Central Inland Water Transport Corporation (CIWTC), fully owned by the government of India, has been on the list for 100% disinvestment from 2005. Even after five years, when the government is disinvesting many PSUs, CIWTC is stay put. Born out of an amalgamation of two old British companies, The India General Navigation & Railways Company Ltd and The Rivers Steam Navigation Co Ltd, CIWTC was taken over by the government in 1967. What exactly has been going on in the company? FE’s Indronil Roychowdhury had a frank discussion with Praful Tayal, chairman and managing director, of CIWTC. Excerpts:

There have been talks of disinvestment in CIWTC for very long. What’s the latest update ?

The government had referred CIWTC to the Board for Reconstruction of Public Sector Enterprises (BRPSE) in 2005. The BRPSE proposed 100% disinvestment of CIWTC, with a rider that the workforce should be brought down to 45. Before we were referred to the BRPSE we had a workforce of 2,800, which at present has come down to 400. I don’t know whether it is possible to bring down our manpower strength further. CIWTC is not a closed company that it needs no manpower nor is the government eager to close it down because selling a closed public sector unit will be difficult. So if I have to run the company I need at least these many people. If this hinders disinvestment, I really don’t know how to go about it.

But the government has always projected inland water transport to have high growth potential, and I suppose CIWTC is not doing well. Why?

We are not doing well because we don’t have plans to realise our potential. I took over as chairman and managing director in 2003 after my stint in Navy as a commander. I found that the company had been incurring losses since the government took it over in 1967, but as chairman I didn’t have an opportunity to think about an alternative revival plan because talks about privatising the company was already on then, and I had to take decisions towards that direction. But I have been making the point that to get private parties interested in taking over the company, CIWTC has to prove its business viability. Although CIWTC was not allowed to make a single investment and left to confront constraints of working capital, today we are profitable operationally. Our operational profit for 2009-2010 (provisional) is Rs 2.91 crore, but our net loss for 2009-2010 is Rs 0.65 crore. CIWTC’s operational profit in 2008-2009 was higher at Rs 4.47 crore although its net loss was Rs 114.80 crore. This high net loss was from heavy tax payout. Our accumulated losses, as of March 31, 2010, is Rs 258.14 crore. Now, I don’t know at the present state anyone will be eager to buy it.

But your net loss for 2009-2010 has come down to just Rs 65 lakh. Isn’t a turnaround possible from this point?

It could have been possible, if I had the Rajabagan Dockyard with me, which functioned as my captive barge repairing facility. GRSE (Garden Reach Shipbuilders & Engineers, a mini-ratna PSU) became the country’s largest dockyard after taking over the Rajabagan dockyard on 33 acres with 60 metres of water front, three dry docks, four ship-building berths, two slip ways and a hull & fabrication shop for just Rs 65 crore. While CIWTC has been left with no captive ship repairing facility, it has not been allowed to use the sale proceeds?the sum was transferred to an escrow account. I have a fleet of over 120 barges but I neither have my own facility nor the required fund to repair them. Only 32 CIWTC barges are operational now and I am losing business on the lack of barges. We handled 2 lakh tonne in 2009-2010 but we could have handled another 10-12 lakh tonne if all our barges were operational. There is high demand for barges on the merchant routes of Sagar, Haldia, Diamond Harbour and Kolkata, and private players are taking away the business. I have asked the shipping ministry to allow me to use the interest on Rs 65 crore for barge repairing. The ministry has in-principle agreed to my proposal but the final clearance is not there yet. So I can’t really tell whether it will be possible for CIWTC to turn around from this point.

What about operational margins. Will it be sustainable?

We have narrowed down our operations and are currently focusing only on short hauls on the merchant route instead of going in for long hauls up to Patna, Allahabad and Guwahati from Kolkata. Since we don’t get any government subsidy like the railways, long haul is not very viable for us. Plus, there are several uncertainties on the national waterways,which increases operat-ional risks. Given our fleet’s condition, I don’t think we can afford to have an appetite for risk.

But isn’t there a demand for long haul?

Not really. I don’t find private operators going in for long hauls unless it is over-dimensional cargo like heavy machinery. We and even the private operators carry minerals and food grain through the merchant route and lighterage is the mainstay of inland water transport’s business in this part of the country.

Two things then: doesn’t the Kolkata and Haldia ports’ draught constraint help you get more business? And Isn’t the Inland Waterways Authority of India’s (IWAI’s) expenditure going waste if there is no demand for long haul, since they have to assure a draught of 1.5 to 2 metres of the water stretch up to Allahabad via Patna?

First of all the draught constraints of the Kolkata and Haldia ports are not helping us to get more business because the lighterage operations for ships calling on the ports of Kolkata Port Trust (KoPT) are done mostly in Paradip. Now we are not into coastal transportation and so cargoes that are partially unloaded in Paradip, meant to serve the KoPT hinterland, are brought either by roadways or railways. We only serve the routes that have no railway or road connectivity.

About IWAI’s draught maintenance, I would avoid a comment. Ask the private players if they are certain about draught availability on national waterways.

But I think transporting through inland waterways is relatively cheaper and that should have given you an edge over other modes of transport.

There is no way we can compete with railways and roadways, but we can be supplementary to both, especially railways. There are shortages of rakes in transporting coal and iron ore. Barges can supplement that shortage but they cannot substitute railways because most industries now are linked to road and railway routes; unlike in the British period, industries are no longer coming up on the banks of rivers.

CIWTC rates work out to Re 1 per tonne per km, which is much cheaper than railways but that can’t prompt users to substitute railways for waterways.

What could have been the ideal situation for CIWTC?

There are many things that can be done, and I have a long list of proposals. Like CIWTC can: make investments to mechanise its terminals; enter into coastal shipping to handle more cargo; invest in creating a captive repairing facility; repair barges and give them to bare boat charter; and so on, but it has always been extremely difficult to sell my ideas. See how inland water transport is flourishing in Goa, and that is because private operators are investing to make their business viable. Even in the east, private operators are profiting. So there is nothing wrong about the viability of business, but CIWTC somehow is on the wrong track.