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Business Plan for Chennai Port Trust
Final Report
Above and beyond

Creating a bright future
Final Report
Table of Content
1
EXECUTIVE SUMMARY ........................................................................................................ 7
MAJOR RESULTS AND CONCLUSIONS........................................................................... 24
2.1
2.1.1
2.1.2
2.1.3
2.1.4
2.1.5
2.1.6
2.1.7
2.1.8
2.1.9
2.2
2.2.1
2.2.2
2.2.3
2.2.4
2.2.5
2.3
2.3.1
2.3.2
2.3.3
2.4
2.4.1
2.4.2
2.4.3
2.4.4
2.5
2.5.1
2.6
2.7
2.8
3
PORT DESCRIPTION ................................................................................................................ 24

INTRODUCTION ..................................................................................................................... 24
PORT INFRASTRUCTURE ........................................................................................................ 24
PORTS NAVIGATIONAL AND HARBOR DETAILS .................................................................... 27
PORT TRANSPORTATION SYSTEM ......................................................................................... 28
INTERNAL PORT TRAFFIC...................................................................................................... 29
ASSESSMENT OF HANDLING OPERATIONS ............................................................................ 30
STORAGE CAPACITY ............................................................................................................. 31
MARINE SERVICES ................................................................................................................ 32
CARGO HANDLING EQUIPMENTS .......................................................................................... 32
COMPETITIVE POSITION ........................................................................................................ 33
THREAT OF NEW ENTRANTS ................................................................................................. 35
RIVALRY AMONG EXISTING PLAYERS .................................................................................. 36
BARGAINING POWER OF SUPPLIERS...................................................................................... 39
BARGAINING POWER OF PORT USERS................................................................................... 40
THREAT OF SUBSTITUTES ..................................................................................................... 41
HINTERLAND CONNECTIVITY................................................................................................ 42
HINTERLAND MAPPING FOR CHENNAI .................................................................................. 42
ROAD CONNECTIVITY ........................................................................................................... 43
RAIL CONNECTIVITY ............................................................................................................. 47
CARGO FORECAST .................................................................................................................. 50
COMMODITY ANALYSIS ........................................................................................................ 50
MARKET DRIVERS................................................................................................................. 54
DEMAND FORECASTING ........................................................................................................ 55
TARGETED TRAFFIC VOLUMES ............................................................................................. 59
CAPACITY AND BOTTLENECK ANALYSIS .............................................................................. 68
CAPACITY ANALYSIS ............................................................................................................ 68
LAND USE PLAN ...................................................................................................................... 83
ORGANIZATIONAL ISSUES...................................................................................................... 88
SWOT FOR CHENNAI PORT AS A WHOLE ............................................................................. 93
BUSINESS PLAN ELEMENTS .............................................................................................. 96
3.1
3.2
3.2.1
3.2.2
3.2.3
3.2.4
3.2.5
3.3
3.4
DEVELOPING THE VISION AND MISSION ............................................................................... 99

STRATEGIES .......................................................................................................................... 101
INTRODUCTION ................................................................................................................... 101
FUTURE INDUSTRY SCENARIOS .......................................................................................... 102
PROCESS OF FORMULATION OF SCENARIOS ........................................................................ 103
PROCESS OF FORMULATION OF STRATEGIES ...................................................................... 106
FUNCTIONAL STRATEGIES .................................................................................................. 110
SELECT PROJECTS INCLUDING MOTIVATION ..................................................................... 124
PLAN OF ACTION TO IMPLEMENT STRATEGY .................................................................... 136
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3.4.1
3.4.2
TRANSLATION OF STRATEGY INTO PROJECTS ..................................................................... 136

CORPORATE PLANNING CAPABILITY .................................................................................. 140
DETAILED ACTION PLAN................................................................................................. 148
FINANCIAL ASPECTS......................................................................................................... 151
5.1
5.2
5.3
OVERVIEW OF INVESTMENTS .............................................................................................. 151

APPROACH FOR FINANCIAL PROJECTIONS ........................................................................ 152
PROJECTED FINANCIAL STATEMENTS ................................................................................ 159
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List of Abbreviations
ACS
AD
BD
BOT
C&F
CAO
CCP
CCTL
CFS
CHAs
ChPT
CONCOR
CKD
CPCL
CPC
CRM
EC
EMP
EMRIP
ESR
EXIM
EPZ
EQ
FEL
GDP
GRT
HRD
HMIL
ICD
IMM
IT
IRR
JD
KPCL
Kms
LOI
MEH
MIS
MoU
MoRR
m
Mtpa
Mteu
Analysis, Consolidation and Strategy

Ambedkar Dock
Bharathi Dock
Build, Operate & Transfer
Cost & Freight
Chief Accounts Officer
Chief of Corporate Planning
Chennai Container Terminal Pvt. Ltd.
Container Freight Station
Custom House Agents
Chennai Port Trust
Container Corporation of India Ltd.
Cars Knocked Down
Chennai Petroleum Corporation Ltd.
Corporate Planning Cell
Client Relation Management
Elevated Corridor
Environment Management Plan
Ennore Manali Road Improvement Project
Environmental Scanning & Research
Export Import
Export Processing Zone
East Quay
Front End Loader
Gross Domestic Product
Gross Registered Tonnes
Human Resource Development
Hyundai Motor India LTd
Inland Container Depot
Implementation Monitoring & MIS
Information Technology
Inner Ring Road
Jawahar Dock
Krishnapatnam Port Company Ltd
Kilometers
Letter of Intent
Manali Express Highway
Management Information System
Memorandum of Understanding
Manali Oil Refinery Road
Meter
Million Tons per annum
Million teu
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MTS
MT
MP
NCR
NH
NHAI
O-D
POL
PPP
PSA
ROB
RMG
SAIL
SBM
SEZ
SPM
SQ
SPV
SWOT
UP
TAA
TPP
teus
TISCO
VRS
WQ
Multi Trailer System

Million Tonnes
Madhya Pradesh
National Capital Region
National Highway
National Highway Authority of India
Origin - Destination
Petroleum, Oil & Lubricants
Public Private Partnership
Port of Singapore Authority
Rail Over Bridge
Rail-Mounted Gantry
Steel Authority of India Limited
Single Buoy Mooring
Special Economic Zone
Single Point Mooring
South Quay
Special Purpose Vehicle
Strength - Weakness - Opportunities - Threats
Uttar Pradesh
Technical & Administrative Assistants
Tiruvottiyur -Ponneri -Pancheti
Twenty Foot Equivalent Units
Tata Iron and Steel Company Limited
Voluntary Retirement Scheme
West Quay
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List of Tables
TABLE NO- 2.2-1: COMPARISON OF FACILITIES AT ALL MAJOR PORTS ....................................................37
TABLE NO- 2.4-1: TONNAGE HANDLED DURING LAST 7 YEARS (IN MTPA)............................................50
TABLE NO- 2.4-2: MARKET DRIVERS ..........................................................................................................54
TABLE NO- 2.4-3: CONTAINER TRAFFIC GROWTH (ORIGINAL)................................................................58
TABLE NO- 2.4-4: CONTAINER TRAFFIC GROWTH (FINE-TUNED) ...........................................................58
TABLE NO- 2.4-5: COMMODITY-WISE PROJECTED TRAFFIC GROWTH RATES .........................................59
TABLE NO- 2.4-6: OTHER COMMODITIES PROJECTED TRAFFIC GROWTH RATES ...................................59
TABLE NO- 2.4-7: CALCULATIONS FOR TARGETED TRAFFIC FOR COAL ...................................................60
TABLE NO- 2.4-8: YEAR-WISE TARGETED TRAFFIC FOR COAL .................................................................60
TABLE NO- 2.4-9: CALCULATIONS FOR TARGETED TRAFFIC FOR IRON ORE ...........................................62
TABLE NO- 2.4-10: YEAR-WISE TARGETED TRAFFIC FOR IRON ORE .......................................................62
TABLE NO- 2.4-11: CALCULATIONS FOR TARGETED TRAFFIC FOR POL ..................................................63
TABLE NO- 2.4-12: YEAR-WISE TARGETED TRAFFIC FOR POL ................................................................63
TABLE NO- 2.4-13: CALCULATIONS FOR TARGETED TRAFFIC FOR CONTAINERS ....................................64
TABLE NO- 2.4-14: YEAR-WISE TARGETED TRAFFIC FOR CONTAINERS ..................................................65
TABLE NO- 2.4-15: CALCULATIONS FOR TARGETED TRAFFIC FOR AUTOMOBILES ..................................65
TABLE NO- 2.4-16: YEAR-WISE TARGETED TRAFFIC FOR AUTOMOBILES ................................................66
TABLE NO- 2.4-17: YEAR-WISE TARGETED TRAFFIC FOR PASSENGERS ..................................................66
TABLE NO- 2.4-18: ABSTRACT OF TARGETED TRAFFIC VOLUME TO BE HANDLED AT CHPT ..................67
TABLE NO- 2.5-1: ABSTRACT OF TARGETED TRAFFIC VOLUME TO BE HANDLED AT CHPT .....................68
TABLE NO- 2.5-2: INFRASTRUCTURE FACILITIES FOR NON-CONTAINERIZED CARGO ..............................69
TABLE NO- 2.5-3: STORAGE AREA REQUIREMENT .....................................................................................71
TABLE NO- 2.5-4: GAP IDENTIFICATION FOR ADDITIONAL STORAGE AREA (IN HA) .............................71
TABLE NO- 2.5-5: IDENTIFIED PROJECTS & ASSOCIATED STORAGE AREA .............................................71
TABLE NO- 2.5-6: PHASE-WISE BERTH REQUIREMENT .............................................................................73
TABLE NO- 2.5-7: BRIDGING GAP FOR REQUIREMENT OF BERTHS ..........................................................74
TABLE NO- 2.5-8: PHASE-WISE CONVERSION OF BERTHS .......................................................................75
TABLE NO- 2.5-9: MODAL DISTRIBUTION FOR CONTAINERS AT CHPT ....................................................77
TABLE NO- 2.5-10: AVG. MODAL DISTRIBUTION FOR IMPORT & EXPORT OF CONTAINERS .................78
TABLE NO- 2.5-11: CALCULATION OF RAIL CAPACITY WHICH CAN BE RELEASED ....................................78
TABLE NO- 2.5-12: CALCULATION OF INCREASED RAIL CAPACITY ...........................................................79
TABLE NO- 2.5-13: PHASE-WISE RAIL AND ROAD SHARE .........................................................................79
TABLE NO- 2.5-14: ANALYSIS OF PORTS CAPACITY WITH RESPECT TO ROAD CONNECTIVITY ...............80
TABLE NO- 2.5-15: ANALYSIS OF PORTS ROAD CONNECTIVITY CAPACITY FOR TRANSPORTING CARS..80
TABLE NO- 2.5-16: NO. OF VESSELS AND THEIR PARCEL SIZES EXPECTED AT CHPT PER ANNUM........81
TABLE NO- 2.5-17: ABSTRACT OF TRAFFIC VOLUME WHICH CAN BE HANDLED AT CHPT ......................82
TABLE NO- 2.6-1: IDENTIFIED DEVELOPMENT PLANS UNDER LAND USE PLAN .......................................84
TABLE NO- 2.7-1: ORGANIZATION ISSUES.................................................................................................91
TABLE NO- 2.8-1: CHPT SWOT .................................................................................................................93
TABLE NO- 3.1-1: EVALUATION OF CHPTS EXISTING VISION STATEMENT ..........................................100
TABLE NO- 3.1-2: EVALUATION OF CHPTS EXISTING MISSION STATEMENT .......................................100
TABLE NO- 3.1-3: NEW CORE VALUES, VISION AND MISSION STATEMENT .........................................101
TABLE NO- 3.2-1: BUSINESS SEGMENTS VIS--VIS THE STRATEGIC POSTURE ...................................108
TABLE NO- 3.2-2: CHPT TOTAL FUNDING REQUIREMENTS .................................................................119
TABLE NO- 3.3-1: CHPT PROJECTS AND THEIR MOTIVATION .............................................................124
TABLE NO- 3.4-1: CORPORATE PLANNING CELLS SCHEDULE OF ACTIVITIES ......................................146
TABLE NO- 5.1-1: TOTAL FUNDING REQUIREMENTS ...............................................................................151
TABLE NO- 5.1-2: OVERVIEW OF INVESTMENTS ......................................................................................151
TABLE NO- 5.2-1: PROFIT & LOSS ACCOUNT PROJECTION DRIVERS.................................................153
TABLE NO- 5.2-2: BALANCE SHEET PROJECTION DRIVERS .................................................................156
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Executive Summary
Introduction
The Ministry of Shipping, Road Transport and Highways (MOSRT&H), has mandated
Chennai Port Trust (ChPT) to develop a Business Plan that i) states a long term vision
for the Port which builds on its core strengths ii) establishes the goals to be achieved
over the next seven years to satisfy this vision iii) Describes the strategy to be
followed to achieve these goals and iv) provide a detailed plan of action to implement
the strategy.
The Department of Shipping, MOSRT&H has appointed Port of Rotterdam as Central
Advisors to ensure that the Business Plan developed by the Consultants satisfactorily
address all elements in the Consultants Scope of work. This Business Plan has been
prepared for the Chennai Port Trust (ChPT) addressing the above objectives in mind.
The Work on this Business Plan has been reviewed from time to time by Chennai Port
Trust and the Central Advisors.
About Chennai Port
Chennai Port is the 2nd largest Port in India in terms of cargo handled, achieving a key
milestone of 50 Million tonnes in March 2007. The current financial year is the 125th
year of commercial operations Port. The Port serves the geographical regions of Tamil
Nadu, Pondicherry, South Andhra Pradesh and parts of Karnataka and has now
emerged as hub on the east coast of India. Major commodities being handled at the
Port are Containers, Automobiles Exports, POL, Iron Ore, Coal, Fertilizers (products
and raw materials), and general cargo items. The total quay length available is around
5.5 km. It has in all 24 berths spread over 3 docks i.e. Ambedkar Dock, Jawahar Dock
and Bharathi Dock. The maximum draft available at ChPT is 17.4 m at some of these
berths. There is 7.0 km of entrance channel with the depth of outer channel being 19.2
m and that of the inner channel being 18.6 m. The Port has a total land area of 240 ha
(approx.). Chennai Port was the first port to start container handling operations in
1983 which were handed over to CCTL in 2001 for operating under BOT basis. A
second container terminal has recently been awarded to PSA SICAL at Ambedkar dock
recently to augment the container operations.
Key aspects related to the Port Infrastructure and Operations
A major change that will take place in Chennai Port is the development of the second
container terminal includes conversion of existing East Quay, Naval berth and South
Quay III of the Ambedkar Dock into container berths with a proposed depth of 15.5 m.
This terminal will have a Quay length of 832 m. Apart from this, Chennai Port has
already commenced strengthening of Jawahar Dock and dredging to a depth of 14 m
shall be taken up thereafter.
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The Bharathi dock provides handling facilities for POL, containers & iron ore. It
comprises of a total quay length around 1.9 km with approx. 380 m for handling iron
ore, 885 for containers and rest for POL. The iron ore berth can cater even PostPanamax ships as it has draft up to 16.5 m. The draft available at the existing
container terminal berths is approximately 13.40 m and is in an ideal location as it is
close to Gate No. 1. The terminal is currently able to demonstrate a better efficiency
on dwell time parameter because the parcel size of ships currently berthing is in the
range of 700 to 1500 teus which coupled with proximity to Gate No. 1 enables faster
turnaround and evacuation.
Given the structure of the Port and its layout, back up land for cargo storage is
expected to be a major issue in future with a not so ideal relationship existing between
the berths (length and location) and the back up storage area. In this context, one
CFS currently inside the port complex is now proposed to be moved out of the Port
premises. There is a fishing harbour on the north side of the outer harbour. The Port is
actively considering a proposal for shifting this fishing harbour further north and
undertake land reclamation in the existing fishing harbour to meet the requirement of
additional storage area for containers.
The existing bulk handling operations of iron ore and coal create a lot of dust within
the port area. Coal handling has been identified as a port operation that ChPT would
like to discontinue because of the above. The nearby port of Ennore has already built
capacities for handling coal operations. Also the present coal operation occupies
significant Port land which to a large extent has already been assigned to the second
container terminal operations. As regards Iron ore cargo, this is identified as an
operation that can positively contribute to ChPTs profitability until that quay length
and associated back-up area is required for container operations or Iron ore handling
at ChPT is closed for any other reasons beyond its control. The impact of iron ore in
terms of pollution can be reduced substantially by enforcing good general house
keeping.
Competitive Position
New Entrants
Non-Major ports in the hinterland area of ChPT are fast developing to divert traffic by
providing special service offerings. Amongst upcoming non- major ports, biggest
threat is perceived from Krishnapatnam Port which has been awarded a concession by
Andhra Pradesh to develop the existing minor port into a modern deep water port with
a deep draft to handle ships of size up to 200,000 DWT. This port is understood to be
targeting iron ore, coal and other minerals cargo. It has a total cargo potential of
about 20 Mtpa in the short term to 37 Mtpa in the long term.
Existing Players
ChPT faces competition from other major ports in south / south east India region like
Ennore, Vishakapattnam, Tuticorin and Cochin. The shape of the Southern Indian
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peninsula is such that hinterland of these ports increasingly overlaps as one moves
from the north to the south of India.
Ennore was originally conceived as a satellite port of Chennai to handle the dusty coal
and iron ore. Accordingly ChPT also owns equity in the Ennore Port Ltd. Ennore has
already diverted the coal cargo from Chennai. The shift of iron ore cargo from Chennai
to Ennore will definitely pick up once the project at Ennore gets completed. Ennore
also has plans to become an energy hub port. Tuticorin is perceived to be a larger
threat to Chennai in terms of containers compared to Ennore, because container
terminal project at Ennore might take some more time for implemention. Tuticorin is a
competitor for Chennai mainly for container cargo originating from hinterland south of
Chennai and also for region which is equidistant from both locations. Cochin, being just
11 nautical miles from international sea route, has planned for major projects including
a trans-shipment hub to explore the opportunities offered by its geography. However
the nature of the port being a transshipment port should pose no great challenge to
Chennai. Ports such as New Mangalore, Goa and Visakhapatnam do not have much of
an overlap with Chennai in terms of the hinterland and therefore do not pose much
threat to ChPT.
Hinterland Connectivity
Highway Roads
The Golden Quadrilateral Road Project being implemented by NHAI connects Chennai
to Kolkata on the east and Mumbai via Bangalore on the west and is closed to
completion with small stretches pending. Chennai is well connected to other major
cities by national highways.
Last Mile Road Connectivity
The last stretch of 15-20 kms from North, West and South to the ChPT through
Chennai city are clogged and regulated with traffic restrictions. Thus the good
penetration in the hinterland is set off against the shorter but complex city transit.
The Golden Quadrilateral shall be connected at Poonamallee outside Chennai city
limits. It is therefore proposed that one of the stretches which can improve hinterland
connectivity is the stretch from Poonamallee to the Port gate. A dedicated four lane
elevated expressway from ports southern gate i.e. Gate No. 10 is already proposed at
an estimated cost of Rs. 750 cr.
As regards the Northern side, presently the traffic movement from the Ennore
Expressway to Gate No.1 of ChPT is through the entry to the fisheries harbor which is
very narrow and creates traffic hold up causing inconvenience. Therefore this road is
also proposed to be upgraded under proposed Ennore-Manali Road Improvement
Project (EMRIP) with ChPT participating in the same through an equity stake.
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Rail
ChPT is well connected with the national railway network. The Port is linked to
Southern Railway network via Chennai Beach Railway Station which connects ChPT to
Southern parts of Tamil Nadu and via Royapuram Station which connects Southern
Railway Trunk line to Kolkata, New Delhi, Bangalore, Coimbatore etc. ChPT has an
internal rail network of approximately 70 km length.
Rail connectivity to Tondiarpet off Dock facility
There is a need for developing an Off Dock facility. Tondairpet Housing Colony is
identified as the available location for the same. Strengthening its already existing rail
connectivity with the Port shall be required. This facility will be restricted to only
storage of containers and shall be an intermediate point for speedy evacuation
between the hinterland and the Container terminals. The facility is spread over 9 acres
and is approximately 5 Kilometers away from the Port. There is already rail
connectivity to Tondiarpet, but this would be insufficient as a dedicated rail
connectivity would be required with the Port to run a shuttle service for effective use of
Off Dock facility.
Establishment of a Shuttle railway service
The use of a "port shuttle railway" system moving containers to and from the port to
an "off-dock facility" close to the port will substantially reduce container dwell time.
This system will free-up valuable land inside the port. Also, the port shuttle railway
service will substantially reduce the number of trucks passing through the port gates.
The shuttle railway would use modern container wagons and Rail-mounted gantry
(RMG) cranes would be used at the Port and the off-dock terminal to efficiently handle
containers.
Use of Multi- Trailer System (MTS)
The proposed new container terminals would use tractor- trailer trains (road units)
that can carry up to 6 teu with either two 20-feet or one 40-feet container on each of
the three trailers. The multi-trailer system (MTS) would quickly and efficiently shuttle
containers between the Ports inter-modal rail yard and the terminals.
Need for a Master Transportation Plan
Presently the iron ore for export and the imported coal are handled exclusively by the
Railways, while only about 7-8% of the container traffic is moved by the railway. The
Business Plan forecasts (See section 2.4 on trade forecast for containers) that
container traffic will increase from the present 0.73 Mteu per annum to more than 3.6
Mteu per annum 15 years from now. To achieve this significant growth, it is of
paramount importance for ChPT to devise a comprehensive transportation master plan
to handle the landside transportation of the traffic required for seamless operations.
ChPT must improve both its internal road / rail system and hinterland connectivity. The
ultimate removal of the existing coal yards presents a golden opportunity for ChPT to
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develop a new railway inter-modal yard that will optimize the use of rail transport for
the port.
Cargo Forecast
The approach followed for cargo forecast is described in this diagram:
Historic Cargo
Trend Analysis
Commodity Analysis
for future focus
ChPTs targeted
Traffic
Demand Forecast Multiple

