Date:04/11/2007 URL: http://www.thehindu.com/2007/11/04/stories/2007110457561900.htm

Business

Karaikal Port, Malaysian firm form JV

Special Correspondent

To manage the upcoming all-weather deep port

Port project to
cost Rs. 1,000 crore
To have warehousing facility

CHENNAI: Karaikal Port Private Ltd. (KPPL), a wholly-owned subsidiary of Marg Constructions, has roped in Pembianaan Redzai Sdn Bhd of Malaysia to form an independent company to manage the upcoming all-weather deep port being developed by it.

The yet-to-be-named equal joint venture will enter into an operation and management contract with KPPL for a concession period of 30 years. The Marg Group, it may be recalled, had made a foray into port development in January 2006 when the Puducherry Government awarded KPPL (equity size Rs. 114 crore) the Karaikal port project on BOT (build, own and transfer) basis. The project is coming up on 600 acres. It will also have a warehousing facility on a one-lakh sq. ft. space for cargo handling.

Addressing a press conference here recently, G. R. K. Reddy, Chairman and Managing Director, Marg Constructions, said the joint venture with Pembianaan would have an equity capital of around $1 million. The Malaysian company, he said, had also showed interest in picking up equity in KPPL. He, however, hastened to add that it was too early to discuss Penbianaan’s equity participation in KPPL. The port project would come up in three phases and involve an investment in excess of Rs. 1,000 crore. Eventually, it would have a capacity to handle 10 million tonnes of assorted cargo. The 3.3 million tonne capacity first phase of the project, involving an investment of Rs. 416 crore, will be come up by 2008-end. It will have an equity component of Rs. 114 crore and a debt portion of Rs. 302 crore. A consortium of bankers led by Indian Bank had extended loan to the project at 10 per cent interest, Mr. Reddy said. Repayment would commence after a two-year moratorium, he added. KPPL had so far invested Rs.140 crore into the project. “Work is going on in full swing,” the Chairman added. Work on the four million-tonne capacity second phase would start in January 2009. The second phase would cost Rs. 250 crore. “Funding is not a problem,” Mr. Reddy said.

To a question, Mr. Reddy said the project would achieve break-even after two full years of operations. He estimated the return on investment to be 20 per cent for the project.