Next year, for the first time in decades, the port will have a deficit. What are the reasons?

The estimates are that there is likely to be a deficit. One reason is that the cargo instead of increasing is decreasing. And our employee costs are increasing. The wage revision is still undernegotiation. We still do not know how the settlement will take place. The situation seems irreversible.

Is the port in for a long spell of deficit earnings?

We are certainly trying to see that the reduction in cargo reverses. That is where our effort will have to be.

Where is the potential for that? Containers, general cargo?

Both really. The reduction in cargo is partly due to decline in economic growth. All the ports put together also, there cargo growth has either been stagnant or there has been a small decrease. So when the economic growth picked up, and so do imports and exports, I am sure Mumbai port will see an increase in traffic. Also the efforts that we are making right now should result in getting some traffic that is being diverted for the time being to JNPT and maybe the NSICT.

What is the potential for cost cutting?

The VRS will only increase your deficit. The one area we must seriously look at is overtime costs. The overall overtime paid is Rs 50 crore. Nowthat is a substantial amount. On VRS, 32,000 is our total workforce. The issue really is manning scales. This has been under discussion for some time. At the national level, also we have broached the issue from the management. We have told the unions that the scales have to be rationalised. Once this is done, we will have an idea of where there is excess labour. Then comes the issue of whether we can redeploy them or have to give them a VRS.

Given your huge workforce, what are the kind of resources you will have to commit to the exercise?

We have not worked that out yet. A lot will depend on the kind of scheme we will have to offer to make it attractive. Also depends on how many people accept it. After all it is not compulsory.

How have the union reacted to this?

The situation at Mumbai port is clear to everyone, even the unions. We account for 30 per cent of the total workforce of major ports and handle only 12 per cent of the traffic. This is not a workable situation by any standards.The unions realise this. But these issues have their sensitivity. Also we want a VRS in targeted categories, not a general one. You have Rs 990 crore of investment under way. Depreciation on this will bloat your deficit even more. That's right. But we have to take corrective steps. We have no estimates of deficit in the future. But hopefully traffic will go up and the cost reduction measures will yield results, so that will help to generate surplus to pay for all this. Given the new competition from private ports and changing demands of shipping logistics, do you plan to reposition the port? Mumbai will in any case be a feeder port. JNPT could become a regional hub. JICA recommends that we should have bigger vessels than are coming in today. They have projected that hinterland for Mumbai and JNPT put together will be 5.9 million teus by 2017.

Who is going to handle those?

They have estimated 1 million TEUs for Mumbai port. There is also the possibility of the three berth offshore terminal. ButJICA has not accounted for private ports like Maroli, Hazira or even Pipavav. Some of these developments could have been anticipated by the JICA report. So the scenario is a little unclear. But according to the report, 28 per cent of the traffic is cargo for Mumbai. So if we can improve our facilities in terms of equipment, business practices, labour practices, private sector involvement which will improve overall efficiency, then we will survive. But these issues will have to be handled. Otherwise the investment itself will become questionable. Private sector involvement is quite important for you. But those who have bought tender documents for the berths are complaining about unfair competition from you. Yes, that issue has been raised. But they too have to operate in a competitive environment. We cannot exit port operations. We have given them adequate back up area. It is integrated operations that we are talking about. In any case, the minimum guaranteed throughput that we are asking for takes intoaccount our own operations. The cargo that has been handled today on those berths is what is being asked for in the guaranteed throughput. There has been a request to extend the bid date of 31st May.

The matter has not been brought to me yet. I will have to see the ground for that request. Our earlier date was given them even less time. May 31 is an extended date.

There has been opposition to your plan to hand over railway operations to the Indian Railways.

Yes. The Union and some trustee have some concerns. One is that the port railway may be a small activity for the trunk railway, so they may not accord it priority. We have to ensure that evacuation is not slower than it is at the moment. Otherwise it becomes a problem for us. Also if JICA does come up, then can the Indian Railways handle the additional evacuation. The other issue is what happens to the workers. Some managements of major ports feel that they cannot compete with new private ports. That something needs to be done to put both onan equal footing. The private ports will not have the same constraints as us. Besides better technology, they do not have the rules that govern us, be it tendering, or buying equipment. This is not specific to the port sector alone. The only thing is that we can charge lower tariff. But inherently, the private sector has more flexibility in functioning. They can never be on the same footing. We are subject to questions from the court of law, the parliament, there are internal audits. Some procedural requirements therefore cannot be wished away.