Regression Analysis
Adjustment towards
Competitors Impact
Fine tuning by qualitative

factors
The conclusions of the regression analysis and adjustments for qualitative factors
result in the following growth rates for traffic for the overall southern region.
Commodity
Coal
Iron Ore
POL
Containers
Automobiles
Passengers
Growth Rates
10%
8%
5%
15%
12%
5%
The Targeted Traffic Forecast for all major commodities are derived by taking into
account the extent of competition from nearby ports in terms of their impact
considering existing infrastructure facilities and considering committed investments
already made by them till date. The targeted traffic forecast for each commodity is
explained below:
Coal
2012
Demand Forecast in Mtpa
Share for competitive Port
2017
7.00
2022
14.07
2027
28.31
56.93
It does not impact our strategic conclusion
Targeted Traffic ChPT (in Mtpa)
1.43
The entire thermal coal has already shifted to Ennore Port which has a market share of
43% of the south India coal traffic. Ennore Pot is already doubling its capacities for
coal handling. Strategically, ChPT shall not encourage the coal trade to operate out of
Chennai.
Iron Ore
2012
Share for competitive Port
15.50
2017
22.77
2022
2027
33.46
49.16
it does not impact our strategic conclusion
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Targeted Traffic ChPT (in Mtpa)
11.08
11.65
0.00
0.00
Till Dec 06, ChPT has handled 7.91 Mtpa of iron ore extrapolated to 11.08 Mtpa for
2006-07. Operational efficiency measures (assumed as 1% p.a) may further increase
it to 11.65 Mtpa. ChPT shall make no major additional investments to attract additional
iron ore volume. In two years time Ennore facility of 10 million tonnes will be ready so
it can cater to all of Chennais current cargo. Issues such as a possible ban / restriction
on iron ore exports continue to play a large role in the strategy for the Port. It is
proposed that Iron ore traffic shall be handled till such time ChPT actually needs the
area occupied by this activity for container operations. It is assumed that such
conversion to container operations is likely to happen in the third phase (2017-2022).
If container traffic does not pick up as expected, Iron Ore operations can continue. On
the other hand, if Iron Ore is banned from Chennai in 2008 itself because of regulatory
issues, the conversion to container operations may commence as early as 2012 with
iron ore gradually moving out by 2011.
POL
2012
2017
2022
2027
17.03
21.73
27.73
35.39
Targeted ChPT Traffic (in Mtpa)
15.00
15.00
20.00
20.00
In 2005-06, ChPT handled 13.21 Mtpa of POL and is projected to handle only around
13.34 Mtpa in 2006-07. Discussions with the single POL customer i.e. CPCL reveal that
the capacity will stagnate at 15 MT. Export of POL products to the extent of 5 Mtpa
are likely to arise in the next 10 year horizon. No new refineries are known to be
coming up in the primary hinterland
Containers

Share for Tuticorin Port
2012
32.18
6.36
2017
56.72
6.36
2022
91.34
6.36
2027
134.21
6.36
Likely share for Ennore Port
4.8
9.6
19.2
19.2
Targeted ChPT Traffic (in Mtpa)
21.02
40.76
65.78
108.65
Targeted ChPT Traffic (in
1.31
2.55
4.11
6.79
Mteu )
In the 2005-06 fiscal year (April to March), ChPT handled 0.73 Mteu of container
volume. It is expected that the port shall handle anywhere between 0.85 Mteu to 1.0
Mteu in the year 2006-07. It is observed that at Tuticorin Port 1.0 teu accounts for
around 10.6 Tonnes of cargo volume unlike Chennai where 1.0 teu accounts for
around 16 Tonnes. Tuticorin Port is presently handling around 0.32 Mteu (i.e. 3.43
Mtpa) of containers with installed capacity of around 0.45 Mteu (i.e. 4.77 Mtpa). The
port is also planning a second container handling facility with expected capacity around
0.15 Mteu escalating its total capacity to 0.60 Mteu (i.e. 6.36) by 2012. Other
competitor, who is likely to develop a container terminal is Ennore Port. It is assumed
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that a terminal with a capacity of 1.2 Mteu will become operational at Ennore with
capacity utilization around 0.3 Mteu (i.e.4.8 Mtpa) gradually increasing to 0.6 Mteu
(i.e. 9.6 Mtpa) in 2017 and upto 1.2 Mteu (i.e.9.6 Mtpa) by 2022.
Automobiles
2012
2017
2022
2027
Demand Forecast in numbers
202.7
357.2
629.5
110.9
Targeted ChPT Traffic (in numbers)
202.7
357.2
629.5
700.0
In 2005-06, ChPT handled around 1 lakh cars. This is expected to increase at the
growth rate of 12% and ChPT is therefore projected to handle around 2 lakh cars by
2012. Chennai is fast becoming a manufacturing hub for automobile exports and
therefore it is proposed to construct two Multi-Level Stacking facilities. With these, it is
expected that the car export capacity will reach saturation between 2022 & 2027 when
it shall be catering to a throughput of around 7 lakh cars per annum.
Total Traffic Abstract
Based on the above numbers, the total projected traffic at Chennai Port in different
phases will be as follows:
Year
2022
COMMODITY
Containers
(in Mtpa)
2012
2017
21.02
40.76
65.78
108.65
Containers (in Mteu )

Iron Ore
(in Mtpa)
1.31
2.55
4.11
6.79
11.08
11.65
0.00
0.00
Coal (in Mtpa)

Automobiles (in 000
Nos.)
1.43
202.7
357.2
629.5
700.0
Passengers (in Nos.)
129,132
164,808
210,342
268,455
POL (in Mtpa)
15.00
15.00
20.00
20.00
General Cargo (in Mtpa)
15.76
8.77
8.77
8.77
TOTAL in Mtpa
64.29
76.18
94.55
137.42
2027
Capacity Analysis
The assessment of maximum possible port capacity and the infrastructure
development required is performed with respect to four following basic parameters:
o
Ground Storage Area,
Requirement of berth length,
Hinterland connectivity,
No. of vessel and their sizes
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Final Report
The infrastructure facilities required for commodities other than container cargo
handled by the Port i.e. iron ore, coal, automobiles, POL and general cargo are
separately analyzed and are found to be capable of meeting the requirements.
Container Ground Storage area capacity:
The capacity of the proposed new container terminals at Chennai Port has been
computed using the benchmark of 27,000 teu per annum per ha of land at the upper
end of the range and 22,000 teu at the lower end of the range. Based on the above
benchmark at 27,000 teu per annum per ha the following storage requirement is
worked out.
Sr.
No
Year
Particulars
Phase-1 Phase-2
Phase-3 Phase-4
2007-12 2012-17 2017-22 2022-27

A
B
C
D
E
F
No. of Containers (in Mteu )

Storage area Requirement (ha)
Storage area available (ha)
Storage Area Gap to be Bridged
(in ha)
Total additional storage area
possible based on planned
projects (ha)
Net deficit which can not be
bridged
1.31
48.66
25.06
2.55
94.34
25.06
4.11
152.27
25.06
6.79
251.50
25.06
23.60
69.28
127.21
226.44
35.00
59.87
108.36
108.36
-11.40
9.41
18.85
118.08
As indicated in the above Table, based on planned projects, back up area for container
storage shall become a constraint during Phase-3. Total area which can be then used
for container storage is 133.42 ha (25.06 + 108.36). This storage area limits the
capacity of the ports container handling facility at 3.60 Mteu (133.42 ha x 27000 teu
per ha). The only way to enhance the port capacity for storage area beyond the above
number is by taking over land outside but near to the port, possibly the nearby fishing
harbour.
Requirement of berth length for Container operations:
The requirement of berth length is worked out below:
Sr.
No
Year
Particulars
Phase-1
Phase-2
Phase-3
Phase-4
2007-12
2012-17
2017-22
2022-27
No. of Berths Required
A1
Total berth length required
944
1947
3150
4419
A2
No. of Berths required*
3.4
7.1
11.5
16.1
B
B1
B2
C.
No. of Berths Available

Existing Terminal length
885
Equivalent No of Berths*
3.22
No of Berths additionally required
885
3.22
885
3.22
885
3.22
Page 14 of 185
Final Report
C1
C2
D
D1
D2
E
E1
E2
Berth length to be
58.80
1061.59
developed
0.21
3.86
Total additional Berths possible to be developed
Total proposed berth length
800.00
1455.00
2.91
5.29
Net deficit in development of additional Berths
Net deficit in total length of
-744.78
-503.58
Berth (in m)
Net deficit in no of Berths
-2.70
-1.43
2265.00
3533.75
8.24
12.85
2668.00
9.70
2668.00
9.70
-282.67
848.29
-1.47
3.15
*Average berth length considered as 275.0 m

As analyzed from the above Table, sufficient berth length is available till the end of
Phase-3. The requirement of 3 berths in Phase 4 however cannot be met and hence
becomes the limiting factor. Therefore, with 1.47 berths as surplus in phase-3,
additional 0.51 Mteu (1.47 x 0.34, being the lowest berth handling capacity) can be
handled. The maximum possible capacity of port against berth length by the end of
Phase-3 will be 4.11+0.51= 4.62 Mteu.
Hinterland connectivity
Since coal and iron ore operations presently occupy most of the rail capacity at the
port, it is expected that the same shall be released for container handling in terms of
additional rail handling capacities in Phase-4. After considering this possible shift of
containers to rail mode, the total no. of containers which are to be handled by road are
estimated based on the balance modal share. The port gate capacity is worked out
based on the following:
1) Average Working days in a year and avg. number of working hours per day
2) Number of existing lanes for the two gates of ChPT,
3) The average no. of trucks which can be handled per lane
The working has been provided in separate tables in section 2.5 for containers, cars
and general cargo. This working is done assuming that the two proposed dedicated
expressways each with four lane capacity lead right upto the two port gates.
Thereafter, once inside the port gates, traffic will split into three different directions,
one with four lanes road and the balance two roads of 2 lanes each.
The need for further expansion of both the existing gates is envisaged based on the
above working. Addition of 2 more lanes at both the gates is proposed for container
movement. A further addition of one dedicated lane is proposed in Phase III for cars
and general cargo. The above analysis assesses the maximum possible capacity of
port against connectivity as 4.11 Mteu.
Number of vessels and their size
Presently, the maximum numbers of ships visiting ChPT have parcel size between 700
to 1500 teu. Current market trend indicates that there is a possibility of larger ships
Page 15 of 185
Final Report
coming on the trade route. The likely container vessel calls as per the ship size and
average parcel size for the targeted container cargo at ChPT have been worked out in
section 2.5.
Based on the likely mix of ship sizes and average parcel sizes achieved at some other
major Indian and international ports, the analysis indicates that the port would be able
to handle 4.14 Mteu in phase-3.
Bottleneck Analysis
For each of the above described parameters the maximum possible capacities for
container handling are compared to decide the weakest link i.e. bottleneck and arrive
at the most likely port capacity for container cargo volume in teus.
Capacity against storage space= 3.60 Mteu
Capacity against berths requirements= 4.62 Mteu
Capacity against connectivity= 4.11 Mteu
Capacity against vessel sizes and numbers= 4.14 Mteu
The above analysis therefore indicates that the overall capacity of the port for
container handling is limited by the storage space at the port. As the next limiting
factor is connectivity at 4.11 Mteu , there is a need of additional storage space of
around 19 ha [(4.11 3.60) Mteu / 27000= 18.89 ha] to handle this no. and it is
proposed that the same can be made available by taking over nearby fishing harbour
and shifting the existing one further north with better facilities.
Proposed Projects
Sl.
No
Projects
Infrastructure Projects (Client Related)

1.
Development of Container Terminal-2; which would include;

1.1
Conversion of EQ & SQ3 berths into container berths,
1.2
Reclaiming land at the area north of sand screen,
1.3
Conversion of a portion of coal yard into container storage yard.
1.4
Conversion of a portion of Marshalling Yard into container storage cum
railway yard
2.
Peripheral Road Development from Gate-1 to Gate-10 to Container Terminal-2
3.
Developing a Flyover on southern side of the port connecting container

terminals to Gate no. 10
4.
Creation of New Cruise Terminal clubbed with a multi level car parking facility
5.
Developing a Off-Dock facility at Tondiarpet Housing Colony
6.

6.1
Conversion of JD2, JD4 & JD6 berths into container berths,
6.2
Conversion of balance portion of coal yard into container storage yard.
Page 16 of 185
Final Report
Sl.
No
Projects

6.3
6.4
Strengthening of berthing face to handle ships requiring depths of 14 m

Conversion of a portion of Marshalling Yard into container storage yard
7.

7.1
Conversion of Iron Ore berths into container berths,
7.2
Conversion of back-up storage area for iron ore into container yard.
7.3
Conversion of existing CFSs into container storage yard
8.
Development of Container Terminal-5; broadly includes;

8.1
Conversion of WQ1, WQ 2, WQ 3, WQ 4 & CB berths into container
berths,
8.2
Reclamation of a small amount of water front on west quay to create
additional back-up land
8.3
Strengthening of berthing face to handle ships requiring depths of 14 m
8.4
Dismantling of existing warehouses and passenger terminal at west
quay, Ambedkar Dock
9.
Reclamation of Timber pond as storage yard for General Cargo
10.
Reclamation of Port Basin for container storage yard
11.
Reclaiming land near Gate no.1 to the north of Bharathi Dock adjacent to
eastern breakwater.
12.
Ennore-Manali Road Improvement Project (EMRIP)
13.
Dedicated Elevated Corridor on NH-4 from Gate-10 at Port to Maduravoyal
14.
Connecting Off Dock facility at Tondiarpet to Port with Shuttle Railway.
Sl.
No
Organization Improvement Related Projects
Marketing Projects
1.
Marketing Department Capacity Building Project
2.
Customer Relationship Management Project
3.
Market Offerings Expansion Project
System and IT related Projects

4.
Restructuring of the IT Department Organization
5.
Process reengineering and Improvement Project
6.
Activity Based Costing
7.
Security Enhancement Projects
HR Projects
8.
Organization Re-design and Right-sizing
9.
Employee Upliftment Project
10.
HR Process Improvement Project
Page 17 of 185
Final Report
Port Development Projects

11.
Identifying Cost Reduction Avenues and Implementing Cost Reduction

Measures
12.
Efficiency Improvement Project
13.
Institutional Strengthening Project
14.
Corporate Social Responsibility Project
Vision and Mission Statements

After extensive discussions and with active participation from ChPT personnel, the
following Core Values, Vision Statement and Mission statement were agreed upon:
Core Values
- Integrity
- Proactive
- Professional
- Committed
- Conscious of Environment / Social obligations
Vision Statement
To be recognized as a futuristic port with foresight
Mission Statements
- Achieve excellence in port operations with state-of-the-art technologies.
- Enhance competence and enthuse workforce to maximise customer satisfaction
- Anticipate and adapt to the changing worldwide scenario
- Act as a catalyst for sustained development of the region
Business Strategy
The process of Strategy
formulation has been
elaborated in the
diagram alongside. The
Strategy Formulation
process first entails the
Business Strategy to be
formulated followed by
functional strategies.
Process followed:
1. Identification of
the Business
Segments: A
Internal Analysis
Key Uncertainties
(SWOT Analysis, Stakeholder

Analysis)
Insights
External Assessment
Future
Industry
Scenarios
(PESTLE Analysis, 5 Force

Analysis, Traffic/Demand Analysis)
Pre-determined Forces
Business Strategy
Thrust Areas
Functional
Strategy
Finance, IT, HR
Projects &
Action Plan
IRR, NPV, Feasibiliy

Business Plan
Projected Financials
business segment is a combination of a product / service and its key / target

customers.
Page 18 of 185
Final Report
2. Evaluation of Key Business Segments: After the identification of the Business

Segments the next step is to evaluate and identify the segments that make the
most business sense for ChPT.
3. Proposed Strategic postures: Having considered merits and demerits associated
with the different business segments it becomes necessary to deal with these
business opportunities strategically. We propose three different strategic
postures vis--vis these segments:
o
Shaping the Future: This posture indicates a perception that there is very
good opportunity and that ChPT should capitalize on its strengths to make
the most of it. It implies that in these chosen business segments ChPT shall
aspire to play a leadership role and hence lead the industry. This may mean
creating capacity ahead of anticipated demand.
Adapting to the Future: This posture reflects the judgment that the intensity
of pursuit or abandon depends on changing market dynamics. In these
segments focus will be to compete with the regular players and to be with
the trend.
Reserving the right to Play: This posture is recommended where the level of
uncertainty is very high. Thus while keeping a tab on the business
dynamics, ChPT does not commit significant investments or undertake
focused projects with a view to tap the business potential.
The table below indicates the strategic posture that ChPT should adopt vis--vis the
different business segments identified.
Business Segment
No.
1.
2.
3.
4.
5.
Customers
Service / Product
Shipping Lines/ IPLSP*

Shipping Lines
Shipping Lines /
General Public
General Public
PS Units
Container Handling
Ship Repair Facilities
Cruise Facility
6.
Public Sector / Private

Sector Units / IPLSP
7. Public Sector / Private
8. Companies
9. Local Govt. Bodies
10. Other Ports
11. Public Sector / Private
Marina Facility
Liquid Cargo (POL)
Handling
Bulk Cargo (Iron
Ore) Handling
Bulk Cargo (Coal)
Handling
Automobile Handling
Desalination facilities
Engineering
Consultancy services
Break Bulk and
Strategic Posture
Reserve
Shape Adapt
the
the
to the
Right to
Future Future
Play
Page 19 of 185
Final Report

12. Other Ports
13. Acquisition of Minor
Ports
14. Other Ports
Project Cargo
Handling
Marine Services
Investment
Providing BOT
services
* Integrators/Port Logistic Service providers

Key elements of the agreed business strategy include:
o
Port chooses to focus on becoming a clean port with a focused attention on

container handling, automobile exports and cruise terminal operations. It also
anticipates coal cargo and later on iron ore cargo to be gradually phased out
In keeping with its vision of becoming a Futuristic Port with a Foresight the
port wants to change its image.
ChPT key business decisions shall primarily be focused on optimum utilization of

its limited land resources.
ChPT shall also aggressively identify opportunities and take controlling stakes in
other ports to either support the cargo it has decided to attract or to service at
a different location the cargo it is constrained to forego.
ChPT appreciates that its people are one of its most important resource and
shall hence usher flexible HR policies along with aggressive training
ChPT recognizes that it must have its stakeholders strongly rallying behind it
and shall focus on relationships
ChPTs Functional Strategies are classified into separate three categories as under:
Commercial Strategy
o
Port Development Strategy: Infrastructure Strategy, Institutional Strengthening

Strategy, Information Technology Strategy and HR Strategy
Financial Strategy
Financial Aspects
The principal task under this component of the assignment was to forecast financial
position and financial performance of ChPT for the next 20 years. For arriving at the
Financial Projections for ChPT, the following process was followed:
Page 20 of 185
Final Report
Financial
Statement
Analysis
Understanding
Key Elements
Deciding
Projection
Drivers
Discussions
with ChPT
and Industry
Experts
Financial
Strategy &
Financial Model
Preliminary
Financial Strategy
Financial Strategy
For deciding the financial Strategy, we can split financial needs of ChPT in Four distinct
areas:
Financing Projects which would be able to generate commercially attractive
returns once executed

Financing Projects which have already been sanctioned and work on which has
begun and which do not have adequate returns or directly identifiable returns
o
Financing Working Capital requirements
Using Surplus Funds
Private Sector Participations (through PPP Schemes) has been recommended for those
projects which would be able to generate commercially attractive returns once
executed. Investments by ChPT and Viability Gap Funding have also been
recommended where the feasibility analysis indicates that Projects which are unviable
based on forecasted revenues and expenses. For other Projects, use of Internal Funds
has been recommended.
In the later part of the next 20 years, the Financial Projections show that ChPT is likely
to have significant surplus funds. Various suggestions have been made for utilisation of
these funds.
Financial Model: Key Outcomes
The Projected Profitability Statement for ChPT appears as follows:
Overview of Profit & Loss Account
14000
10000
8000
6000
4000
2000
2
02
7
20
26
2
02
5
2
02
4
20
23
2
02
2
20
21
20
20
2
01
9
20
18
20
17
2
01
6
20
15
2
01
4
2
01
3
20
12
2
01
1
20
10
20
09
2
00
8
0
20
07
R
s. inM
illion
12000
Ye ar
Total Operating Revenue
Total Operating Costs
Operational Net Earnings before Depreciation, Interest & Tax
Net Earnings before Tax
Net Earnings
Page 21 of 185
Final Report
As would be evident from the above, profitability of ChPTs operations is likely to rise
Overview of Assets
120000
Rs. in Millions
100000
80000
60000
40000
20000
20
27
20
26
20
25
20
24
20
23
20
22
20
21
20
20
20
19
20
18
20
17
20
16
20
15
20
14
20
13
20
12
20
11
20
10
20
09
20
08
20
07
20
06
Ye ar
Fixed Assets
Current Assets
Investments
Liquid Means
steadily over the forecast period. Given the rise of BOT operations in the subsequent
years, the gap between operating revenues and operating expenses is likely to widen
thereby increasing the Operating Ratio year-on-year. The drop in revenue in the years
2019 to 2022 is because of gradual reduction in Iron Ore Traffic during this period. Net
earnings have been forecast to rise quite steadily because of interest earnings from
surplus funds. Interestingly due to reinvestment of surplus funds and consequent high
interest earnings, Earnings before tax in last couple of years rises above the operating
revenues. As has been mentioned in the paragraph on Financial Strategy above, rather
than just parking these funds in government securities/Fixed Deposits, suggestions
have been made for more optimum utilization of these surplus funds.
The projected Balance Sheet of the ChPT is a follows:
Overview of Liabilities
100000
90000
80000
Rs. inMillion
70000
60000
50000
40000
30000
20000
10000
20
27
20
26
20
25
20
24
20
23
20
22
20
21
20
20
20
19
20
18
20
17
20
16
20
15
20
14
20
13
20
12
20
11
20
10
20
09
20
08
20
07
20
06
Yea r
Equity
Reserves
Provisions
Long term loans
Short term Liabilities
A reading of the assets clearly shows that investments are the only components on the
rise and all other asset categories are more or less constant or are reducing gradually.
This is largely because, as mentioned in the profitability analysis above, BOT
operations are likely to be the flavor of the day in the years to come and due to this
reason; revenues are expected to rise without a corresponding increase in expenses
Page 22 of 185
Final Report
giving rise to high level of cash surplus. These have, in the Model, been parked in
Government Securities/Fixed Deposits (as is the current practice) and these are shown
as Investments in the Balance Sheet. Investments also include investments against
dedicated Funds like Provident Fund, Pension and Gratuity and these too are increased
with the passage of time. Since no major asset acquisitions by CHPT are required,
asset values steadily decline over the years.
Mirroring the effect on the asset side, on the liabilities side, the most significant
increase is in Reserves mostly General Reserves which basically is the accumulated
net revenue surplus of CHPT year-on-year. Provisions rise steadily mainly due to
increased tax provisions which would be necessitated due to high levels of net
earnings.
A more elaborate analysis of ChPT Financial Projections has been given in Chapter-5.
Page 23 of 185
Final Report
Major Results and conclusions
2.1 Port Description

2.1.1 Introduction
Chennai Port is one of the twelve major
ports in the country and the second
largest port in India in terms of cargo
volume handled per annum. It serves
the geographical regions of Tamil Nadu,
Pondichery, South Andhra Pradesh and
parts of Karnataka.
Chennai Port is located at latitude of
13.06 N and longitude of 80.18 E on
the southeast coast of India and in the
northeast corner of Tamil Nadu. It is
located on a flat coastal plain known as
the eastern coastal Plains.
From a humble beginning of its
commercial operations 125 years ago,
it has now grown into an emerging hub
on the east coast of India. Though it is
about 600 nautical miles away from the
international maritime route, because
of its location, proximity to market,
competitive pricing, safe and secure
Figure 2.1-1: Location of Chennai Port

with other major ports
operations this is one of the preferred ports for the trade.
2.1.2 Port Infrastructure

