled in November. The depreciating rupee is likely to leave a larger impact in the current fiscal's earnings. After all, since April 1, the beginning of this fiscal, rupee has fallen by 22 per cent against the dollar, touching a low of Rs 54.23 against a dollar on Thursday. Major ports, meanwhile have registered a muted growth of below two per cent in cargo handling during the April-November period.

Source: Hindu Business Line