This section of the chapter will illustrate the results and conclusions drawn while
assessing the port facilities. Details on Infrastructure facilities available in Chennai Port
have been furnished in Section 7.1 of Interim Report.
Chennai Port has 24 alongside berths in the 3 Docks viz., Dr. Ambedkar Dock, Jawahar
Dock and Bharathi Dock. The existing Container Terminal is situated in Bharathi Dock.
A detailed map of the Port covering all the docks is provided in Annexure-1.
The major cargo commodities being handled in the Port of Chennai are Containers,
Automobiles export, POL, Iron Ore, Coal, Fertilisers products, Fertiliser Raw Materials,
and general cargo items.
Page 24 of 185
Final Report
Dr. Ambedkar Dock (AD): AD has a total quay length of around 2.3 km through 11
berths which generally cater to passengers, general cargo, fertilizers, and other ore
cargoes. Of this total, the quay length of 200 m i.e. one berth is presently dedicated
for naval vessels. The draft in the dock varies from a minimum of 8.5 m for passenger
berth to a maximum of 12 m for general/ore berths. The entrance at AD is 125 m
wide.
Figure 2.1-2: Location of Dr. Ambedkar Dock inside

the Port
Dr. AMBEDKAR
DOCK
Not to scale
In order to cater to increasing future volumes of containers, the development of a

second container terminal at Chennai port was conceptualized in March 2005. The
proposal includes conversion of existing East Quay, Naval berth and South Quay III of
the Ambedkar Dock into container berths. As this would entail shifting of Navy
operations, it is decided that a 218 m long finger jetty at the erstwhile Chokhani Dry
Dock can be handed over to Navy.
In order to cater to the increasing growth in the container cargo a second container
terminal is in the offing. This second container terminal will be build with an
investment of 491.76 crores. It will operate on BOT (Build Operate Transfer) model.
The letter of intent for the same has been issued to a private operator. Chennai Port
will contribute around Rs. 100 crores and operator the balance.
This terminal will have a Quay length of 832 m consisting of East Quay and South
Quay-III. Four hundred meters of this length can be dredged to a depth of 15.5 m,
which will be sufficient to handle fourth generation vessels.
Jawahar Dock (JD): The total quay length in JD is of around 1.3 km with 6 berths
which generally cater to food grains, coal and other ores. The draft in the dock varies
from a minimum of 10.4 m to 11.0 m. This is a closed dock with basin dimensions of
655m x 152m.
Page 25 of 185
Final Report
Figure 2.1-3: Location of Jawahar
Dock inside the Port
JAWAHAR
DOCK
Not to scale
As the deepest berth in AD, East Quay (12 m) is now being handed over to private
operator for second container terminal and understanding the need for modern
terminal operations, Chennai Port has already commenced modernization/
strengthening of JD. It is learnt that the work is being executed in a phased manner
and strengthening is expected to be completed in November 2008 and dredging to a
depth of 14 m shall be taken up there after.
In view of the trade requirements and the future ship sizes, this dock will be dredged
to a depth of 14 m to enable handling of larger vessels. It is observed that this
proposed modernization has already been included as a part of NMDP program in
March 2006.
Bharathi Dock (BD): This dock provides handling facilities for POL, containers & iron
ore. It comprises of a total quay length slightly more than 1.9 km with around 380 m
for handling iron ore, 885 for containers and rest for POL. The iron ore berth can cater
even Post-Panamax ships as it has draft up to 16.5 m. The two POL berths have drafts
of 14.6 m and 16.5 m. The iron ore berth and one of the POL berths are the deepest
berths at the Port.
Figure 2.1-4: Location of Bharathi
Dock inside the Port
N
BHARATHI DOCK
Not to scale
Page 26 of 185
Final Report
BD also encompasses container handling operations of the port through a dedicated

container terminal. The container terminal has a total quay length of 885 m with 4
berths. The draft available is approximately 13.40 m at all the berths. The entrance at
BD is 350 m wide. This terminal is operated by a private operator under a Concession
Agreement.
Bharathi Dock has oil berths which are capable of loading and discharging crude and
petroleum products using marine loading arms and has a capacity of more than 12
Million Tonnes per annum (Mtpa).
The iron ore berth was commissioned in year 1977. It is capable of receiving, stocking,
reclaiming, weighing, sampling and ship loading 8 Mtpa of iron ore per annum. It has a
Bulk carrier handling capacity of 1,50,000 DWT and a Stock yard capacity of 8 lakh
tones. It has a rated ship loading capacity of 8,000 Tonnes per hour.
The first dedicated container terminal in India stated operations at Chennai Port. This
terminal with a quay length of 885 m and the backup area of 25 ha was handed over
to a private terminal operator CCTL (Chennai container terminal) under a thirty year
Concession Agreement. This terminal in the year 2005-06 handled 0.73 million teu
(Mteu). The terminal is connected to the hinterland through the Beach Road railway
station. There is one CFS inside the port complex.
2.1.3 Ports navigational and harbor details

The Chennai Port has total land area of around 590 acres (i.e. 238 ha approx.) and
total water area of around 420 acres (i.e. 170 ha approx.)
The port has 7.0 km of entrance channel with depth of outer channel being 19.2 m and
that of the inner channel being 18.6 m. The turning circle in the inner harbour is 560
m in diameter with a depth of 18.0m.
The width of channel gradually increases from 244 m to 410 m at the bent portion and
then maintains a constant width of 305 m.
At Chennai Port, being located on open straight coast, the challenges of port
development were critical because of prevalence of two monsoons viz. southwest
monsoon during months of June to September and north east monsoon during the
months of November to February. These monsoons cause wave actions associated with
littoral drift. It is learnt that the littoral drift caused due to southwest monsoon season
is much more dominant compared to northeast monsoon. The orientation of the port
entrance was planned facing north to avoid siltation in the approach channel and at
the entrance resulted in reduced menace from the littoral depth.
The development of port caused accretion of sand on the southern side and erosion on
the northern side. In order to mitigate siltation at the entrance of the port, a long bund
termed as Sand Screen was constructed at the Surf Zone, which gave a relief against
siltation process at the port entrance. The severely eroded portion north of Chennai
port has been fruitfully used for developing outer harbour with entrance facing north.
Page 27 of 185
Final Report
Thereafter a fishing harbour has been developed on the north side of the outer
harbour with the entrance facing towards north. Due to the orientation of entrance
facing north and overlapping breakwaters of ports and fishing harbour (eastern
breakwaters), the siltation at the entrance has been minimal.
There has been severe erosion north of fisheries harbour for several kilometers due to
lack of sand supply from southern region. Due to the erosion, the Ennore Expressway
north to the port has been endangered.
The Chennai - Ennore Port connectivity Project has been taken up by National
Highways Authority of India (NHAI) through a separate special purpose vehicle
company named Chennai Ennore Port Road Company Limited. Sea protection works
including construction of groyns is an important feature in this scheme and are nearing
completion.
On the south side of Chennai Port, there has been progressive creation of beach and
this is creating additional land. By and large this has a beneficiary effect in the form
one of the long artificial beaches in the world.
2.1.4 Port Transportation System

From April 2006 to December 2006, ChPT handled approximately 39.00 Million Tonnes
(MT) of inbound and outbound cargo. Of this traffic, containerized cargo amounted to
around 10.35 Mt i.e. 0.65 Mteu at an average of 16 tonnes per teu. Presently the
outbound iron ore and the inbound coal are handled exclusively by the Indian
Railways, while only about 7-8% of the container traffic is moved by the railway. It is
apparent that the use of rail transport is underutilized when compared to other modern
international ports. This is especially true for container traffic.
The Business Plan forecasts (See section 2.4 of this chapter on trade forecast for
containers) that container traffic will increase from the present 0.73 Mteu per annum
to more than 4.0 Mteu per annum 15 years from now and is likely to cross 6.0 Mteu
per annum by the end of 20 years horizon period. This represents a dramatic increase
in container traffic.
To achieve the significant growth in container traffic, it is of paramount importance for
ChPT to devise a plan to handle the landside transportation of the traffic through the
Port and City to the hinterland. Otherwise the full growth potential of ChPT will not be
realized and competitors may gain the upper hand, diverting the traffic that should
rightly be handled by ChPT.
ChPT must improve both of its existing internal road / rail system and its hinterland
connectivity to retain its competitive advantage. ChPT must also reduce its heavy
dependence on road transport to avoid increased congestion and efficiency loss at the
existing and future terminal developments.
Shipping lines use a number of factors when selecting a port of call, including depth of
water, port charges, berth availability, terminal efficiency and land transport. ChPT is
Page 28 of 185
Final Report
presently competitive in most of these categories, but as competition arises, a status

quo position will not do.
ChPTs Strategy (outlined in Section 2.2 of this Report) is to become the preferred Port
for container business. This means that ChPT must develop the most efficient transport
system possible, if it wants to become the Port of first or second call for the shipping
lines. To become a Port of first call and receive the largest container vessels plying the
coast, ChPT must have the best transport infrastructure and processing /security
systems in India to deal with the increased handling of containers, say when a 4,000
teu vessel arrives and wants to discharge and load 2,500 teu each.
2.1.5 Internal Port Traffic

The Chennai Port receives Iron Ore mostly from the mines in the Bellary-Hospet region
in Karnataka. Iron Ore is hauled by rail wagons entering the port passing through
Royapuram station on the main rail network. The mechanized ore handling facility for
ship loading at the iron ore berth has the installed capacity of 8000 tonnes per hour.
Chennai Port use to handle large quantities of Coal but in the recent past large share
of this coal volume has shifted to Ennore Port. Coal is being shipped out of port
premises using rail mode. The rail transfer yard has five railway sidings and is
connected to beach road railway station of the southern railway network. These
railway wagons can reach the Jawahar Dock as the rail lines are laid upto this point.
Front end loaders are used to load these wagons and also in the coal storage yard for
housekeeping.
Break bulk cargo handled mostly at Jawahar Dock and Ambedkar Dock West quay is
mostly in smaller parcel sizes and hence is transported to and from the port by road
network. This cargo is stored inside the port complex in open spaces available and in
the covered warehouses.
Chennai Port handles sizeable number of cars. A dedicated parking area of 46,000 sq.
m is identified for storage of cars behind West Quay berths. These cars are driven
inside the port only four days ahead of scheduled departure. The cars are generally
covered to prevent any damage/ dust accumulation and are at times washed prior to
their export.
The existing container terminal, presently being operated by CCTL, is in an ideal
location as it is close to Gate No. 1. Unfortunately, the proposed new second container
terminal located on the east side of the port will not have the same advantage. The
present route to ChPTs main exit gate is long and circuitous and subject to much
traffic congestion and potential delays to vehicular traffic. For this reason, it is
proposed that ChPT implement the proposed road connection to Gate No. 10 with the
proposed elevated roadway that will serve as a direct truck only route to the location
outside of the City limits.
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Although the present railway tracks within ChPT does not adequately serve the
potential east-side container terminals, the ultimate removal of the existing coal yards
presents a golden opportunity for ChPT to develop a new railway inter-modal yard that
will optimize the use of rail transport for the port. In fact, it is envisaged that ChPT
could implement a shuttle railway that could quickly and efficiently move container
wagons to an off-dock inter-modal container yard located within 6 kilometers from the
Port.
The Land Use Plan now shows a new perimeter road connecting the east-side terminals
to a new proposed elevated corridor at Gate No. 10. The road connector requires a
grade-separated overpass spanning a proposed Port railway yard. The road will also
allow truck passage to/from Gate No. 1 for traffic exiting the port in a North West
direction.
The Port road and rail system illustrated on the Land Use Plan is conceptual in nature
and is indicative of what the proposed system would entail. As soon as ChPT reviews
and accepts the major findings and proposals of its Land Use Plan as part of this
business plan, it should undertake a comprehensive Transportation Master Plan that
will allow ChPT to develop a transportation system required for seamless operations
through the next 20 years. The plan should analyze the present logistics of container
movements throughout the entire system encompassing the hinterland, through the
City and within the Port. It should also identify the present and future needs of all
stakeholders and potential customers, including potential locations for one or more offdock inter-modal terminals.
Details on Shuttle Railway concept are explained in details at section 7.2 of Interim
Report.
2.1.6 Assessment of Handling Operations

The vision of ChPT is to create an environmentally clean Port. The existing bulk
handling operations of iron ore and coal create a lot of dust within the port area.
It is anticipated that ChPT will continue with Iron Ore for at least 10 -15 years unless
there are any regulatory constraints imposed. Iron ore is identified as an operation
that can positively contribute to ChPTs profitability until that quay length and
associated back-up area is required for container operation or any other strategically
feasible option. The iron ore operation is entirely for exports and includes the
unloading of iron ore from wagons to stockpile and later reclaiming of the iron and
conveying it to the vessel by ship-loader.
Consultants past experience show, dust levels at the iron ore operation can be reduced
substantially by enforcing good general house keeping such as keeping the terminal
area clean; reviewing the bulk handling operations in terms of conveyor transfer points
and other areas where material is allowed to fall or collect; and minimizing vehicular
and equipment traffic within the terminal.
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It is recommended that ChPT undertake a diagnostic review of the dusting situation as

a means to minimize future dusting. The review can also look at potential benefits of
making any minor adjustments or renewal of equipment to increase efficiency and
throughput.
Coal handling has been identified as a port operation that ChPT would like to
discontinue within the very near future. It is a very dusty operation due to the types of
coal handled and the way that the coal is handled by front end loader (FEL) and
trucks. The present coal operation also occupies a considerable portion of Port
property as it is generally a low-tech, flat storage operation.
2.1.7 Storage Capacity

Out of the total available land area of 240 ha, around 27 km of roads with various
widths ranging of 6 m to 26 m are spread over an area of around 33 ha (assuming
average width as 12m). Broad-Gauge Railway tracks totaling to around 68 km takes
around 17 ha of the ports land area.
Existing container terminal has been earmarked with an area of approximately 25 ha.
Out of balance area, it is learnt that, around 90 ha is presently earmarked for
allotment to select customers/cargo commodities.
Details on the respective storage capacity of Chennai Port are provided at Section
7.1.1. of the Interim Report.
Given the land requirement, the Port has obtained the Coastal Regulation Zone
clearance from the Ministry of Environment and Forest for the first stage reclamation
work for area north of sand screen to an extent of 8 hectares to create an additional
open storage area. It is also envisaged that storage space shall be created by:
1. Reclamation of Port Basin for container storage yard
2. Reclaiming land near Gate no.1 to the north of Bharathi Dock adjacent to
eastern breakwater to an extent of 60 hectares
It is also envisaged that existing CFSs can be shifted out site the port premises to
enhance the container storage capacity of the port. A proposal to acquire a 24 ha (60acre) of land at Sathangadu from CMDA for setting up off-dock CFS and parking area
is also included in the NMDP. However due to delay in the land acquisition, an
alternative has been proposed for creating this facility at Tondiarpet Housing Colony by
dismantling some old quarters. A proposal is already drawn up for the scheme and
approval of Southern Railway is awaited. This will make available a buffer storage area
for catering to the increasing volumes of cargo likely to be handled at Chennai port.
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2.1.8 Marine Services

Marine services basically comprises of dredgers, tugs, pilot & mooring launches etc
providing assistance during berthing/ unberthing of ships. Details on the same are
provided at section 7.1.1 of Interim Report.
2.1.9 Cargo Handling Equipments

The details of equipments at Chennai port include Shore Electric Cranes, Gantry
Cranes, Mobile Cranes, Low Capacity, Diesel Fork Lift Truck, Heavy Duty Diesel Fork
Lift Truck, Pay Loader, Diesel Electric Loco and Floating Crane-Thangam and are
furnished in section 7.1.1 of Interim Report.
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2.2 Competitive Position

The competitive position of ChPT was determined using Porters Five force Analysis
model. As per the model, there are five competitive forces affecting an organization:
Threat of new entrants: How easy or difficult is it for new entrants to start
competing, which barriers do exist?
Threat of substitutes: How easily can a product or service be substituted, especially
made cheaper?
Bargaining power of buyers: How strong is the position of buyers? Can they work
together in ordering large volumes?
Bargaining power of suppliers: How strong is the position of sellers? Do many
potential suppliers exist or only few potential suppliers (monopoly)?
Rivalry among the existing players: Does a strong competition between the
existing players exist? Is one player very dominant or are all equal in strength and
size?
All of these five forces were analyzed and findings were presented in our Interim
Report. A summary of the findings are depicted in Figure 1.3-2 on the next page.
Conclusions reached for each of the Forces have also been given in this sub-section.
Threat of New
Entrants
Bargaining
Power of
Suppliers
Competitive
rivalry within
the industry
Bargaining
Power of
Customers
Threat of
Substitutes
Figure 2.2-1: Porter Five Force Analysis
Page 33 of 185
Final Report
Figure 2.2-2: Summary of conclusions of Porters 5 Force Analysis for ChPT

Chennai port faces very negligible
pressures from various service
provides like stevedores, CHA,
concessionaire.
The relations with labour unions are
under good balance under present
circumstances. However, they do
possess lot of bargaining power.
However, this scenario may change if
initiates action to solve existing
labour issues
Labour issues faced by CCTPL will
impact future plan of becoming a hub
port
The agreements with concessionaires
provide them the power to enforce
fulfillment of obligations of ChPT
The contractors do possess certain
bargaining power due to cartelization
among them
Bargaining power of service
providers
Contractors/ equip. suppliers
Concessionaires
Labor unions
Chennai port enjoys

monopoly because of
location committed
investments by users.
The new port facility requires
huge investment and long
gestation period
Proactive measures by
nearby major ports and minor
ports to attract customers
through efficient services
and modern technology.
Increasing containerization
and upcoming projects
through the international
shipping route in the Indian
Ocean is increasing the
international competition
Ability to control negotiations by the

threat of curtailing / cancelling services
Chennai port has negligible threat

from competing transport modes like
rail/road congestion. In fact, there is
a possible opportunity for
promoting coastal trade.
Substitutes for principal cargo
unlikely
Principal Cargo can shift to other
ports
Minerals export cargo (iron ore,
manganese) might also face
reduction because of government
policy to impose restrictions on
minerals export to avoid domestic
shortage.
Terminology:
Threat of New Entrants

New port facilities planned by
minor and major ports
Sethusamundram Project
Potential of new ports or

service providers
Rivalry among existing

competitors
Better tariff terms
Better efficiency
Better connectivity
Ability to utilize other ports

or other sources of supply
Potential for global

substitute
Other sources of supply
Substitute products
Threat - Negative impact
Chennai port presently has a

monopoly due to geographical
advantage
Chennai has a First Mover Advantage
and has an established base of
customers
All the ports in the southern Indian
peninsula have smaller hinterland to
serve and large number of upcoming
ports, resulting into greater
competition
Better infrastructure and efficiency by
minor, major & international ports
likely to put pressure
All the competing ports are planning
for port based SEZ and also trying
grab other cleaner cargo like auto
export, container cargo, project
export, etc.
Size & importance of

the port user to the port
Bargaining power of port

users
Cargo traffic enablers
Importers/ exporters, CHA
Shippers, steamer agents
Increasing containerization and rise in

variety of break bulk cargo, project export,
auto exports, etc. provide avenue for
diversification
Monopoly status
Chennai port is the entry point of sea trade
& generates employment for local
community, giving bargaining power to
ChPT
Chennai port is dependent on few port users
for its cargo like iron ore, coal & POL
Enabling policies of state Govt. to promote
captive ports leading to increased
bargaining power
User friendly attitude and efficient services
by competing ports coupled with probable
decrease in hinterland transport costs
Opportunity Positive/ neutral impact
Page 34 of 185
Final Report
2.2.1 Threat of New

Entrants
ChPT will face threat from new
entrants which are non-major
ports of Tamil Nadu and other
neighboring states and
upcoming projects of major
ports in the region. The
adjacent figure represents the
upcoming non-major ports and
existing major ports in the
Figure 2.2-3: Upcoming non-major
Southern India region. Since

the liberalization policy of the
central Government in 1991
and resultant increasing foreign
trade, the State Governments
have been trying to develop
non-major ports. The increasing
privatization among
infrastructure projects and
supporting policies and
Vizag
incentives have given a

renewed focus to the
development of these nonNew
Mangalore
Our analysis suggests that nonAzhikkal
major ports in the hinterland
Beypore
area of ChPT are fast moving
Cochin
Alappuzha
forward to grab traffic by
Vizhinjam
providing special service options
major ports.
Colachel
Kakinada
Krishnapatnam
Ennore
Chennai
Pondicherry
Cuddalore
Nagapattinam
Tuticorin
Tirukkadaiyur
Major Port
Minor Port
like developing Single Point

Mooring (SPM) for different customers. The state government policies for greater private
sector participation have been the catalyst for such development. However, the efficient
facilities provided by ChPT will help in maintaining the existing tonnage growth. The
non-major ports will take some time to attract a large customer base.
Amongst upcoming minor ports, biggest threat is likely to come from Krishnapatnam
Port. Krishnapatnam Port Company Ltd. (KPCL) has been awarded the concession by the
Government of Andhra Pradesh to develop the existing minor port into a modern deep
water port. The port is designed with deep draft to handle ships of size up to 200,000
DWT. The port is targeting iron ore cargo from Bellary Hospet region in Karnataka,
coal cargo for power plants and cement plants in the nearby areas and other minerals
Page 35 of 185
Final Report
cargo originating from Andhra Pradesh. Krishnapatnam has a total cargo potential of
about 20 Mtpa per year in the short term and over 37 Mtpa in the long term. The port
has expansion plans to build up to 30 berths and has 4000 acres of back-up area. The
phase I of the port development will be completed by 2008. Krishnapatnam port has the
potential to attract iron ore cargo of ChPT. Contrary to this we do not envisage any
threat from Krishnapatnam for container cargo.
Apart from non-major ports, the Sethusamudram Project is expected to result in acting
as catalyst for rise in coastal trade. As per a TCS report for DG Shipping on
Development on Coastal shipping and non-major ports, about 4 Mtpa of traffic can be
diverted to coastal route without increasing the transportation cost, and if the capacity
planning is done in a proper way, coastal traffic can go upto 10 Mtpa by 2012. The
promotion of transshipment traffic can help in saving recurring economic loss of Rs. 600
Crores annually on cargo handling alone1
The beneficiaries of the coastal trade will be all the major ports as well as non-major
ports along the route. The impact of Sethusamudram project on coastal trade and on
facility planning at ChPT needs to be studied.
2.2.2 Rivalry among

Existing Players
Rivalry among existing players
basically covers analysis of
Figure 2.2-4: Southern Indian peninsula
competitive pressure from

other major ports in south /
south east India region like
Ennore, Vizag, Tuticorin and
Cochin. Existing players also
cover international ports in the
region like Colombo, Singapore
and Hong Kong.
The shape of the Southern
Indian peninsula is such that
hinterland of different ports
Ennore
increasingly overlaps as one

move from the north to the
south; this is depicted in the
Captive hinterland
adjacent figure.
Secondary hinterland
This phenomenon results in smaller hinterland area for ports in Southern peninsula and
larger hinterland to serve for ports as we move northward. This creates immense
competitive pressures among ports in the south because they compete for the same
Page 36 of 185
Final Report
cargo, and this requires a focused planning for identifying desired niche cargo and to be
the first in grabbing this traffic.
The following Table No- 2.2-1 summarizes the facilities provided by major ports in the
region.
Table No- 2.2-1: Comparison of facilities at all Major ports
Chennai
Berths
Main berth
types
Container
terminal
24
Coal, iron
ore, POL,
General
Cargo
885m long,
13.4m deep
Tuticorin
Port
Ennore
Port
11
Dry bulk,
oil & coal
2
Coal
370m
long,
10.7m
deep
137 acre
inside
security
wall, 2158
acres
outside
the main
gate
Storage
facility
172 acre
owned port,
200 acre &
14000 KL of
liquid by
private
parties
Cargo
handling
equipments
1 floating
crane, 12
electric wharf
cranes, 3
mobile
cranes, 3
gantry
cranes, 29
fork lift trucks
6 electric
wharf
cranes, 4
lift trucks
2 shore
gantry
type
grab, 1
mobile
hopper,
6 temp.
hopper
Flotilla
7 tugs, 3 pilot
launches, 4
mooring
launches
5 towing
tugs, 2
pilot
launch, 2
floating
cranes, 4
barges &
lighters
3 tugs, 2
pilot
launches,
3
mooring
launches
Other
facilities
Mechanized
ore handling
facility
Water supply
& bunkering
Crude oil
handling
New
Mangalore
Port
13
General
Cargo, POL,
iron ore
Cochin Port
Vizag port
10
General
cargo, liquid
bulk, POL,
fertilizer
573m long,
12.5m deep
26
POL, iron ore,
general cargo,
fertilizer, LPG
14 acre of
covered
area, 25 acre
of open area,
125400 tons
of liquid
cargo by
private
parties
12 electric
wharf
cranes, 2
mobile
cranes, 26
fork lift
trucks, 1
floating
crane, 9
transfer
cranes, 2
mobile
cranes, 2
gantry
cranes
300 acres, 2
Mt of various
cargo storage
owned by
private parties
20 acres,
64000 tons
of cargo
storage by
private
parties
25 electric
wharf cranes,
4 mobile
cranes, 15 fork
lift trucks, 92
top lift carrier
3 electric
wharf
cranes, 2
mobile
cranes, 7
fork lift
trucks
3 barges, 3
mooring
launches, 2
floating
cranes, 4 pilot
launches
5 pull tugs,
3 pilot
launches, 4
mooring
launches
451m long,
15m deep
Mechanized
ore handling
facility, raw
fertilizers,
crude oil and
liquid
chemicals
Page 37 of 185
Final Report
Chennai
Tuticorin
Port
facility
Ennore
Port
Cochin Port
Vizag port
New
Mangalore
Port
handling
facility
Ship repair
facility
Water supply &
bunkering
Ennore was originally conceived as the satellite port of Chennai to handle the dusty coal
and iron ore. Ennore has already succeeded in diverting the coal cargo from Chennai.
Even though the shift of iron ore cargo from Chennai to Ennore has been virtually not
there at present, the project to be implemented by PSA SICAL at Ennore will definitely
start the trend in next two years. With the proposed developments like LNG power
project, a Petro Chem Park and a Naphtha Cracker Plant, in the immediate hinterland,
Ennore port has identified its role to be the energy hub port and planned for projects like
LNG terminal and marine liquid terminal. Ennore being promoted as dirty industrial port,
it is very unlikely that categories like cars will move there. POL traffic of Chennai, if it at
all moves out, it will shift to a SBM, and possibly not to Ennore.
While both Ennore and Tuticorin pose competitive threats to ChPT, Tuticorin is perceived
to be major threat to Chennai in terms of containers compared to Ennore, because the
projects at Ennore might take some time to be implemented. This was the result of the
initiative taken by Tuticorin Port to privatise and improve the efficiency in the container
terminal. Tuticorin is a competitor for Chennai mainly for container cargo originating
from south of ChPT. Tuticorin Port has plans for further expansion in capacity for
containers, coal and POL products. Tuticorin port is not directly exposed the cyclone
induced delays, unlike Chennai.
Cochin, being just 11 nautical miles from international sea route, has planned for major
projects including a trans-shipment hub to explore the opportunities offered by its
geography. Cochin has identified big ticket infrastructure projects under SEZ led port
development plan. However the cargo hinterland for this projects and the very nature of
the same being a transshipment port should pose no great challenge to Chennai.
Major traffic of New Mangalore port comprises of iron ore and POL of Kudremukh Iron
Ore Company Ltd. and Mangalore Refineries & Petrochemicals Ltd. respectively. The
port has planned for LNG terminal and coal handling facilities. However, Mangalore,
situated on the seaward side of Western Ghats does not share a major common
hinterland with Chennai and therefore is not considered to be a threat to Chennai.
ChPT has identified its role to be a hub port in the Indian subcontinent on the eastern
coast, However, Chennai will face competition for container cargo, coal, iron ore and POL
products. In the nearby hinterland area, Chennai has the presence of global vehicle
manufacturing giants like Ford, Caterpillar, Hyundai, BMW and Mitsubishi as well as
domestic heavyweights like MRF, TI cycles of India, Ashok Leyland, Royal Enfield, TAFE
Tractors and TVS. Hyundai has also signed a MOU with Chennai guaranteeing traffic at
Page 38 of 185
Final Report
Chennai. Chennai, therefore, enjoys a strong competitive advantage so far as

automotive exports are concerned.
As far as international ports in concerned, ChPT faces stiff competition from these ports
for attracting main line vessels. Chennai is greatly hampered by its location which is not
on the international maritime route.
2.2.3 Bargaining Power of Suppliers

Suppliers for the ChPT consist of the following:
3. Stevedores
4. Civil Construction Contractors
5. Work Contractors & Equipment Suppliers
6. Labour Unions & Dock Labour Boards
7. Private Operators & Concessionaries
Bargaining powers of these groups have been discussed below:
A. Stevedores
ChPT has been able to withstand pressures from these players because of its
government protected monopoly. Even though these agencies are given opportunity to
participate in management decisions by having a representative on port trust board,
their say in the decision making might be limited.
However, considering the fact that the cargo to be handled at ChPT is going to be mostly
containers and its consolidation, stuffing/de-stuffing will happen outside the port limits,
they will become irrelevant entity.
B. Work Contractors & Equipment Supplier
The scenario presented clearly indicates that the ChPT enjoys good relations with
contractors. The port is able to get the desired performance from the contractors, while
the contractors have been able to get timely payments with decent tender terms and
conditions. However, recent cartel formation among contractors is a cause of concern.
C. Labour Unions & Dock Labour Boards
Our study indicates that even though the port has not faced any man-day loss due to
labour unrest in the past, the port does face problems of surplus labour and poor
efficiency coupled with commensurate higher wage bill. As and when the Port will try to
address these issues by taking tougher decisions, it is expected that there will be
immediate fallout on port performance. Labour issues faced by CCTL (the container
terminal operator in Chennai) are a matter of great concern because it affects the
credibility of ChPT and reduction in revenue share because of effect on cargo volume
handled.
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D. Private Players & Concessionaries

ChPT has substantial experience of dealing with private players ever since the
introduction of the berth reservation scheme in 1995. The port has privatized a
container terminal and plans to establish second container terminal through BOT
operator. Whenever a PPP opportunity is tendered, ChPT receives good responses from
credible infrastructure operators. This shows the possibility of the future private
participation for traffic expected to be generated through such facilities.
2.2.4 Bargaining Power of Port Users

ChPT like most other major ports provide very little room for negotiation or bargaining
with their users. The tariffs are fixed and the service delivery and efficiency is not
comparable to private ports. Given the increasing need for international reach and the
extreme congestion on rail/road traffic modes, industry players have started to look for
ports as an alternative for transfer of their goods.
All these factors clearly indicate that ChPT is increasingly facing or bound to face
tremendous pressure from the corporate players in terms of creating their captive ports
or single buoy moorings and thus shift the cargo volume from the port.
Considering this trend, the ChPT will have to look for options like berth reservation or
private participation in the port facilities. However, the port user industry might prefer
berth reservation only if the port trust is able to achieve considerable efficiency
improvement. Similarly, increasing container trade and break bulk cargo will result in
reduction of dependency of the port trust on a particular port user.
The port should move towards a partnership model directly with its customers. For
instance, partnerships with automobile manufacturers like Ford and Hyundai ought to be
envisaged.
For iron ore cargo, ChPT faces competition from other major ports like Tuticorin and
Vishakhapatnam, so the iron ore exporters can shift their cargo handling to other ports if
the efficiency is higher, or port charges are lower and the connectivity is not the major
problem. Increasing awareness about pollution issues and judicial action will require that
either these cargos be shifted from ChPT or be handled with more environment
management initiatives.
Bargaining power of steamer agents, shipping lines, CHAs
These user support agencies have very little bargaining power in terms of direct
interface with ChPT. However, these agencies may have power in terms of influencing
the decision of the actual port users (cargo importers/ exporters) for selection of any
particular port facility. However, the small port users, who trade and handle small
quantity of general cargo, will switch the port facility only if the total cost results in
sufficient cost reduction, because the land transportation cost is higher than the sea
transportation cost. These users will also have less bargaining power because of less
importance to ChPT due to lower traffic and revenue.
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Final Report
2.2.5 Threat of Substitutes

The main commodities of traffic handled by the port include POL, iron ore, container
cargo and other cargo. Out of the different type of cargo handled by the port, only the
export of iron ore has the potential substitute source. The majority of the iron ore
exported at the ChPT is carried to the ports of China. However, the National Steel Policy
of the Indian government seeks to give Indian steel producers priority in the use of
domestic iron ore production.
Page 41 of 185
Final Report
2.3 Hinterland Connectivity

The importance of maritime infrastructure in facilitating international trade and economic
growth is well recognized. The recent economic indicators point towards Indias economy
growing possibly at a GDP growth rate of upwards of 8 percent per annum in a sustained
manner. This would require a marked improvement in modernization and up gradation
of the overall port infrastructure, especially for ensuring seamless movement of cargo.
With introduction of new technology and additional capacity building, the cumulative /
total capacity available at ports generally matches the current requirement. However,
evacuation of cargo from ports is a matter of concern. Thus, despite having the
capability of developing adequate capacity and modern handling facilities at the berths,
the ports are not able to ensure competitiveness of Indias EXIM trade in the global
market. This undermines the competitiveness of Indian ports vis--vis other ports in the
region. Therefore, it is important that connectivity to gateway ports with the hinterland
is augmented not only to ensure smooth flow of traffic for the present level of cargo
volume but also to meet the future requirements of projected increase in traffic.
2.3.1 Hinterland mapping for Chennai

Chennai has the entire South India as its hinterland. If one were to consider the seaward
connections too as hinterland for cargo potential, Chennai is well located and connected
with other ports in the Bay of Bengal.
The above mentioned generic advantages are somewhat nullified due to inherent
disadvantages arising out of a seaport wherein the city has outgrown and gained in
importance vis--vis the Port. Situated at the eastern end of the urban conurbation,
connectivity to ChPT is time consuming and resulting additional cost burden. Use of by
Rail for cargo movement is limited and hence there is overdependence on Roads for
cargo evacuation.
The hinterland served by ChPT is dynamic but is shared by the major ports like Ennore,
Tuticorin, Visakhapatnam, and New Mangalore port on the eastern and western coast
and will be the potential hinterland for the upcoming non major ports as well. Currently
Cargo to / from ChPT is handled through rail (33%), road (40%) and pipeline (27%).
An origin destination profile (O-D Profile) was prepared based on available data. Details
on O-D profile are provided at section 6.2 of the Interim Report.
In order to assess the hinterland for ChPT, Origin and destinations analyzed above, the
regional presence of other major & minor ports and the competitive advantage they may
have over ChPT is considered. Hence, keeping in mind all these factors hinterland for
Chennai have been plotted accordingly in Figure 1.5-1.
Even though there are no natural barriers, the presence of other major ports like
Visakhapatnam to the North, Tuticorin to the South West (technically on East Coast) and
Kochi to the west and other upcoming non- major ports like Kakinada, Krishnapatnam,
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etc, the primary hinterland of Chennai can be stretched to the extent of about 100 miles
only.
Further, the hinterland may be called as secondary wherefrom competition may also be
able to take away Chennais cargo share, although logically, distances would not justify
such loss of trade share. This can be stretched to 200-300 miles radii from Chennais
location.
As it happens, beyond Bangalore the Western Ghats become a natural barrier and so it
determines the western limit.
Figure 2.3-1: Hinterland Map
Further to north/north-west
and south/south-west, the
tertiary hinterland stretches
to the twin cities of
Vishakhapatnam
Port
Hyderabad- Secunderabad
and to the industrial
settlement of Tiruchirappally.
Rail connection by CONCOR
to the former and the
National Highway connection
to the latter strengthen the
same. However to the west,
Chennai
Port
New Mangalore
Port
Bangalore remains the limit

for the aforesaid reasons.
Primary Hinterland
The adjoining hinterland

Secondary Hinterland
mapping is sketched as
described above. There are
no strict distances, staging
Cochin
Port
Tertiary Hinterland
points, cities or towns that

delineate as above. Competition between ports and service providers determine the
hinterland outreach.
2.3.2 Road Connectivity

Popularly known as "Gateway to South India", Chennai is well connected to other major
cities by national highways namely NH-5 which connects it to Kolkata, NH-4 which
connects it to the western part of the country and NH-45 which connects it to Dindugal,
the southern region.
With the objective of providing improved port connectivity, National Highway Authority
of India (NHAI) has been mandated the implementation of connecting the major ports to
the nearest National Highways through strengthening and four-laning of these highdensity corridors.
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The Figure 2.3-2 shows the alignment of Golden Quadrilateral Project and North-South
and East-West corridors.
Figure 2.3-2: Alignment of Golden

Quadrilateral Project and NorthSouth and East-West corridors
Golden Quadrilateral connects Chennai to Kolkata on the east and Mumbai via Bangalore
on the west. The status of Chennai citys in-turn ChPTs connectivity through ChennaiKolkata stretch under Golden Quadrilateral till Dec 2006 is depicted in figure 2.3-3.
Figure 2.3-3: Status of ChennaiKolkata stretch under Golden

Quadrilateral till Dec 2006
Page 44 of 185
Final Report
The status of Chennai citys in-turn ChPTs connectivity through Chennai-Mumbai stretch
under Golden Quadrilateral till Dec 2006 is depicted in Figure 2.3-4.
Figure 2.3-4: Status of ChennaiMumbai stretch under Golden

Quadrilateral till Dec 2006
These developments on ground suggest we can reasonably consider that Chennai city is
expected to have better connectivity to the National and State highway network within a
reasonable timeframe.
But the last stretch of 15-20 kms from North, West and South to the ChPT are clogged
and regulated with traffic restrictions. Thus the penetration in the hinterland is set off
against the shorter but complex city transit; Bangalore to Chennai outskirts may be
hauled in 4-5 hours but the last 20 kms at times require up 1.5-2.0 hours, that too only
during night time. The ring roads circumventing the city have helped but increased the
distance and costs against marginal savings in hauling time.
The Golden Quadrilateral shall be connected at Poonamallee outside Chennai city limits.
It is therefore proposed that one of the stretches which can improve hinterland
connectivity is Poonamallee to the Port gate. A dedicated elevated expressway from
ports southern gate i.e. Gate No. 10 of ChPT near the War Memorial on Kamarajar
Salai, over the EVR Periyar High Road to Maduravoyal leading to the NH-4 is already
proposed in NMDP program at an estimated cost of Rs. 750 cr. This corridor is planned
as a four-lane corridor along the Poonamallee High Road.
In view of the improving the ports connectivity on the northern side, improvement and
strengthening of major road network in Ennore and Manali area is envisaged. This is
proposed to provide much desired connectivity to the Port from the national highway
and also provide a facelift to the approach roads to the Port. Presently the traffic
movement from the Ennore Expressway to Gate No.1 of ChPT is through the entry to the
fisheries harbor which is very narrow and creates traffic hold up causing inconvenience.
The road passing through the fishing harbor should also be upgraded under proposed
Ennore Manali Road Improvement Project (EMRIP). The EMRIP project has already been
taken up by NHAI through a separate special purpose vehicle named Chennai Ennore
Port Road Company Limited. Under this scheme, the following works will be taken:
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Final Report
Sea protection works on Ennore Expressway.
Widening of Ennore Express way to 4 lane along with service Roads on both
sides for 6.8 Km.
Improvement and widening of TPP road
Strengthening of IRR and MORR road
Sea erosion protection works are nearing completion and other components of the
project are in initial stages of implementation. About 80,000 sq.m. of land has been
reclaimed along the Ennore coast, which was in the past affected by sea erosion. Work
on Tiruvottiyur -Ponneri -Pancheti (TPP) Road was inaugurated in the month of March06
and the project components inside Fishing Harbour and at MORR and Inner Ring Road
will be taken up soon. Total road length under EMRIP project is around 30 km and the
Figure 2.3-5 indicates the alignment of proposed roads under this EMRIP Scheme.
Figure 2.3-5: Alignment of proposed roads under this EMRIP Scheme
Page 46 of 185
Final Report
Government had approved participation of ChPT in the Special Purposed Vehicle

comprising ChPT, National Highways Authority of India (NHAI) and Government of Tamil
Nadu. The State Government is also participating in this project by way of equity in this
company worth Rs.30 crores by virtue of handing over of Northern portion of Inner Ring
Road (IRR), Manali Oil Refinery Road (MORR) and Thiruvottriyur - Ponneri - Panchetty
Road (TPP).
2.3.3 Rail Connectivity

The ChPT is well connected with the national railway network. The Port is linked to
Southern Railway network via Chennai Beach Railway which connects ChPT Station to
Southern parts of Tamil Nadu and via Royapuram which connects Southern Railway
Trunk line to Kolkata, New Delhi, Bangalore, Coimbatore etc.
Port railways interchange traffic with southern railway
o
Ports connection from Via Royapuram Station to Bharathi Dock for

exchanging Iron Ore traffic coming from Ore mines meant for export through
ChPT.
Exchanges other general-purpose traffic via Chennai Beach Station into

Marshalling Yard at ChPT Railway. This general purpose traffic includes import
of Steam Coal, Coke and Thermal Coal for steel and cement industries and
also for the two power stations for APSEB and KPCL.
The exchange of container trains from Chennai Beach Station into N&C (North
& Central) yard of Port Railway System. The unloading and loading of
container is handled by CONCOR. CONCOR is provided with a dedicated siding
and also developed port land for stacking containers.
The ChPT has a rail network of approximately 70 km. The Bharathi Dock marshalling
yard has a capacity to handle 10 rakes of railway wagons per day for Iron Ore and 2
container rakes. Similarly the coal yard including sidings can handle 7 rakes.
As the port in its strategy has emphasized on containerized cargo, it is imperative to
improve the share of rail in transporting containers from the present 7%, to take the
load off from roads and faster movement of containers to the hinterland locations. In
this regard, the following projects are required to be undertaken to improve rail
connectivity.
Developing an Off-dock facility at Tondiarpet
There is a need for developing an Off Dock at Tondairpet Housing Colony as shown in
figure below and strengthening its already existing rail connectivity with the Port. This
facility will be restricted to only storage of containers and shall be an intermediate point
for speedy evacuation between the hinterland and the Container terminals. Activities
related to a typical CFS such as stuffing / de-stuffing will not be carried out at this
location. The facility is spread over 9 ha and is approximately 5 Kilometers away from
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Final Report
the Port. Though dedicated rail connectivity from Tondiarpet Housing Colony to port is
envisaged, we also propose to check the feasibility of having a dedicated elevated rail
link.
It is also proposed to carryout a study for assessing the possibility of further augmenting
the land capacity of this facility by relocating the nearby stadium and school as shown in
the figure below
Tollgate Road
School
THC
Thiruvottriyur
High Road
Stadium
Establishment of a Shuttle railway service

Initial observations and the experience of the Consultant indicate that the use of a "port
shuttle railway" system moving containers in-bond from the port to an "off-dock facility"
close to the port will substantially reduce container dwell times. This system will free-up
valuable land at the port that is presently used for the storage of containers. Also, the
port shuttle railway service will substantially reduce the number of trucks presently
servicing the port. With good management, the port shuttle railway would always have a
balanced flow of loaded and empty containers moving in both directions ensuring a high
level of utilization.
The shuttle railway would use modern container wagons and depending on distance and
train speed would shuttle between the off-dock inter-modal container yard and the port
on a around-the-clock basis. Rail-mounted gantry (RMG) cranes would be used at ChPT
and the off-dock terminal to efficiently handle the containers. The proposed new intermodal railway yard would allow all terminals to receive containers via the railway
system.
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Final Report
Use of Multi- Trailer System (MTS)

The proposed new container terminals would use tractor- trailer trains (road units) that
can carry up to 6 teu with either two 20-feet or one forty-foot container on each of the
three trailers. The multi-trailer system (MTS) would quickly and efficiently shuttle
containers between the Ports inter-modal rail yard and the terminals. The MTS system
is successfully used at number of international terminals where containers must be
quickly moved within the Port areas over medium distances.
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Final Report
2.4 Cargo Forecast

Cargo handling forecast is the most pertinent factor as it enables us in deciding upon the
future infrastructure and other functional facilities required and service levels demanded.
This section presents the excerpts of a detailed cargo forecast study carried out and the
outcomes.
In order to forecast the cargo potential over the horizon period of 20 years, the historic
cargo trends with various quantifiable and non-quantifiable variables were used as
inputs in developing a Statistical Model. The statistical model is developed using multiple
regression analysis and resulted in demand forecast for the region which is further
translated into targeted traffic forecast for ChPT. Detailed methodology followed and
various interim outcomes are illustrated in section 6.6 of the interim report.
2.4.1 Commodity analysis

In order to understand the trade flux, the traffic analysis was carried out based on the
last 7 year statistics of cargo volume handled at the Port. The same is presented in
Table No- 2.2-1:
Table No- 2.4-1: Tonnage Handled During Last 7 Years (in Mtpa)
1999-
2000-
2001-
2002-
2003-
2004-
2005-
Commodities
2000
2001
2002
2003
2004
2005
2006
POL
10.05
8.69
8.51
8.92
9.48
11.7
13.21
-13.53
-2.07
4.82
6.28
23.42
12.91
Growth% over
last year
% share
26.84
21.08
23.57
26.48
25.82
26.71
27.96
Iron Ore
6.19
6.82
7.44
7.94
8.92
9.6
9.46
10.18
9.09
6.72
12.34
7.62
-1.46
Growth%
% share
16.53
16.55
20.60
23.57
24.30
21.92
20.02
Fertilizers
0.69
0.48
0.49
0.42
0.38
0.55
0.71
-30.43
2.08
-14.29
-9.52
44.74
29.09
Growth%
%share
1.84
1.16
1.36
1.25
1.04
1.26
1.50
Raw Fertilizers
0.47
0.43
0.32
0.28
0.32
0.32
0.36
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Final Report
Commodities
1999-
2000-
2001-
2002-
2003-
2004-
2005-
2000
2001
2002
2003
2004
2005
2006
-8.51
-25.58
-12.50
14.29
0.00
15.63
Growth%
% share
1.26
1.04
0.89
0.83
0.87
0.73
0.78
Thermal Coal
9.23
11.67
7.19
2.68
1.86
1.99
1.91
26.44
-38.39
-62.73
-30.60
6.99
-4.02
Growth%
% share
24.65
28.31
19.91
7.96
5.07
4.54
4.04
Cooking Coal
0.41
0.53
0.52
0.98
1.34
1.32
1.26
29.27
-1.89
88.46
36.73
-1.49
-77.13
Growth%
% share
1.10
1.29
1.44
2.91
3.65
3.01
2.67
Containers
3.98
5.99
5.86
7.22
8.63
9.86
11.76
50.50
-2.17
23.21
19.53
14.25
19.27
Growth%
% share
10.63
14.53
16.23
21.44
23.51
22.51
24.89
Others
6.42
6.61
5.78
5.24
5.78
8.46
8.58
2.96
-12.56
-9.34
10.31
46.37
100.94
Growth%
% share
17.15
16.04
16.01
15.56
15.75
19.32
18.16
Total
37.44
41.22
36.11
33.68
36.71
43.80
47.25
10.10
-12.40
-6.73
9.00
19.31
7.88
352307
344528
424665
539265
616530
734778
Growth%
9.43
-2.21
23.26
26.99
14.33
19.18
Cars
5260
4635
8432
39868
83121
102692
-11.88
81.92
372.82
108.49
23.55
Growth%
Containers
(teu)
Growth%
321960
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Having observed the change in the total cargo volumes in the last 7 years there is a
need to analyze the transformation pattern for each major commodity individually.
Detailed commodity analysis has been carried out in the section 6.1 of the Interim
Report.
The commodity analysis has been further bifurcated into Trade analysis & Trade Focus.
Trade analysis talks about trade pattern observed in the recent years and trade focus
illustrates the future expected pattern. The conclusions on the same have been
presented below for each major commodity:
A. Coal
Trade Analysis: Thermal coal is one commodity which has dropped drastically from 9.0
Mtpa to 2.0 Mtpa over the last few years. The main reason is that the coal linkages to
power utilities have been moved to nearby ports and the remaining volume serviced out
of Chennai is only to the private sector.
Coking coal has grown from 0.4 Mtpa in 2000 to 1.26 Mtpa in 2006 showing a 215%
phenomenal growth. However the annual growth rates are uneven with negative
growths in 2002, 2005 and 2006 as compared to the previous years. After the
substantial catch up growth in 2003-04, the total Coal cargo has been approximately 1.3
Mtpa during the last three years.
Trade focus: Growth opportunities appear limited, unless policy decisions compel
increased use of the linkage via ChPT. Though India has ample reserves of Thermal
Coal, the ash content therein is found to be high and calorific value lower than imported
coal. The coal reserves of the nation are on the northern side of the country. High
domestic transportation cost makes imports attractive and coastal power plants and
industrial units better propositions in the peninsular geography. As such Coal in all its
forms is expected to be imported in high volumes, with improved / increased supplies
from Indian mines catering to a part of the demand surge in the hinterlands.
As regards coking coal, new coke oven plants are being put up and its import has been
dropping. Therefore, coking coal is to be considered only as a minor contributory to
Chennai trade.
B. Iron Ore
Trade Analysis: As it can be seen from the historic trend that this is a commodity
which has never seen negative growth rate except for the year 2005-06. Share of Iron
Ore to the total Port tonnage ranges from 16% to 20% and the commodity has
averaged a growth of over 7% in the last seven years.
Trade Focus: Exports of iron ore are touching a 10 Mtpa mark. This growth has been
driven by the Chinese boom which is in for some correction. Due to environmental
issues, the impeding creation of an Iron Ore loader facility at Ennore Port, and the
Page 52 of 185
Final Report
possibility of a reduction / ban on its export to preserve it for domestic steel plants, the
dependence on its growth and share for CHPT will have to be toned down.
C. POL
Trade Analysis: This is one of the most important commodities that has accounted for
a quarter of the ports total cargo during the last seven years. Further, the strength of
this sector can be seen by the fact that even the oil prices surged high to a price of 75$
per barrel, then also this sector continued to show a growth rate of 13% during 200506. POL has consistently contributed at above 20% of the total Ports tonnage.
Trade Focus: Under POL, the most important product is crude oil which is being
imported from the Gulf countries. With the evolution of new technology like Single Buoy
Mooring (SBM) the throughput at the ports can be affected in the future. After imports
were liberalized, the oil products, more appropriately the petrochem sector has seen
growth and diversification terms of product range from base oil (lube) to orthoxylene
and carbon black. These can be expected to increase in variety and volume. Newer
refining capacities have made India a net exporter of Petroleum Products driving up
crude imports too. As India has turned into a net surplus refiner, petroleum product
exports are on the increase. POL has ample capacity and demand potential for growth
through general economic drivers. Therefore, POL throughput will continue to increase
incrementally in the near future. The scope of the Port is however limited in managing
the increase in the POL traffic numbers because ChPT has only one POL customer and
there is a basic limitation to the total refining capacities that the customer has. No new
refining capacities are envisaged in the ChPT hinterland.
D. Containers
Trade Analysis: It is observed from the historic trend that growth has been around
20% over the previous years numbers and the share of containers in the total cargo
volume has been constantly increasing in the past few years from 10% seven years back
to 25% by 2005-06. In addition to this, the recent trend indicates various new
commodities are also being containerized resulting in further addition to the growth
pattern. With this, container trade can be considered to be main thrust area in the
coming years.
Trade Focus: Chennai is a pioneering port with container handling facility on the east
coast and coupled with a distinct locational advantage, container trade is expected to
have phenomenal growth in the future years. A second container terminal is already in
the offing at the port to cater the expected increase in container traffic. Understanding
the fact that privatizing the containerized operations brings improvement in the
productivity, the second terminal has been planned on BOT basis. Presently, smaller
ships are calling at the port, hence the facilities at the port for container handling are
under utilized, but in the near future the trade pattern may change which may lead to
increase in the container trade. The worldwide shipping pattern also indicates the ship
sizes are gradually becoming larger to benefit from the economies of scale.
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E. Automobiles
Trade Analysis: This sector has seen phenomenal growth from 5260 cars being
exported in year 2000-01 to 102692 cars in the year 2005-06. This is in addition to the
cars brought down in knocked down condition (CKD). It is envisaged that this sector will
show continuous improvement in the coming years.
Trade Focus: Industry research has shown positive results which further strengthen the
belief that this sector will grow as many new car manufacturing, ancillary and
assembling units are coming up in the vicinity of Chennai. Hyundai is planning capacity
expansion of its plant which will double its production capacity. The other vehicle
manufacturers include Ford, Leyland, Daimler & Chrysler, etc. Hence a good traffic
growth can be expected in this sector.
2.4.2 Market Drivers

The traffic handled at the Port is affected by the multiple market drivers. These market
drivers help in projecting the growth rates for the commodities as we look into the
future and work out a traffic forecast. Most of these market drivers have considerable
affect on the ChPT traffic but several of these are non-quantifiable. Details on the impact
of each market drivers (shown in Table No- 2.2-2) have been discussed in the section
6.5 of the Interim Report.
Table No- 2.4-2: Market Drivers
Macro Economic Drivers

Government Policies
Population
Location
Industrial Development
Economies: Global &
National
TRADE & Exchange Rates
Historical Linkages
Port Sector Drivers

Administered
Commodity Driven
Trade Oriented
Facilitating Role
Public-Private Partnerships
Activities
Agriculture Focused
Import Substitution
Manufacturing
Assembling
Export Oriented
Consumer driven
Weather windows
Human Resource
Labour Oriented
Cost driven
Productivity led
Quality focus
Unionism
Adaptability
Professional pool
Hinterland Resources
Minerals
Rain-Fed Agriculture
Plateau less
mountainous
Technology Drivers
Equipment
Urban conurbation
Road access
Air & Rail Connectivity
Waterway possibilities
Island Trade
Coastal Trades
Cruising
Ship Repair Facilities
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2.4.3 Demand Forecasting

For estimating the demand forecast for ChPTs hinterland i.e. South India, all
commodities have been split into two groups:
o
Major Commodities
Other Commodities
Major Commodities:
This Group consists of the following commodities:
o
Coal
Iron Ore
POL
Containers
Automobiles
For these major commodities, demand forecast has been derived using a combination of
two methods:
o
Regression Analysis for quantifiable factors
Analysis of Qualitative factors
A statistical model (Multiple Regression Analysis) has been developed for estimating the
demand in Southern India for major commodities based on available quantifiable factors.
Multiple Regression Analysis is an effective statistical tool used for demand forecasting
where the demand for a particular commodity depends upon various quantifiable factors.
This demand Forecast has further been adjusted / fine tuned by taking into account all
the non quantifiable factors. This adjusted demand forecast for Southern India has been
translated into a specific targeted traffic forecast for ChPT by taking into account the
extent of competition from nearby ports which have an equal opportunity to attract the
southern India demand forecast as worked out above. The impact of competition has
been worked out keeping in mind existing as well as planned infrastructure facilities at
the competing ports. The detailed Methodology adopted for Demand Forecasting and
then translating Demand Forecast into Targeted Traffic forecast is illustrated in section
6.6 of the Interim Report.
A. Coal
Coal traffic has been forecasted based on the following principal factors:
Quantitative Factors (i) Southern Region Gross State Domestic Product % (GSDP), and
(ii) Growth in coal handled by all major ports & Growth in coal import
Qualitative Factors used for this forecast are:
o
Liberal trading, stocking, stacking and leasing facilities at local ports till date
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Inadequate inland supply of coal
High ash content in Indian coal supply - Most Indian coals have high ash
content of the order of 2535%. High ash in the coal not only reduces the
thermal value of coal which is not preferred by the Indian thermal plants but
also leads to production of fly ash, which is a major environmental problem.
Slow liberalization in mining
Distances from mine pits given the distances and quality constraints,
imports may still be a better option
Surging demand for coastal thermal and cement plants due to infrastructurehousing building boom
Macro Economic Factors
The multiple regression analysis indicates that the coal volumes are expected to grow at
the growth rate of around 7.44%. However, for coal traffic, there are a host of
qualitative factors which will impact the growth of coal traffic in the region.
Taking these factors into consideration the demand of coal can be assumed to be
growing at 10 % for the southern India.
B. Iron Ore
Iron Ore traffic has been forecasted based on the following major factors:
Quantitative Factors:
o
Indias Gross Domestic Product % (GDP)
Growth in Iron Ore handled by all major ports
Growth in Iron Ore exports
Qualitative Factors:
o
With the upcoming facility at Ennore, Chennai theoretically might stand to

lose its entire volumes. However, given the likely higher pricing at Ennore
may prove beneficial to ChPT.
Capacity utilization of major suppliers like Australia and Brazil could impact
demand from India
Steel industry in India is lobbying hard to restrict / ban iron ore exports as
new mega plants are planned by domestic giants like TISCO, SAIL, POSCO,
MITTAL etc. While their demand is for prohibition and ban of Iron Ore export
and it is indeed a distinct possibility in a long term, in the short term,
restrictions seem more likely than such drastic measures.
Various other Macro Economic Factors
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The multiple regression analysis done for iron ore resulted in growth rate of around
9.98%. Taking into account the above qualitative factors, Iron Ore demand has been
adjusted to 8 % for the future.
C. POL
POL traffic has been forecasted based on the following important factors:
o
Indias Gross Domestic Product % (GDP) (Factor X1 in regression analysis)
Growth in POL handled by all major ports (Factor X2 in regression analysis)
Growth in POL Imports (Factor X3 in regression analysis)
o
The only import-commodity under this category is Crude oil. With an SBM
(Single Buoy Mooring) being installed off Paradip, traffic through ChPT will
reduce. A SBM off Chennai itself could be a reality eventually.
While demand for POL products will continue, exploitation of the opportunity
is not entirely within the Ports reach as Oil companies are the ones who
determine usage and terminal throughputs.
Eventual shortage of availability of Crude Oil
Drop in consumption given the rise in prices
Controls through pricing when the price surges further
Gas substitution and new Refining capacity impacts.
The multiple regression analysis enabled us in conclude that POL volumes will grow at
around 7.07%. Given the above qualitative factors, growth in POL traffic for the
southern region has been adjusted to 5% p.a.
D. Containers
Container traffic volumes for the future years have been estimated on the statistical
model using the following principal factors:
o
Total traffic of Indian major ports
Container traffic trends in India
Containerization of break bulk cargo
Manufacturing growth rate
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Final Report
o
Trade Pattern
The multiple regression analysis enabled us in understanding that the container volumes
will be as indicated in Table No- 2.4-3:
Table No- 2.4-3: Container Traffic Growth (Original)
Year
Southern Indias Container Traffic Growth %
2007-12
16.30
2012-17
11.80
2017-22
10.38
2022-27
8.09
However, as mentioned before, traffic forecast is not only a derivative of quantifiable

factors but also depends on certain qualitative factors as well. Qualitative factors like
hinterland connectivity and emerging trade pattern will also play a role in arriving at the
forecasted traffic volumes.
Keeping these quantitative and qualitative two factors in mind the demand forecast was
further adjusted to the % growth presented in Table No- 2.4-4.
Table No- 2.4-4: Container Traffic Growth (Fine-Tuned)
Year
Southern Indias Container Traffic Growth %
2007-12
2012-17
2017-22
2022-27
15%
12%
10%
8%
These growth rates shall provide us with demand forecast in the hinterland near ChPT.
E. Automobile
Projected Automobile export volumes have been forecasted based on the following
principal factors:
Quantitative Factors: Automobile Export trends in India & South India GDP growth
Qualitative Factors: Trends in Automotive Industry & Macro Economic Factors
The multiple regression analysis enabled us in understanding that that automobile
volumes will grow at the rate of 13 % in the future years. But considering the impact of
certain qualitative factors like trend seasonality & cyclic fluctuation in the industry and
other macro economic factor as well, the growth of automobiles volumes can be
corrected to 12 % in the coming years.
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Summary of the Commodity wise projected traffic

Table No- 2.4-5 indicates the abstract on Demand Forecast for all above major
Commodities.
Table No- 2.4-5: Commodity-wise Projected Traffic Growth Rates
YEAR
COMMODITY
2007-12
2012-17
2017-22
2022-27
10%
10%
10%
10%
Iron Ore
8%
8%
8%
8%
POL
5%
5%
5%
5%
Containers
15%
12%
10%
8%
Automobiles
12%
12%
12%
12%
5%
5%
5%
5%
Coal
Passengers
F. Other Commodities
For other commodities, a mix of quantitative and qualitative factors was analyzed. The
demand forecast growth rates so derived for other commodities are based on industry
expertise and expert views obtained on the likely growth pattern for these commodities.
This approach has been taken considering that all of these commodities collectively
contribute to a little less than 20% of the total cargo handled by ChPT in 2005-06.
The final demand forecast figures have been presented in Table No- 2.4-6:
Table No- 2.4-6: Other Commodities Projected Traffic Growth Rates
Commodity
Growth Rates (%)
Fertilizers
Grains & Sugar
Engineering Goods
Other Minerals
Steel Products
Consumer Products
SEZ Products
4%
4%
10%
8%
8%
15%
8%
As business plan shall be supported by several initiatives in terms of development of

infrastructure facilities and functional capabilities, it required demand forecast to be
translated into a traffic forecast which ChPT can target. The section below would
translate the derived demand forecast into targeted traffic volumes for ChPT.
2.4.4 Targeted Traffic Volumes

After understanding the total demand potential in the ChPT hinterland and estimating
the likely share which can be taken away by competing ports based on their future
plans, the targeted share for the ChPT is estimated.
The estimation of the targeted share of each commodity for ChPT is illustrated below:
Page 59 of 185
Final Report
A. Coal
In the year 2005-06, ChPT handled 3.17 Mtpa of coal comprising of 1.26 Mtpa of Coking
Coal and 1.91 Mtpa of Thermal Coal. As it is observed from the recent years, almost
entire thermal coal has already shifted to Ennore Port and is no longer handled at ChPT.
In addition, in view of specific strategy outlined in Chapter 2,2 of this report regarding
coal, ChPT will now no longer encourage the coal trade to operate out of Chennai. A
significant part of the area currently used for coal storage is already allotted for the
second container terminal. Based on the above, coal volume including coking coal shall
also be shifted to Ennore Port as quickly as possible. It is assumed that complete shifting
of coking coal may take some time. In the current year, till December 2006, the port
has handled around 1.073 Mtpa of coking coal which is expected to reach 1.43 Mtpa by
the end of the year 2006-07. As no special initiatives are envisaged for attracting this
commodity at the port, it is expected that the volume to be handled would not increase
but remain more or less the same i.e. 1.43 MT. This is in spite of the fact that the
overall demand forecast for the southern India hinterland is pegged at 10%.
Table No- 2.4-7: Calculations for Targeted Traffic for Coal
COAL (in Mtpa)

2012
Demand Forecast in
Mtpa
Share for competitive
Port
Targeted Traffic at
ChPT (in Mtpa)
2017
5.60
2022
9.02
2027
14.53
23.41
Even if other ports attracts some of this traffic, it

does not impact our strategic conclusion
1.43
Estimated volumes thereby are indicated in Table No- 2.4-8:

Table No- 2.4-8: Year-wise Targeted Traffic for Coal
Year
2006 -07
2007-08
2008-09
2009-10
2010-11
2011-12
Growth
(in %)
10%
10%
10%
10%
10%
10%
Demand
Forecast
( in MT)
3.48
3.83
4.21
4.63
5.10
5.60
Traffic
Forecast
(in MT)
1.43
1.43
1.43
1.43
1.43
1.43
Page 60 of 185
Final Report
Year
2012-13
2013-14
2014-15
2015-16
2016 -17
2017-18
2018-19
2019-20
2020-21
2021-22
2022-23
2023-24
2024-25
2025-26
2026-27
Growth
(in %)
10%
10%
10%
10%
10%
10%
10%
10%
10%
10%
10%
10%
10%
10%
10%
Demand
Forecast
( in MT)
6.17
6.78
7.46
8.21
9.02
9.92
10.92
12.01
13.21
14.53
15.99
17.58
19.34
21.28
23.41
Traffic
Forecast
(in MT)
B. Iron Ore
In the year 2005-06, total iron ore handled at ChPT was 9.46 MT. In the current year,
till December 2006, the port has handled 7.91 Mtpa of iron ore. But in line with future
strategy and identified thrust areas as outlined in this Report, no special efforts will be
made to attract additional iron ore. This also means that no major additional
investments will be made for the Iron Ore handling. With this strategic posture, it is
planned that the iron ore traffic shall be handled by ChPT only till such time we actually
need the area occupied by this activity for any other strategic infrastructure
development especially container operations.
A marginal improvement of around 1% in throughput has been considered with various
operational efficiency measures like reduction in pre-berthing and related delays,
reduction in non-working days, and corresponding improvement in operating out put.
During the future port planning process as per the capacity requirement, it is observed
that the actual need for this conversion may arise during the period 2017 2022 i.e
Phase-III and accordingly necessary measures can be taken in advance to stop the iron
ore handling operations so that the area can be made available before the conversion of
this berth to container berth can be taken up.
Given the above, iron ore traffic numbers are expected to rise from 10.66 Mtpa in 200708 to 11.65 Mtpa by the end of 2017 and would further start ceasing gradually to zero
by the end of 2022.
Page 61 of 185
Final Report
Table No- 2.4-9: Calculations for Targeted Traffic for Iron Ore
IRON ORE (in Mtpa)

Year
Demand Forecast in
Mtpa
Share for competitive
Port
Targeted Traffic
Volume at ChPT (in
Mtpa)
2012
2017
15.50
2022
22.77
2027
33.46
49.16
Even if other ports attract some share of this

traffic, it does not impact our strategic conclusion
11.08
11.65
0.00
0.00
Estimated targeted volumes thereby are indicated in Table No- 2.4-10:

Table No- 2.4-10: Year-wise Targeted Traffic for Iron Ore
Year
Growth
(in %)
2006 -07
2007-08
2008-09
2009-10
2010-11
2011-12
2012-13
2013-14
2014-15
2015-16
2016 -17
2017-18
2018-19
2019-20
2020-21
2021-22
2022-23
2023-24
2024-25
2025-26
2026-27
8%
8%
8%
8%
8%
8%
8%
8%
8%
8%
8%
8%
8%
8%
8%
8%
8%
8%
8%
8%
8%
Demand
Forecast
( in Mtpa)
10.55
11.39
12.31
13.29
14.35
15.50
16.74
18.08
19.53
21.09
22.78
24.60
26.57
28.69
30.99
33.47
36.14
39.04
42.16
45.53
49.17
Traffic
Forecast
(in Mtpa)
10.66
10.76
10.87
10.98
11.09
11.20
11.31
11.42
11.54
11.65
8.00
6.00
4.00
2.00
0.00
As the decision of shifting the Iron Ore to Ennore Port is not governed completely by
strategy adopted by ChPT, the possibility of any ban on its export from Chennai also
exists. A scenario with Iron Ore getting shifted to Ennore port by the end of year 2012
has also been presented in Annexure 5.
C. POL
In 2005-06, ChPT handled 13.21 Mtpa of POL and is projected to handle only around
13.34 Mtpa in 2006-07. Based on discussions with the single POL related customer i.e.
CPCL, it is understood that the capacity will stagnate at 15 Mtpa. This is because there
are currently no plans for oil companies to set up new refining facilities in the immediate
Page 62 of 185
Final Report
Chennai hinterland. Export of POL products to the extent of 5 Mtpa is also envisaged
from third phase onwards; increasing it to 20 Mtpa.
Table No- 2.4-11: Calculations for Targeted Traffic for POL
POL
2012
2017
2022
2027
Demand Forecast in
Mtpa
17.03
21.73
27.73
35.39
Targeted Traffic at
ChPT (in Mtpa)
15.00
15.00
20.00
20.00
Table No- 2.4-12: Year-wise Targeted Traffic for POL
Year
Growth
(in %)
2006 -07
2007-08
2008-09
2009-10
2010-11
2011-12
2012-13
2013-14
2014-15
2015-16
2016 -17
2017-18
2018-19
2019-20
2020-21
2021-22
2022-23
2023-24
2024-25
2025-26
2026-27
5
5
5
5
5
5
5
5
5
5
5
5
5
5
5
5
5
5
5
5
5
Demand
Forecast
( in MT)
13.34
14.01
14.71
15.44
16.21
17.03
17.88
18.77
19.71
20.69
21.73
22.82
23.96
25.15
26.41
27.73
29.12
30.58
32.10
33.71
35.39
Traffic
Forecast
(in MT)
13.34
14.01
14.71
15.00
15.00
15.00
15.00
15.00
15.00
15.00
15.00
15.00
15.00
15.00
15.00
20.00
20.00
20.00
20.00
20.00
20.00
D. Containers
In the 2005-06 fiscal year (April to March), ChPT handled 0.73 Mteu of container
volume. In the current year till December 2006, it has handled 0.65 Mteu. It is expected
that the port shall handle anywhere between 0.85 Mteu to 1.0 Mteu in the year 2006-07
i.e around 16 MT. For the purpose of capacity analysis an optimistic assumption of 1.0
Mteu i.e. 16 MT is taken considering tremendous growth in the recent years. The
demand forecast for Chennai hinterland is shown in Table 6-19 of above in Chapter-6.6
of Interim export.
Using the available data for the last four years, it is observed that at Tuticorin Port 1.0
teu accounts for around 10.6 Tonnes of cargo volume. Tuticorin Port is presently
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Final Report
handling around 0.32 Mteu (i.e. 3.43 Mtpa) of containers with installed capacity of
around 0.45 Mteu (i.e. 4.77 Mtpa). The port is also planning a second container handling
facility on its berth no. 8 for which proposals have already been invited from interested
parties and therefore it could be reasonably expected that the new facility shall be
operational any time before 2012. The expected capacity of this new facility is around
0.15 Mteu escalating its total capacity to 0.60 Mteu (i.e. 6.36) by 2012.
Given the growing demand for container cargo in the hinterland, it is assumed that
container traffic at Tuticorin Port shall also grow at the growth rates similar to hinterland
growth rate till it achieves its capacity utilization. Therefore Tuticorin port container
traffic is likely to reach 6.9 Mtpa in 2012, 12.16 Mtpa in 2017, 19.58 Mtpa in 2022 and
31.54 Mtpa in 2027.
Since the total capacity is less than the demand forecast, the share of Tuticorin port will
be equivalent to its capacity while estimating the ChPTs share.
Other competitor, who is likely to develop a container terminal is Ennore Port. Given the
present position and growing economic activity, it is assumed that a terminal with a
capacity of 1.2 Mteu will become operational at this port by 2011.. In the year 2011, it is
expected that the capacity utilization may be around 0.3 Mteu (i.e.4.8 Mtpa) gradually
increasing to 0.6 Mteu (i.e. 9.6 Mtpa) in 2017. However, the container handling at this
competing port is likely to increase upto 1.2 Mteu (i.e.9.6 Mtpa) by 2022. As this port is
likely to take the share of container traffic from ChPT, the conversion factor for 1.0 teu
is considered to be the same as observed at ChPT i.e. 1 teu is equivalent to 16 tonnes.
Therefore out of total demand of 23.65 Mtpa in the hinterland, Tuticorin ports share
would be around 6.36 Mtpa and likely share for new competing terminal would be
around 9.6 Mtpa by the year 2012. Estimation of targeted containerized cargo for the 20
years horizon period is illustrated in Table No- 2.4-13:
Table No- 2.4-13: Calculations for Targeted Traffic for Containers
CONTAINERS (in Mtpa)

Year
Demand Forecast in
Mtpa
2012
2017
2022
2027
32.18
56.72
91.34
134.21
Share for Tuticorin Port
6.36
6.36
6.36
6.36
Likely share for Ennore

Port
4.8
9.6
19.2
19.2
Targeted Traffic at ChPT

(in Mtpa)
21.02
40.76
65.78
108.65
Targeted Traffic at ChPT

(in Mteu)
1.31
2.55
4.11
6.79
Page 64 of 185
Final Report
Table No- 2.4-14: Year-wise Targeted Traffic for Containers
Year
Growth
(%)
Demand
Forecast
( in Mtpa)
15
15
15
15
15
12
12
12
12
12
10
10
10
10
10
8
8
8
8
8
2007-08
2008-09
2009-10
2010-11
2011-12
2012-13
2013-14
2014-15
2015-16
2016-17
2017-18
2018-19
2019-20
2020-21
2021-22
2022-23
2023-24
2024-25
2025-26
2026-27
Share for
Tuticorin
Port
Likely share for

Ennore Port
3.94
4.54
5.22
6.00
6.36
6.36
6.36
6.36
6.36
6.36
6.36
6.36
6.36
6.36
6.36
6.36
6.36
6.36
6.36
6.36
18.40
21.16
24.33
27.98
32.18
36.04
40.37
45.21
50.64
56.72
62.39
68.63
75.49
83.04
91.34
98.65
106.54
115.06
124.27
134.21
Traffic
Forecast
(in Mtpa)
4.80
5.76
6.72
7.68
8.64
9.60
11.52
13.44
15.36
17.28
19.2
19.2
19.2
19.2
19.2
19.2
14.46
16.62
19.12
21.99
21.02
23.92
27.29
31.17
35.64
40.76
44.51
48.83
53.77
59.40
65.78
73.09
80.98
89.50
98.71
108.65
E. Automobiles
In 2005-06, ChPT handled 102692 cars. As identified in above Chapter-5, it is expected
to increase at the growth rate of 12% and thereby projected to handle round 202696
cars in the last year of phase-I i.e. 2012. At present there is no major competition for
exporting cars from ChPT. Therefore it is assumed that ChPT can handle car traffic by
the way of establishing a multi-level car parking yard. Presently, the cars are being
parked in an area of about 47700 sq.m. As the proposed Multi-Level Stacking facility is
proposed at two different locations, the total storage for car stacking after this facility
shall be confined upto 72,000 sq.m.
With this available area, it is expected that the car export capacity shall be catering to
around 7,00,000 cars.
Table No- 2.4-15: Calculations for Targeted Traffic for Automobiles
AUTOMOBILES (in 000 numbers)

2012
2017
2022
2027
Demand Forecast in
numbers
202.7
357.2
629.5
110.9
Targeted Traffic Volume

at ChPT (in numbers)
202.7
357.2
629.5
700.0
Page 65 of 185
Final Report
Table No- 2.4-16: Year-wise Targeted Traffic for Automobiles
Year
Growth %
Demand
Forecast
Traffic
Forecast
2005-06
2006 -07
2007-08
2008-09
2009-10
2010-11
2011-12
2012-13
2013-14
2014-15
2015-16
2016 -17
2017-18
2018-19
2019-20
2020-21
2021-22
2022-23
2023-24
2024-25
2025-26
2026-27
12
12
12
12
12
12
12
12
12
12
12
12
12
12
12
12
12
12
12
12
12
12
102.7
115.0
128.8
144.3
161.6
180.9
202.7
227.0
254.2
284.8
318.9
357.2
400.0
448.1
501.9
562.0
629.5
705.1
789.7
884.4
990.6
1109.5
102.7
115.0
128.8
144.3
161.6
180.9
202.7
227.0
254.2
284.8
318.9
357.2
400.0
448.1
501.9
562.0
629.5
700.0
700.0
700.0
700.0
700.0
F. For Passengers
In 2005-06, ChPT handled 96,360 passengers. As worked out in demand forecast, this is
expected to increase at the growth rate of 5% and thereby projected to handle round
129,132 passengers in the last year of Phase-I i.e. 2012.There is no serious competition
expected for this activity except for some small activity at Tuticorin. ChPT already has a
passenger terminal in place and all the expected traffic can be serviced with the same
terminal facility.
Table No- 2.4-17: Year-wise Targeted Traffic for Passengers
Year
2005-06
2006 -07
2007-08
2008-09
2009-10
2010-11
2011-12
2012-13
2013-14
Growth %
5%
5%
5%
5%
5%
5%
5%
5%
5%
Demand
Forecast
(in Nos)
96360
101178
106237
111549
117126
122982
129132
135588
142368
Traffic
Forecast
(in Nos)
96360
101178
106237
111549
117126
122982
129132
135588
142368
Page 66 of 185
Final Report
2014-15
2015-16
2016 -17
2017-18
2018-19
2019-20
2020-21
2021-22
2022-23
2023-24
2024-25
2025-26
2026-27
5%
5%
5%
5%
5%
5%
5%
5%
5%
5%
5%
5%
5%
149486
156960
164808
173049
181701
190786
200326
210342
220859
231902
243497
255672
268455
149486
156960
164808
173049
181701
190786
200326
210342
220859
231902
243497
255672
268455
G. Abstract
As estimated above, the abstract of targeted traffic forecast for ChPT is presented in
Table below:
Table No- 2.4-18: Abstract of Targeted Traffic volume to be handled at ChPT
Year
COMMODITY
Containers
(in Mtpa)
2012
2017
2022
2027
21.02
40.76
65.78
108.65
1.31
2.55
4.11
6.79
11.08
11.65
0.00
0.00
1.43
Automobiles (in 000

Nos.)
202.7
357.2
629.5
700.0
129,132
164,808
210,342
268,455
POL (in Mtpa)
15.00
15.00
20.00
20.00
General Cargo (in

Mtpa)
15.76
8.77
8.77
8.77
Total in Mtpa
64.29
76.18
94.55
137.42
Containers (in Mteu)

Iron Ore
(in Mtpa)
Coal (in Mtpa)
Page 67 of 185
Final Report
2.5 Capacity and Bottleneck Analysis

2.5.1 Capacity Analysis
A detailed capacity and bottleneck analysis is carried out and is presented in this
section. The Analysis starts with the assessment of available & required infrastructure
facilities and the identification of the gap to be bridged based on the translated targeted
traffic volumes.
As estimated above in section 2.4, the abstract of targeted traffic forecast for ChPT is
presented in Table No- 2.5-1:
Table No- 2.5-1: Abstract of Targeted Traffic volume to be handled at ChPT
Year
COMMODITY
Containers
(in Mtpa)
2012
2017
2022
2027
21.02
40.76
65.78
108.65
1.31
2.55
4.11
6.79
11.08
11.65
0.00
0.00
1.43
Automobiles (in 000

Nos.)
202.7
357.2
629.5
700.0
129,132
164,808
210,342
268,455
POL (in Mtpa)
15.00
15.00
20.00
20.00
General Cargo (in

Mtpa)
15.76
8.77
8.77
8.77
TOTAL in Mtpa
64.29
76.18
94.55
137.42

Iron Ore
(in Mtpa)
Coal (in Mtpa)
In general, the most critical constraint on container terminal capacity is quay length
rather than storage area capacity. The quay length is usually fixed, while off-dock
storage and selection and quantity of cranes and yard gantries can be installed to suit
the requirements. ChPT has sufficient existing berths that are suitable, after due
strengthening and modification, for handling a range of likely sizes of container vessels
that will call at the port.
The assessment of maximum possible port capacity and the infrastructure development
required is performed with respect to four following basic parameters:
o
Ground Storage Area,
Requirement of berth length,
Hinterland connectivity,
No. of vessel and their sizes.
Page 68 of 185
Final Report
The infrastructure facilities required for commodities other than container cargo handled
by the Port i.e. iron ore, coal, automobiles, POL and general cargo are analyzed and is
presented below in Table No- 2.5-2:
Table No- 2.5-2: Infrastructure facilities for non-containerized cargo
Sr.
No
1
Iron Ore
Dedicated berth in
Bharathi Dock
2.
Coal
Dedicated berths
in Jawahar Dock
3.
Automobiles
POL
General
Cargo
Dedicated berth
recommended on
North Quay in
Ambedkar dock
Dedicated berth
available
Currently being
handled at
Ambedkar and
Jawahar Dock. It is
proposed to shift
general cargo to
Jawahar Dock to
the extent of
capacity of 3
berths
Commodity
Berth
Storage facility
Connectivity
Sufficient storage facility

available for the
projected traffic.
Sufficient storage facility
available for the
projected traffic for only
1.43 MT
Multi-level car parking
facility recommended as
a part of the Business
Plan.
None required
Rail
Back up area on western

side of Jawahar Dock
(behind JD 1, 3 and 5)
made available for
general cargo. Proposals
provided for reclamation
of Boat Basin and Timber
Pond for additional
storage area
Road / Rail
Rail for
Thermal coal
and Road for
coking coal
Road.
Pipeline
The following paragraphs therefore deal with the assessment of infrastructure required
for container cargo only.
A. Ground Storage Area
Factors such as dwell time, stacking height, utilization factor, split between loaded and
empty containers, split between import and export containers and split between
refrigerated and non-refrigerated containers have to be taken into consideration while
determining of the number of terminal ground slots (tgs) required for on-site container
storage. The area and configuration of the land, selection of handling equipment and
location and number of truck gates also affect the number of teu that can be handled at
any terminal.
The most accurate method for determining a terminals capacity is to layout the required
number of terminal ground slots (tgs), estimate the average stacking height for
containers and estimate the average dwell time then apply a discount factor for peak
periods of say 30 percent. Prior to building a terminal, computer spreadsheet models are
used to model the critical elements of the terminal (berth occupancy, crane productivity,
yard productivity, truck gate productivity) and arrive at a practical operating capacity. It
Page 69 of 185
Final Report
should be noted that the practical operating capacity is always less than the maximum
capacity as the maximum capacity is not sustainable without affecting operating costs or
customer service levels.
At the conceptual stage, benchmarks or rules-of-thumb are often used to estimate
throughput capacity. Figures are used for annual throughput per meter of quay length,
annual teu per ha of land, annual teu per guay crane and number of quay cranes per
berth and yard gantries per quay cranes. These benchmarks can vary considerably from
terminal to terminal; therefore caution must be used when comparing the capacity of
one terminal to another.
Since Chennai Port has ample berth length, it was decided to use industry best
practices to estimate what the capacity of each new terminal could be in the future
based on the land available at each potential container terminal site. The potential future
throughput capacity of the proposed new container terminal operations is estimated at
27,000 teu/ha of land using industry best practices and assuming an RTG or RMG based
operation with a complementary off-dock container terminal.
Because of all of the service specific factors, that can affect a terminals capacity, the
practical operating capacity of the future terminals is estimated based upon experiences
at similar international terminals. The two separate such terminals are about 30 ha in
size and have annual practical maximum operating capacity of about 27,000 teu per ha.
Both terminals have road congestion owing to city ports and are currently using rail for
evacuation of about 50% of the traffic. Both terminals, mainly handle vessels making
second and third calls. Depending upon yard operational system and on dwell times, the
practical operating capacity could be greater or less than 27,000 teu per ha. Also, the
volume per ha can be exceeded, but not for long periods of time, as service may suffer
with the consequent that the shipping line may move to another terminal or worse,
another port.
DP Worlds 27.6 ha Centerm Container Terminal at the Port of Vancouver Canada was
recently converted from a top-pick operation to an RTG operation. DP World has
advertised Centerms annual throughput capacity at 800,000 teu or the equivalent of
29,000 teu per ha of land. Terminal System Inc.s, Vanterm Container Terminal has an
advertised throughput capacity of 645,000 teu on approximately the same area of land
for 21,500 teu per ha capacity. The capacity of the proposed new container terminals at
Chennai Port were therefore assumed to equal 27,000 teu per ha of land at the upper
range and 22,000 teu at the lower range.
The total area required for container storage in future is worked out, as shown in Table
No- 2.4-3, considering the same operating capacity of 27,000 teu per ha. This would be
the best case scenario for ChPT. An alternative scenario estimating ports capacity
against the assumption 22,000teu per ha is also developed and is presented in
Annexure-4. The calculations assume that the current estimated throughput per ha at
the existing terminal(s) may decrease in the future as larger container vessels call at
Page 70 of 185
Final Report
ChPT, likely traffic congestion with increased volumes at ChPT and as shipping lines
demand higher service performance levels with respect to vessel turn-around.
Table No- 2.5-3: Storage Area Requirement
Sr.
No
Year
Particulars
2007-12
2012-17
2017-22
2022-27
Cargo volume to
be handled
(in Mtpa)
21.02
40.76
65.78
108.65
Cargo volume to
be handled (in
Mteu)
1.31
2.55
4.11
6.79
Total Storage area

Requirement
48.66
94.34
152.27
251.50
Presently, the container terminal operated by Chennai Container Terminal Limited is

operational in an area of around 25.06 ha. Deduction of this area from the above area
requirement enabled us in estimating the storage area gap need to be filled. The same is
presented in Table No- 2.5-4.
Table No- 2.5-4: Gap Identification for Additional Storage Area (in ha)
Sr.
No
Particulars
Year
2007-12
2012-17
2017-22
2022-27
Storage area
required
48.66
94.34
152.27
251.50
Storage area
available
25.06
25.06
25.06
25.06
Storage area gap

to be bridged
23.60
69.28
127.21
226.44
The land use plan is developed for all the four phases depicting the requirement and
identification of land within the port which can be converted and used for best
possible/required storage requirements.
The Table No- 2.5-5 illustrates the phase-wise need of additional container storage area
for a 20 year horizon period, based on the targeted container traffic volumes and areas
which could best be converted to meet those requirements.
Table No- 2.5-5: Identified Projects & Associated Storage Area
Sr.
No
A
Year
Particulars
2007-12
No. of Containers to be
handled (in Mteu)
1.31
2012-17
2.55
2017-22
4.11
2022-27
6.79
Page 71 of 185
Final Report
Total Storage area

Requirement (ha)
48.66
94.34
152.27
251.50
Storage area available

(ha)
25.06
25.06
25.06
25.06
Storage Area Gap to be

Bridged (in ha)
23.60
69.28
127.21
226.44
Planned Projects and corresponding Backup Storage Area conversion
E1. Container Terminal-2

Area to be developed is
shown in Drawing-1
35.00
35.00
35.00
35.00
0.00
24.87
24.87
24.87
0.00
0.00
29.67
29.67
shown in Drawing-3
0.00
0.00
18.82
18.82
Total additional
storage area possible
to be developed (ha)
35.00
59.87
108.36
108.36
Net deficit in storage

area required which can
not be bridged
-11.40
9.41
18.85
118.08

shown in Drawing-2
shown in Drawing-3
Note: Negative (-) indicates surplus

As indicated in above Table No- 2.5-5, with various measures suggested, back up area
for container storage shall become a constraint after Phase-3. Total area which can be
then used for container storage is 133.42 ha (25.06 + 108.36). This storage area
freezes the capacity of the ports container handling facility at 3.60 Mteu (133.42 ha x
27000 teu per ha)
As it can be seen from above table, with the available area it would be difficult to handle
entire targeted container traffic. There is a net deficit ranging from around 9 ha by the
end of Phase-2 to more than 100 ha by the end of Phase-4. The only way to provide this
additional requirement of land is by taking over land outside but near to the port. Our
understanding of the nearby region of the port shows that the possibility of taking over
the nearby fishing harbour should be explored. This can be developed as storage yard
for the port in the phased manner depending upon the exact land requirement.
So, the port capacity for container handling against storage as one of the
limiting parameter can not go beyond 3.60 Mteu.
Page 72 of 185
Final Report
B. Berth Requirements
The requirement of berth length is worked out considering average length of berths as
per the number and sizes of vessels given in above Table No- 2.5-6. The requirement of
berths corresponding to the total number of vessels and average number of days for
which the ship will be required to be at berth is given in Table No- 2.5-6. The
assumption for the number of days of ship at the berth for the initial period of 10 years
is based on the efficiency of the cranes presently used for handling containers. For the
later phases, from 2017 onwards, it has been assumed that quay cranes, which can
handle twin-containers of 20 feet length at a time, shall be deployed. As a result, in
spite of increasing average parcel size, turn around time for ships in numbers of days at
berth are considered as 1.5 only.
Table No- 2.5-6: Phase-wise Berth Requirement
Berth Requirement
Sr.
No
Year
Particulars
2006-07
20072012
20122017
20172022
20222027
16.00
21.02
40.76
65.78
108.65
Cargo to be
Handled (in Mtpa)
Total No of Mteu
1.00
1.31
2.55
4.11
6.79
No. of Vessels
592
900
1,350
1,800
2,525
1,700
1,500
1,900
2,300
2,700
200
200
250
350
350
1.4
1.6
1.7
1.5
1.5
2.8
4.7
7.8
9.0
12.6
564
944
1947
3150
4419
2.1
3.4
7.1
11.5
16.1
4
5
6
7
8
9
Average parcel size

(approx teu's)
Average length of
berth required
No. of days at berth
per ship
No of Berths
required
Total length of
berths
No of Berths of
average 275.00
length
Numbers of container berths available presently in Bharathi dock are four, aggregating
to a total quay length of 885 m.
Based on the requirement of berths to handle targeted volume of containerized cargo
and the available berths, the additional requirement to bridge the gap is worked out and
produced in Table No- 2.5-7:
Page 73 of 185
Final Report
Table No- 2.5-7: Bridging Gap for Requirement of Berths
Available/ Additional Berths

Sr.
No
A
A1
Particulars
No. of Berths Required
Total length of berths
required
2006-07
20072012
Year
201220172017
2022
20222027
564
944
1947
3150
4419
2.1
3.4
7.1
11.5
16.1
885
885
885
885
885
3.22
3.22
3.22
3.22
3.22
-320.63
58.80
1061.59
2265.00
3533.75
-1.17
0.21
3.86
8.24
12.85
A2
No. of Berths Required of

average length 275.0 m
No. of Berths Available
B1
Existing Container Terminal

No. 1 having 4 berths of
200.00 m length each
B2
No of Berths of equivalent
length of 275.00 m
C.
No of Berths additionally required
C1
Total length of Berths

required to be developed
C2
No of Berths of equivalent
length of 275.00 m
required to be developed
Note: Negative (-) deficit indicates surplus

Berths Identified for conversion to meet the additional requirement
In order to meet the additional requirement of berths to cater to the incremental cargo
volume, the possibility of converting available infrastructure is considered. The berths
which are at present being used for handling coal, iron ore, break-bulk/general cargo will
be converted into container berths in phased manner. The berths which could be
converted into container berths are as under:
o
Berth on East side in Dr. Ambedkar Dock consisting of Naval Berth, EQ, SQ3
and SQ2. This is already identified by ChPT to be developed as a Container
Terminal-2 on BOT basis and the process of awarding the project is complete.
Since the targeted container cargo includes the requirement for ChPT as a
whole, the present capacities and proposed capacities at second container
terminal are also considered as part of business plan. The total additional
length available after this conversion will be around 880 m and this terminal
is estimated to handle 0.9 Mteu annually.
The next quay length considered for conversion into container berths is at
Jawahar Dock. The berths available are JD2, JD4 and JD6 on east side of
Jawahar Dock covering a total length of 655 m. Based on the present level of
throughput the potential handling capacity could be 0.6 Mteu p.a. but with
Page 74 of 185
Final Report
increasing size of container vessels and corresponding increase in parcel size

supported by deploying better cranes on the berths there could be increase of
30% - 40% in the above throughput. This is proposed as Container Terminal3.
o
The berths available at this proposed terminal are more or less in straight line
with the berths proposed for container terminal-2. A portion of back-up space
available behind these berths is already assured to second container terminal
operator for container storage. For developing container terminal -3 here, the
back-up land available to support this is only on the southern side of Jawahar
Dock. So it is recommended that, if this berthing face is combined with the
berthing face of terminal-2, it would provide a continuous berthing face of
more than 1000 m. The possibilities of clubbing these two terminals have to
be studied in conjunctions with contractual obligations between ChPT and
second terminal operator.
Another berth which is available for conversion is the existing iron ore berth in
Bharathi Dock with total length of 360 m. The draft available in front of this
berth is 17.4 m which will allow vessels of 8000 teu to berth. With the use of
cranes with twin lifting facilities and the bigger size vessels calling, the
throughout at the berth can be estimated to be around 0.9 Mteu p.a. This is
termed as Container Terminal-4
The berths available on west side of Dr. Ambedkar Dock namely; WQ 1, WQ

2, WQ 3, WQ 4 and CB covering the total length of 853 m are also proposed
to be converted into container berths. The draft at this location is 11 m to 12
m and is planned to be deepened to -14 m. Based on the present level of
throughput the handling capacity could be about 0.9 Mteu but with larger size
of container vessels calling at ChPT and corresponding increase in parcel size
together with deployment of better cranes, the throughput can be increased
by 30% - 40% upwards. This is proposed as Container Terminal-5.
As there is insufficient back-up space for this proposed terminal, we envisage the need
of shifting the berthing face eastward and reclaiming the additional area which shall
provide some area at the back to be used as stacking space.
The detailed working and the phase in which other cargo berths are required to be
converted to container berths are given in Table No- 2.5-8.
Table No- 2.5-8: Phase-wise Conversion of Berths
Identification of New Berths

Sr.
No
A
A1
Particulars
2006-07
20072012
Year
201220172017
2022
20222027
1062
3534
Berths to be additionally provided

Total length of Berths
to be additionally
-321
59
2265
Page 75 of 185
Final Report
developed (in m)
A2
B
B1
B2
B3
B4
No of Berths of
equivalent length of
275.00 m to be
developed
-1.17
0.21
3.86
8.24
12.85
Berths to be newly developed

Container Terminal-2
Proposed Berth length
0.00
800.00
800.00
(in m)
Proposed No. of
0.00
2.91
2.91
Berths
0.00
0.00
655.00
(in m)
Proposed No. of
0.00
0.00
2.38
Berths
0.00
0.00
0.00
(in m)
Proposed No. of
0.00
0.00
0.00
Berths
0.00
0.00
0.00
(in m)
Proposed No. of
0.00
0.00
0.00
Berths
Total additional Berths possible to be developed
800.00
800.00
2.91
2.91
655.00
655.00
2.38
2.38
360.00
360.00
1.31
1.31
853.00
853.00
3.10
3.10
C1
Total proposed berth

length (in m)
0.00
800.00
1455.00
2668.00
2668.00
C2
Total no. of proposed

berths (each 275 m)
0.00
2.91
5.29
9.70
9.70
D
D1
D2
Net deficit in development of additional Berths

Net deficit in total
length of Berth (in m)
Net deficit in no of
Berths
-320.63
-744.78
-503.58
-282.67
848.29
-1.17
-2.70
-1.43
-1.47
3.15
Note: Negative (-) deficits indicates surplus

As analyzed from Table 2.4-8, sufficient berth length is available till the end of Phase-3.
It becomes a constraint only in phase-4, where there is a need of another 3.15 (say 3)
berths even after considering various possible developments / conversions. This
requirement however cannot be met and hence becomes the limiting factor.
As observed from the Table 2.4-8, the average container handling capacity of any berths
in last years of each of phases 2007-12, 2012-17, 2017-22 & 2022-27 is 0.47, 0.38,
0.34 & 0.42 Mteu respectively. Based on the assumptions made, additional numbers of
Page 76 of 185
Final Report
containers which can be handled at one berth is considered using the lowest of these
four i.e. 0.34 Mteu.
Therefore, with 1.47 berths as surplus in phase-3, additional 0.51 Mteu (1.47 x 0.34)
can be handled. The maximum possible capacity of port against berth length by the
Phase-3 will be 4.11+0.51= 4.62 Mteu.
So, the practical possible port capacity against the berths as one of the
parameters is limited to 4.62 Mteu annually.
C. Connectivity
In order to determine the maximum possible capacity of the ChPT, the connectivity
parameter was evaluated. An understanding of the number of container teu which can
be shifted to rail mode and those which can be handled by available and planned road
network is necessary.
Rail Mode
To estimate the percentage container traffic that can be shifted to rail mode in the
future years, the trend for the earlier years was analyzed. The Table No- 2.5-9 & Table
No- 2.5-10 indicates that the present share of containers being transported by rail is
barely 6.7% while the majority is by road.
Table No- 2.5-9: Modal distribution for Containers at ChPT
EXPORT
Year
Rail
Road
2000-01
8.10%
91.90%
2001-02
4.70%
95.30%
2002-03
5.60%
94.40%
2003-04
6.40%
93.60%
2004-05
5.80%
94.20%
2005-06
6.40%
93.60%
Average
6.20%
93.80%
IMPORT
2000-01
7.30%
92.70%
2001-02
5.60%
94.40%
2002-03
5.50%
94.50%
2003-04
11.80%
88.20%
2004-05
5.90%
94.10%
2005-06
7.00%
93.00%
Average
7.20%
92.80%
Page 77 of 185
Final Report
Table No- 2.5-10: Avg. Modal distribution for Import & Export of Containers
Rail
Road
Export
6.20%
93.80%
Import
7.20%
92.80%
Average
6.70%
93.30%
Worldwide all the efficient ports have a reasonable share of containers being hauled by
rail network. Therefore to improve the composite port capacity, there is an immediate
need of shifting some more load from the roads to rail.
As per the strategy adopted by the port, it is envisaged that the coal operations should
be shifted to Ennore Port by the end of phase-1 i.e. year 2012 and iron ore terminal
shall be converted into container terminal at the time when the port would actually need
additional berths and storage area for handling incremental container volumes. Based on
the current estimation of targeted forecast, it is observed that this conversion is
expected by the end of Phase-3, i.e. year 2021 / 2022.
Since coal and iron ore operations presently occupy most of the rail capacity at the port,
it is expected that the same shall be released for container handling in respective years.
Similarly, the need of off-dock facilities is also envisaged for handling containers outside
the port premises. The port has already developed a proposal for developing an OffDock facility at Tondiarpet Housing colony. This facility is expected to handle around
144,000 containers per annum.
The rail capacity which is expected to be released by shifting coal and iron ore handling
to Ennore is estimated and shown in Table No- 2.5-11:
Table No- 2.5-11: Calculation of rail capacity which can be released
Description
For Coal
Total coal transported using rails in 2005-06 (in
MT)
Quantity of Coal being transported in one wagon
(in Tonnes)
Therefore, total number of wagons being handled
per annum to handle coal (in numbers)
Number of wagons per rake (in numbers)
Total number of rakes per annum for
transporting coal (in numbers)
transporting container (in numbers)
Quantity of containers per rake (in teu)
Additional Quantity of containers, which can
be handled (in teu)
Calculation of rail
capacity which can be
released
4,572,500
60
76,208
58
1,314
1,314
45
59,127
Page 78 of 185
Final Report
For Iron Ore

Total iron ore transported using rails in 2005-06
(in MT)
Quantity of iron ore being transported in one
wagon (in Tonnes)
Therefore, total number of wagons being handled
per annum to handle iron ore (in numbers)
Number of wagons per rake (in numbers)
transporting iron ore (in numbers)
transporting container (in numbers)
Quantity of containers per rake (in numbers)
Quantity of containers, which can be
handled by shifting iron ore (in teu)
8,949,394
60
149,157
58
2,572
2,572
45
115,725
These above additional capacities will increase the present rail capacity for containers in
Phase-4 as shown in the Table No- 2.5-12.
Table No- 2.5-12: Calculation of increased rail capacity
Sr.
No
1
Particulars
No. of containers
presently being
handled by rail
Additional capacity
created by shifting
Coal & Iron Ore
Additional capacity
created by
developing an OffDock facility at
Tondiarpet Housing
Colony
Total Nos. of
containers which
can be handled
using rail links (in
teu)
20052006
20072012
Year
20122017
20172022
20222027
49,420
49,420
49,420
49,420
49,420
174,852
144,000
144,000
144,000
144,000
193,420
193,420
193,420
318,852
With this enhanced rail mode capacity to handle containers, the expected percentage
share of targeted traffic by rail and road mode is presented in Table No- 2.5-13:
Table No- 2.5-13: Phase-wise rail and road share
Sr. No.
1
2
3
4
5
Phase
2005-2006
2017-2012
2012-2017
2017-2022
2022-2027
Rail mode
6.73%
11.98%
7.59%
4.70%
5.42%
Road mode
93.27%
88.02%
92.41%
95.30%
94.58%
Page 79 of 185
Final Report
Road Mode
Now, with this modal share for road in the last year of each phase, the total containers
which are to be handled by road are estimated and further the connectivity issues are
analyzed. Details are provided in the Table No- 2.5-14.
Table No- 2.5-14: Analysis of ports capacity with respect to road connectivity
Sr.
No
1
2
3
4
6
7
8
9
10
11
12
Particulars
Total Number of Mteu to be handled
% traffic to be transported by rail
mode
% traffic to be transported by road
mode
Traffic in Mteu to be handled by road
per annum
Traffic in teu to be handled by road
per day (assuming 300 working days
per annum)
Traffic in teu to be handled by road
per hour (assuming 18 working hours
per day)
Total no. of lanes for container
movement
No. of Trucks/ teu to be handled per
lane/hour on the port gate
No. of trucks which are to be handled
at any gate with 4 lane (2 inbound + 2
out bound)
Average no. of trucks which can be
handled per lane
No. of trucks which can be handled on
any gate
Net Deficit (9-11) in Nos
20072012
Year
201220172017
2022
20222027
1.31
2.55
4.11
6.79
11.98
7.59
4.70
5.42
88.02
92.41
95.30
94.58
1.16
2.35
3.92
6.42
3855
7846
13060
21408
214
436
726
1189
8.0
8.0
12*
12*
27
54
60
99
107
218
242
396
50
50
60
60
200
200
240
240
-93
18
156
Note: Negative (-) deficits indicates surplus

* The need of further expansion of both the gates is envisaged. Addition of 2 more lanes
to both the gates is considered.
The table below indicates the analysis of ports capacity against road connectivity for
transporting cars:
Table No- 2.5-15: Analysis of ports road connectivity capacity for transporting cars
Sr No
1
2
3
Particulars
No. of Cars expected to be handled
No. of cars transported in one trailer
Total No. of trailers required for
20072012
202,696
6
33,783
Year
201220172017
2022
357,219 629,542
6
6
59,537 104,924
20222027
700,000
6
116,667
Page 80 of 185
Final Report
5
6
7
transporting forecasted nos. of cars

Total numbers of trailers to be handled
by road per day (assuming 345
working days per annum)
Number of trailers to be handled by
road per hour (assuming 20 working
hours per day)
No. of dedicated lanes for car trailer
movement
No. of trucks to be handled per
lane/hour at the port gate
98
173
304
338
15
17
15
17
Based on the above table, a further addition of one lane is proposed in Phase III for cars
and general cargo
The above analysis assesses the maximum possible capacity of port using the
connectivity parameter and indicates that the maximum practical capacity of the port for
container handling shall be the targeted container volume by the end of phase-3 i.e.
4.11 Mteu.
D. Vessel Size and Numbers
Presently, the maximum numbers of ships visiting ChPT have parcel size between 700 to
1500 teu with few vessels above 2000 teu and some below 500 teu. Current market
trend indicates that there is a focus on container trade and there is a possibility of larger
ships coming on the trade circuit. By deepening of docks for additional draft, it will be
possible to bring vessels maximum up to 8000 teu at ChPT but only at one berth i.e. the
present Iron ore berth if it is converted into a container handling facility (Proposed
Container terminal No 4). The likely container vessel calls as per the size and average
parcel size with the targeted container cargo at ChPT is given below in Table No- 2.5-16.
Maximum size of the vessel considered is 8000 teu with 300 m length and draft
requirement of 16 m and a berth length of 350 m.
Table No- 2.5-16: No. of Vessels and their parcel sizes expected at ChPT per annum
Size of Vessels
2007-12
2012-17
2017-22
2022-27
8000 teu and above
75
6000 teu
50
150
4000 teu
75
200
350
500
2000 teu
300
550
750
1200
1500 teu
350
400
500
500
1000 teu and below
175
200
150
100
Total No. of container Vessels
900
1350
1800
2525
1800
2000
2300
2700
1620000
2700000
4140000
6817500
Average Parcel size in Teu

Total No. of teu
Page 81 of 185
Final Report
Above Table No- 2.4-16 provides one possible mix of ship sizes and average parcel sizes
achieved at some other major Indian and international ports. The Table No- 2.4-16
indicates that with this mix of sizes and numbers, the port would be able to handle 4.14
Mteu in phase-3.
E. Bottleneck Analysis
For the above described multiple parameters the maximum capacities for container
handling are compared to decide the weakest link i.e. bottleneck and arrive at the most
likely container cargo volume in teu.
o
o
o
o
Capacity
Capacity
Capacity
Capacity
against
against
against
against
storage space= 3.60 Mteu

berths requirements= 4.62 Mteu
connectivity= 4.11 Mteu
vessel sizes and numbers= 4.14 Mteu
The above analysis therefore indicates that the overall capacity of the port for container
handling is limited by the storage space at the port.
As the next limiting factor is connectivity at 4.11 Mteu, there is a need of additional
storage space of around 19 ha [(4.11 3.60) Mteu / 27000= 18.89 ha], it is proposed
that the same can be fulfilled by taking over nearby fishing harbour and shifting the
existing one to further north with better facilities.
H. Abstract of traffic volume which can be handled at ChPT
With above estimation of port capacities against various parameters, we provide below
the abstract of actual traffic volumes which can be handled in different phases ranging
to 20 years keeping in mind the bottlenecks identified above.
Table No- 2.5-17: Abstract of Traffic volume which can be handled at ChPT
Year
COMMODITY
Containers
(in Mtpa)
2012
2017
2027
108.65
Restricted
to 57.6
6.79
Restricted
to 3.6
21.02
40.76
1.31
2.55
11.08
11.65
0.00
0.00

Iron Ore (in Mtpa)
2022
65.78
Restricted
to 57.6
4.11
Restricted
to 3.6
Coal (in Mtpa)

Automobiles (in 000
Nos.)
1.43
202.7
357.2
629.5
700.0
129,132
164,808
210,342
268,455
POL (in Mtpa)

General Cargo (in
Mtpa)
15.00
15.00
20.00
20.00
15.76
8.77
TOTAL
64.29
76.18
8.77
94.55
Restricted
to 86.37
8.77
137.42
Restricted
to 86.37
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2.6 Land Use Plan

In order to make optimum utilization of the most valuable and scarce resources i.e. land
available within the port, a Land Use Plan is developed. This is prepared keeping in mind
the vision of the port To be a futuristic Port with a foresight.
The total area available within the port is approximately 240 ha. Out of this total
available land, around 27 km of roads with various widths ranging of 6 m to 26 m are
occupying an area of around 33 ha (assuming average width as 12m). Broad-Gauge
Railway tracks totaling to around 68 km occupy around 17 ha of the ports land area.
Existing container terminal operated has been allotted an area of approximately 25 ha.
The balance area of around 165 ha is being used for various activities including handling
coal, iron ore, general cargo, Car export, POL etc. It is learnt that, around 90 ha is
presently earmarked for allotment to select customers for storing cargo commodities.
World over, the container terminals are managed with integrated transportation network
which includes efficient gate operations, apposite railways and road network. As the
efficient use of the railway and road system is critical to improve the capacity of the
port, it is recommended to undertake a transportation plan. The plan will formulate the
best strategy for the future use of the railway system as the port is presently heavily
reliant on the roads for cargo evacuation.
It is proposed that a 20 m wide road (4 Lane divided carriageway) along the periphery
of the port boundary be developed for smooth cargo movement. In future, as the
container cargo increases, there will be a need for use of railway for evacuation of cargo
in order to avoid road congestion. It is therefore suggested that an Off-Dock facility
should be created and the containers should be shifted to this location as quickly as
possible. For this purpose it is proposed that on the extreme southern side a railway
yard may be created with facility for load and unload containers using Rail Mounted
Gantrys. It is proposed that the existing rail network towards the coal yard be removed
once the development of container terminal no. 3 is taken up by converting JD2, JD4, &
JD6 in Jawahar Dock. This is to create additional back-up storage area immediately
behind the quay length and also ease movement of tractor, trailors within port area.
Conversion of existing facilities i.e. berths and godowns/warehouses into container
facilities is taken up based on strategic decision to focus on container business and
reduce the activity of handling dirty cargo. Various developments phases have been
indicated separately in the drawing.
Along with the development of 3rd Container terminal, it is recommended that a Rail
over bridge (ROB) as shown in attached Land Use Plan (ROB) also may be constructed
connecting proposed container terminals to an elevated road corridor proposed
separately. This will help faster evacuation of cargo which is south bound.
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Final Report
It is also proposed that in the long run to avoid the congestion on the expressway
connecting the northern hinterland, a by pass road from the Maduravoyal side of the
proposed elevated corridor may be constructed avoiding the Chennai city traffic.
Based on the targeted cargo volumes, the phase-wise development of available land is
indicated in order to create sufficient back-up storage area and the other utilities and
support infrastructure.
The land use plans are developed for all the four phases and are attached with this
report in Annexure-II. This schedule of creation of berths is indicated in the Table No2.6-1 below:
Table No- 2.6-1: Identified Development plans under Land Use Plan
Sr.
No
1.
2.
3.
4.
5.
Land Use
Plan (LUP)
No.
Attached
Land Use
Plan
Identified development plans
Phase
Period
Color
shown
in LUP
Container Terminal-2;
broadly includes;
- Conversion of EQ &SQ3
berths into container
berths,
- Reclaiming land at the
area north of sand
screen,
- Conversion of a portion
of coal yard into
container storage yard.
Peripheral Road
Development from Gate-1 to
Gate-10 to Container
Terminal-2
Conversion of a portion of
Marshalling Yard into
container storage cum
railway yard
Developing a Flyover on
southern side of the port
connecting container
Creation of New Cruise
Terminal clubbed with a
multi level car parking
facility
Phase-1
20072012
6.
Strengthening of berthing
face at JD2, JD4 & JD6 to
handle ships requiring
depths of 14 m
7.
Developing a Off-Dock
facility at Tondiarpet Housing
Colony
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Final Report
8.
Attached
Land Use
Plan
9.
10.
11. Attached
Land Use
Plan
12.
Development of Container
Terminal-3; broadly
includes;
- Conversion of JD2, JD4
& JD6 berths into
container berths,
- Conversion of balance
portion of coal yard into
- Shifting berthing face
eastward by demolishing
existing JD-2, JD4, &
JD6.
Conversion of a portion of
Marshalling Yard into
container storage yard
Phased development of
Fishing Harbour as container
storage facility
Terminal-4; broadly
includes;
- Conversion of Iron Ore
berths,
- Conversion of back-up
storage area for iron ore
into container storage
yard.
Terminal-5; broadly
includes;
- Conversion of WQ1, WQ
2, WQ 3, WQ 4 & CB
berths,
- Reclamation of a small
amount of water front
on west quay to create
additional back-up land
- Strengthening of
berthing face to handle
ships requiring depths of
14 m
- Dismantling of existing
warehouses and
passenger terminal at
west quay, Ambedkar
Dock
- Reclamation of Timber
pond
Phase-2
20122017
Phase-3
20172022
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13.
14.
15. Attached
Land Use
16. Plan
Conversion of existing CFSs

into container storage yard
Phased development of
Fishing Harbour as container
storage facility
Reclamation of Port Basin for
container storage yard
Reclaiming land near Gate
no.1 to the north of Bharathi
Dock adjacent to eastern
breakwater.
Phase-4
20222027
Note: Scale of Land Use Plan is considered as 1:100000.
The port trust has already proposed reclamation of approx 60 ha of land on eastern
breakwater near fishing harbor. The cost of this reclamation is about 135 crores. The
analysis of various parameters considered for finalizing the maximum practical container
capacity of the port indicates that the availability of backup area for container storage is
not the only constraint over the 20 year period. Other parameters are also becoming a
limiting factor for handling container volume beyond Phase-3. Hence this proposed
reclamation of additional 60 ha of land is proposed in last phase so that this can be
made available for any possible requirement arising out of increased cargo operations at
the port.
The business plan exercise brings to the notice of any organization the core business
segments to excel in service delivery and also throws open the various opportunities for
optimum utilisation of all available resources - both physical as well as soft resources.
ChPT has a natural advantage of being in the close proximity of a thriving and upcoming
industrial region. This throws open multiple options to the port for the utilisation of this
new area that can be made available by reclamation. One of these options is to set up
an Export Processing Zone (EPZ).
EPZ are be defined as industrial zones with special incentives set up to attract foreign
investors, in which imported materials undergo some degree of processing before being
re-exported". Today, there are many types of export processing zones (EPZs) which
include free trade zones, special economic zones, bonded warehouses, free ports and
customs zones.
With developments in information technology, "imported material" would also include
"electronic data" today as well as call centers located in these zones. EPZs have evolved
from initial assembly and simple processing activities to include high tech and science
parks, finance zones, logistics centers and even tourist resorts.
Port cities like Hong Kong and Singapore have enhanced their strategic trading role by
providing special customs regimes for export processing and transshipment. While many
public agencies are still establishing zones, there is a distinct trend towards the private
development of zones often by foreign developers.
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In the EPZ, facilities are provided for activities in manufacturing, processing, packaging,
warehousing and the distribution of goods and services. The EPZ also provide investors
with the added option of constructing their own facilities and developing infrastructure
within an EPZ, including independent utility installations.
As regards the Port itself, the development of an EPZ entails the following benefits:
o
Direct Import and export cargo potential without competition pressures
No hinterland connectivity issues
Generate direct / indirect employment potential in the region.
The ChPT can implement the above referred project after doing a detailed feasibility
study. This should clearly establish the activity possible within the available surplus land
and the economic considerations thereupon. Since the consultants are of the opinion
that exhaustive exercise is needed to work out the financial attractiveness of that
project, nature of implementation and the direct/ indirect benefits to the nearby
hinterland, it is premature to comment on this project at this stage. However this
business plan aims at showcasing the basic strengths of the ChPT and recommends
setting up of such EPZ if any surplus land can be made available.
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2.7 Organizational Issues

In every organization there are inherent strengths and weaknesses which are developed
over a period of time. It is important to first identify these strengths and weaknesses
and then take appropriate measures to overcome the weaknesses and develop the
strengths into core competencies.
In order to find out the above the SWOT Analysis as a tool was used.
A SWOT Analysis Workshops were conducted by Deloitte in the month of July 2006.
Deloitte explained and assisted all the nodal officers in conducting the SWOT Analysis for
their respective departments. During this workshop, the nodal officers were provided
with guidelines to carry out SWOT analysis for their respective departments. During this
exercise, the Department Head and other key officials of the Department interacted with
each other for sharing their perspective on respective strengths, weaknesses,
opportunities and threats.
The consultants team reviewed these SWOT notes developed by the departments and
later discussed thoroughly with respective departments for due validation. These
workshops resulted in the finalization of strengths and weaknesses, opportunities and
threats for the ChPT as an organization.
Some of the major strength and weaknesses of the port arising out of this SWOT
analysis are mentioned below.
Strengths of the port
o
Geographical Location: The major strength of the port is its geographical

location. Situated on the eastern coast it is known as the gateway to the
India and is well connected to other major cities by rail & road network.
ISO 9001:2000 Compliant: Chennai port it is a ISO 9001: 2000 compliant

port which further enhances its reputation in comparison to other minor and
major ports present in the vicinity.
Well trained staff in Marine, Engineering, Traffic & Accounting: The marine
department has marine survey teams for effectively monitoring the depths of
basins, channels and berths. Key personnel especially in Traffic, Engineering,
E&M and Accounts departments have relevant technical skills and
qualifications for carrying port related operations which can be improved with
continuous training programs, to face the challenges of the new technologies
and competing environment.
Good Employment & Training facilities: The port provides it employees with
good salary and other benefits and attrition rate has been not too high for the
port. It has its own training institute to impart training to its employees.
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Transparency in operations: Port maintains transparency in all its internal and

external procedures and enjoys a good reputation among its employees and
customers.
Good Industrial relations: Port enjoys cordial industrial relations with labor
unions and there have been no major problems with unions in the past few
years.
First Mover Advantage: The port has a first mover advantage in Southern
India especially in Containers and has an established base of customers. It
has long term user agreements with companies like CPCL and Hyundai, and
hence assured traffic commitments.
IT Developments & Automation: The port has kept pace with the
developments in IT sector, many of its departments have been computerized
and some are undergoing the process of basic automation and
computerization. The accounts department has full automation in revenue
collection and paperless transaction in receipts, salary, etc.
Sound Financial Position: The port has sufficient working capital to meet its
current obligations. Chennai Port is almost a Zero Debt organization and all
capital / revenue expenses are met only from internal accruals. The Port has
a good quality financial accounting system;
Weaknesses of the port

Like in all other organizations, there are inherent weaknesses which the port has to keep
in mind and try to overcome in the near future to remain competitive. Few critical
weaknesses are discussed in the next few paragraphs of this section.
o
Outdated Environment Management Plan: The Environment Management Plan

(EMP) at ChPT was developed 16 years back. The absence of a latest and
comprehensive environment management plan with clear allocation of
responsibilities may affect the Ports image in the industry scenario.
High attrition of Skilled workforce in Marine departments: In Marine

Department, the port does not have sufficient skilled manpower to operate
some of the critical port equipments. The attrition amongst these categories is
very high. This results in lower utilization and higher fixed costs of dredger
thereby increasing overall cost of dredging.
Unstructured Framework for internal Communication: The Port faces

constraints due to absence of structured framework for intra-department
communication. This results into lower knowledge transfer within the different
departments.
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Succession Planning not done by HR department: The Port does not carry out
forward HRD Planning for manpower requirements keeping in mind factors
like profile of retiring employees, required skill sets for future operations etc.
This is more because of a decentralized HR function that focuses more on
personnel management functions at the departmental level. The Port also
faces several HR related issues in attracting new talent some of which is
related to career growth opportunities, remuneration gaps, and existing work
conditions
Failure to benefit from Treasury Management: The ChPT, like many other
major ports in India, have over the years generated huge surplus. The
working capital requirements are met internally. All funds, however, have
effectively been lying idle in the form of bank balances, fixed deposits, and
Government Securities. There is huge potential for these port trusts to gain
from efficient Treasury Management by suitably utilizing these funds. The
existing government guidelines restrict investment of surplus fund to
government securities and nationalized banks fixed deposits.
Absence of internal audit department: There is no independent internal audit

department in the port for review of the functions / procedures performed by
all the departments. From an internal control point of view it is important that
processes and functions are reviewed separately so that inherent weaknesses
are identified and addressed appropriately.
Lack of customer focuses: There is no specific department for focusing on

marketing port facilities and the traffic department handles the marketing
activity. There are competing ports coming up which will try to take away
share of Chennai cargo. Marketing of the port infrastructure hence has a
crucial role in the future market driven economy.
Multiple Regulatory Bodies: Chennai port being a major port is governed by

Central legislation administered by the Ministry of Shipping in the
Government of India. However, Chennai port is also influenced by the
statutory and regulatory provisions of the state and the local self government.
Any legislative and regulatory action required to improve overall port
operations, especially in matters related to city congestion, pollution and port
connectivity is affected to a large extent by these multiple regulatory
requirements. Labour laws have to satisfy the requirements posed by all
these bodies.
Cumbersome Business Procedures: Business Processes within the port require

re-alignment keeping in view the service quality standards and the
requirements of modern global environment.
High Tariff: The tariff structure of the port is perceived to be comparatively

higher than the tariff structure of the ports in the region.
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Ageing workforce and issues related to excess labor: Due to a ban on

recruitments over the last few years, the average age of the workforce is no
longer young. Moreover, it has also been seen that the port has a surplus of
labor in various departments which leads to high operating expenses.
Lack of computer training to the staff: The process of computerization of basic

port activities has been completed in different phase, but the employees have
not been imparted proper training to make better use of the system. Hence
proper training programmers should be developed based on the specific needs
of employees.
Port Organizational Issues

A perusal of the above perceived strengths and weaknesses brings out the need for
Chennai Port to have a paradigm change in the way it is structured and the manner in
which the port operations are conducted. Key to increased tonnage in the future in the
face of stiff competition entails a market driven approach that emphasizes on efficient
customer handling and back office IT driven business processes, implementation of an
marketing plan, and resolution of customer related issues in terms of hinterland
connectivity and infrastructure support issues. The Port also needs to carry out better
tariff management that focuses more on implementing cost reduction measures
(especially in staff related costs) and ascertaining the actual cost of service. The Port
also needs to strengthen its IT Department capabilities, given the need to provide esupport to all Port Operations and at the same time maintain adequate IT and physical
security standards.
As outlined earlier, there is a need to further enhance the strengths listed above so that
they become core competencies of the Port. Given the competitive requirements of the
future, some of these strengths may no longer continue as such if adequate
organizational reforms are not implemented. On the other hand several weaknesses
listed above can be comprehensively addressed if a set of given organizational reforms
are implemented along with the hard infrastructural projects.
The Table No- 2.7-1 documents the summary of all organizational issues that emerge
from the above analysis and the set of organizational reforms that need to be
implemented:
Table No- 2.7-1: Organization Issues
Sr.
No.
1.
Function
HR
Organizational issues
Organizational reforms required.
Ageing workforce,
Organizational reforms require a
surplus labor, need for
comprehensive look at current
retaining existing and
organizational structure & design, and
attracting new talent,
structure of the current remuneration
and addressing employee
policies, The Organizational design also
related problems on
emphasizes on reduction in workforce
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Final Report
remuneration and work
numbers and increased salary and
conditions.
pension costs to some extent. The

reform process should undertake
centralization of the HR Department &
implementation of a centralized HR MIS
software that focuses on skill set
requirements, current availability and
sourcing of required skill sets through
training or new recruitments,
2.
Business
Cumbersome business
Organizational reforms such as
Processes
processes and
business process re-engineering,
and IT
procedures, reduced
renewed focus on current
Support
work efficiencies due to
Implementation of port automation
manual processes, and
software, Implementation of IT
inadequate IT security
Security systems and enhancing the IT
and capabilities to
organization are some of the steps that
manage IT
can address these issues.
Infrastructure.
3.
Marketing
Lack of a market and
Since marketing has never been a
customer driven
focus area for ChPT, this area requires
approach and providing
a slew of organizational reform
logistics services
initiatives that require the marketing
support.
function to be institutionalized in the

Port. This involves setting up a
Marketing research / operations cell,
implementing a CRM solution and a
Port community system to cater to
customer care, customer profiling &
segmentation, and developing
partnerships with key customers.
4.
Financial
Issues in Financial
Chennai Port would need tom identify
management
management relate to
and implement cost reduction
high operational costs,
measures to ensure that its operational
and resultant perceived
costs are reduced. This will facilitate a
high tariffs.
re-look on the tariff structure and the

possibility of a rationalization of tariffs
in favor of the customer.
Implementation of an activity based
costing as a part of the Business
process re-engineering and automation
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Final Report
exercise would also be required.
The strategy to implement these organization reforms is outlined in Section 3.2 of the
Report and the strategy implementation is sought to be taken up by implementation of
various organizational projects outlined in Section 3.3.
2.8 SWOT for Chennai Port as a whole

Based on the above sections related to Port Infrastructure, competition analysis,
hinterland connectivity, traffic forecast, capacity & bottleneck analysis, and
organizational issues, a all compassing assessment of ChPT as a whole was developed in
the form of Strengths, Weaknesses, Opportunities and Threats (SWOT). This provides an
essence of the analysis carried out in the previous sections.
Table No- 2.8-1: ChPT SWOT
Strengths
Weaknesses
Strategic Geographical location
Congested approach road
Dedicated facilities for handling all

major cargo types
Traffic evacuation not allowed during

the day time
Good multimodal connectivity
Restricted land availability
First Mover advantage and an

established base of customers
Higher tariffs for use of plants &

equipments
Long term agreements with users like

CPCL and Hyundai
Sub-optimal usage of rail connectivity
Best location on the East Coast for

cruise operations in view of good air
connectivity and proximity to cruise
destinations like Bangkok/ Pattaya/
Singapore/Malaysia/ Indonesia /
Andaman & Nicobar
Exposure to dust & saline

environment, requiring higher
maintenance expense
Perceived need for improvement in

service levels to retain existing
clients, avoid them being lost to other
ports and for developing new ones
Efficiencies lower and tariffs levels

higher than those in international
ports in the region like Singapore,
Colombo, Hong Kong and Dubai
ISO 9001: 2000 compliant port
ISPS Compliant port
Good IT implementation, web enabled

port-user interaction
Good labour relations
Ageing workforce
Uninterrupted pilotage operations
Need for additional environment /

pollution management
Port trust has diverse representation

of different interest groups
Surplus labour of about 600 in

different departments
Ports own training institute
Sufficient reserves & surplus
Good traffic growth and revenues in

recent years
Restriction on investment of surplus

fund to government securities and
nationalized banks fixed deposits
High turnover among skilled staff in
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Final Report
Sufficient working capital to meet its

current obligations
marine department like pilots and

marine engineers
Inadequate manpower to operate the

dredgers round the clock resulting in
lower utilization of dredgers and
higher fixed costs thereby increasing
overall cost of dredging
Port does not have fully computerized

management accounting system
Lack of systematic marketing and

Customer Relationship Management
skills / systems
Opportunities
Positive economic environment in the

years to come with an anticipated 7%
GDP growth rate, stable inflation and
foreign exchange rates and rising
international trade
Increasing containerisation and good
forecasted demand with strong
business potential
Strong forecasted growth in
automobile exports
Increased ship sizes
Increasing automation
Possibility to tap other sources of

revenue:
Ship Repair facilities and services

to Ship Owners
Engineering Consultancy Services

to Other Ports
Provision of Marine Services/BOT

services to other Ports
Management & Technical

consultancy & training services to
other smaller ports
JV or strategic investment with

minor/ intermediate ports
Potential to attract main line vessels
Better road connectivity after

construction of proposed road
projects
To facilitate cruise tourism by
Threats
Competition from major ports

specially from Ennore and Tuticorin
port
Competition from minor ports mainly

from Krishnapatnam
Expected ban on export of minerals
Loss of lucrative cargo like coal & iron

ore
Increase in awareness among

common public about environmental
issues
There are too many gates providing

access to port, increasing vulnerability
and efforts to maintain security
High possibility of reduction in

government funding
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construction of a cruise terminal and

marina
Increased focus on private-publicpartnerships and the landlord model

of port operations
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Business Plan Elements
Consolidation, increasing competition, rapidly changing technology, changed regulatory

landscape, competitive pressures in managing capital, & knowledge resources,
increasing demand from stakeholders etc. are affecting businesses in all industrial
sectors. Therefore the business strategy has to be developed in such a way that it
anticipates and sustains all the macro-changes in the environment and reflects well the
Vision and Mission of the organization.
In order to develop the strategy for the Chennai Port it was essential to develop the
Mission, Vision and goals known as Business Imperatives for Chennai Port. Well-defined
Vision and Mission statements are essential for evaluating, formulating and
implementing strategy. Without clear statements of Vision and Mission, an organizations
short-term actions can turn out to be counter productive to long term interests.
Business imperatives, by definition are essential pillars of any organization. Business
imperatives are arrived at an interaction of two essential constructs viz. The Business
Definition and Business Constraints. Development of the Business Constraints, Business
Definition and consequently, Business Imperatives is the first step of a Strategic
Planning process.
Business Definition: The Business Definition describes the organization in terms of its
Values, Vision and Mission.
Business Constraints: Business Constraints basically are perspectives of various
stakeholders of the organization.
The interaction between Business Definition and Business Constraints allows the
organization to assess the magnitude of impact of constraints on the present and future
lines of business.
Identification of Business Constraints
For identification of ChPTs Business Constraints, the following activities were
undertaken:
o
Preparing a list of ChPTs Stakeholders
Conducting interviews with Key Stakeholders
Compilation and analysis of Stakeholders responses
For details of the interviews conducted with key stakeholders. please refer to section 4.2
of the Interim Report.
The compilation of Stakeholder responses and its analysis are depicted below:
Strengths
The greatest strength of the ChPT is its geographical location. Majority of the
stakeholders have pointed out due to high costs associated with inland transportation,
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businesses close to Chennai and other nearby areas would transport their goods through
ChPT only even though there may be problems like congestion etc.
Rank
Rank 1
Rank 2
Rank 3
Rank 4
Rank 5
Strengths
Monopoly because of geographical location
Management Response
Nothing
Industrial growth in the port's vicinity
Port has all the required equipments
It is agreed by almost everybody that key officials from the Port are cooperative and
responsive. Lower level employees, however, do not enjoy the same level of confidence
among stake holders. There is a class of stakeholders which believes that the Port does
not possess any strength. Some of these stakeholders, however, do not deny that
Chennai enjoys a monopoly position.
Industrial activities in the Ports hinterland have grown considerably in recent years and
the growth rate is expected to be maintained in the coming years ensuring a healthy
hinterland market for the Ports services. This is going to be one of the ChPTs great
opportunities cum strength. The fact that ChPT is an all weather port, a multi cargo port
and port with good rail connectivity are other strengths that emerged from the analysis.
Weaknesses
The problem relating to evacuation, congestion and non-existence of good road
connectivity are some of the biggest weakness as revealed in the analysis.
Rank
Rank 1
Rank 2
Rank 3
Rank 4
Rank 5
Weaknesses
Road Connectivity / Traffic Congestion / Evacuation Problem
Low Labour Productivity
Land / Storage space constraints
High service charges / Avoidable overheads
Huge & Inefficient manpower
In terms of manpower, the Port suffers in three different ways. First, it has huge work
force which makes the establishment overheads a major cost of total cost. Second,
labour productivity is very low. Reasons for such low productivity ranges from unfocused
attitude, late coming and early going, unnecessary breaks, unnecessary high gang
composition of 11 labors, no watching gang for labors etc. Third, the labour cost is very
high when compared with market rates.
The Ports inability to extent its geographical limits due to land constraints is a major
issue which comes next in list of weaknesses. The next issue in the list is the charges for
services provided by the Port. The users still want the Port to reduce its charges which
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Final Report
they felt were on the higher side. Their view is that this is because of inclusion of
avoidable overheads and notional levies in the Ports charges
From the interviews and responses, the following appear to be the main business
constraints imposed by various stakeholders:
Stakeholder
Port
Trustees
Port
Management
Constraint imposed
- Ensure adherence to provisions of Major Port Trusts Act,
1963
- Ensure fiscal and corporate governance
- Maintain and raise profitability
- Maintain and raise profitability
- Ensure performance of duties by sub-ordinates
- Personal and professional growth
Employees
Personal and professional growth
Shipping
lines
Adequate Channel depth

Minimum pre-berthing detention and turnaround time
Lower Tariffs
Lower Tariffs
Efficient procedures
Co-operative employee attitudes
Efficient handling equipments and other infrastructural
facilities
Adequate Channel depth

Adequate storage facilities and hinterland connectivity
Adherence to Concession Contract terms
Adherence to applicable Laws
Contribution to economy (local and national)
Pollution control
Corporate Social Responsibility

Pollution Control
Stevedores,
steamer
agents, C&F
agents,
CHAs, CFS,
ICD,
Importers,
Exporters
Container
Terminal
Public
Authorities
Citizens,
Environment
Groups
Some of the other stakeholder perceptions are listed below:

o
The major threat for the Port is the Tuticorin Port in the container segment of
cargo.
The main suggestion that emerged from the stakeholder analysis is the need
for privatization of operations.
The foremost objective for the Port should be to provide adequate

infrastructure to the Port users.
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3.1 Developing the Vision and Mission

Business Definition is the description of an organizations Core Values, Vision and
Mission. The terms are defined below:
Core Values: These are set of commonly held fundamental beliefs that describe the
kind of behavior it will take to realize the organizations Vision. They provide guidance
on how work is expected to be done.
Vision: A Vision is an idealized view of a desirable future where and what an
organization would like to be in the future. It is a clear, concise, compelling statement
that provides direction and guides business activities.
Mission: A Mission is an enduring Statement of Purpose, the organizations reason for
existence. It describes what an organization does, who it does it for and how it does it.
For, ascertaining the future Vision, Mission and Core Values, the following process was
undertaken. ChPT already has a Vision and Mission Statement and these were re-visited
and examined to ascertain their suitability in the current circumstances, likely future
environment and their appropriateness when benchmarked against requirements of a
sound Vision and Mission statement. Each of the above steps has been explained below:
Understanding ChPT
Understanding of ChPTs business was developed through number of interactions and
discussions with Chennai port officials and data gathered from ChPT during the inception
mission and subsequent vision.
Stakeholder Analysis
As mentioned under developing Business Constraints above, A Stakeholder Analysis
exercise was conducted and the results are documented in the Interim report
Researching Best-in-Class Vision and Mission
In order to develop Values, Vision and Mission statements for ChPT the Vision & Mission
Statements of other Ports in India and some of the best managed Ports internationally
were examined.
Preliminary Environment Analysis
A preliminary analysis of Global, National and Local environments was undertaken and
key likely developments were summarized. These likely developments formed the
backdrop for revisiting/developing the Vision and Mission statements of ChPT.
Summary of Preliminary Environment Analysis have been depicted in table 4-4 of the
Interim Report.
Revisiting ChPTs Vision and Mission
After undertaking the above steps, the final step undertaken was to re-visit ChPTs
current Vision and Mission. This was done in a Visioning Workshop. The present Vision
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and Mission statements were analyzed to evaluated whether they meet the essential
requirements for a sound Vision and Mission statement.
Vision Statement
Table No- 3.1-1: Evaluation of ChPTs existing Vision Statement
Statement
Our Remarks
To become the best

among all ports in all
aspects
Vague expression of
Intent
Empower employees for

shouldering higher
responsibilities resulting in
job enrichment and job
satisfaction
More like a mission than

a vision
To become the best port in

environmental
management and in
controlling pollution
Duplication with the first

statement
Too wide a canvas to

enthuse action
Does not enjoy a proper

connect with the vision
identified above
Emphasizes only one

dimension of the overall
vision
Clear
Forward Call to Unifying

looking Action theme
Mission Statement:
Table No- 3.1-2: Evaluation of ChPTs existing Mission Statement
Statement
Our Remarks
Strive to achieve excellence

in port operations through
dedicated, loyal and
committed workforce to
enhance customer
satisfaction
Why Strive to?

Mission is a call TO
DO
Strive for continual

improvement at all levels by
enhancing skills, knowledge
and enthusiasm to meet the
needs of the changing world
Why Strive to?

DO
Strive to achieve maximum

value addition through the
most effective use of
resources
Why Strive to?

DO
Duplication with vision

statement
Vague expression of
Intent
Vague expression of
Intent
Connect Specific
with
guide to Comprehensive
Vision
action
Further to the review, various suggestions were also provided for suggested Core
Values, Vision and Mission Statements. After extensive discussions and with active
participation from ChPT personnel, the following Core Values, Vision Statement and
Mission statement was agreed upon:
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Table No- 3.1-3: New Core Values, Vision and Mission Statement
Core Values
Integrity
Proactive
Professional
Committed
Conscious of Environment / Social obligations
Vision Statement
To be recognized as a futuristic port with foresight
Mission Statements
- Achieve excellence in port operations with state-of-the-art technologies.

-
Enhance competence and enthuse workforce to maximise customer

satisfaction
Anticipate and adapt to the changing worldwide scenario
Act as a catalyst for sustained development of the region
3.2 Strategies
3.2.1 Introduction
Figure 3.2-1: Strategy Process
Strategy is all about making

choices in the face of
multiple alternatives, about
making the right decisions.
It is about identifying
strategic options, and
choosing and implementing
them in a manner that leads
to the achievement of the
stated objectives within the
planning horizon. It often
involves sacrificing some
Internal Analysis
Key Uncertainties
(SWOT Analysis, Stakeholder

Analysis)
Insights
External Assessment
Future
Industry
Scenarios
(PESTLE Analysis, 5 Force

Analysis, Traffic/Demand Analysis)
Pre-determined Forces
Business Strategy
Thrust Areas
Functional
Strategy
Finance, IT, HR
Projects &
Action Plan
IRR, NPV, Feasibiliy
immediate gain for a future

long term advantage,
something tangible for
Business Plan
Projected Financials
something intangible, or something gross and manifest for something subtle and - at
that point- hypothetical. Usually these deeper intentions are not apparent from a
superficial view of the actions taken and the actions lend themselves to the criticism /
skepticism of the uninitiated.
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Implementing a strategy requires commitment and conviction in the adopted plan. The
ability to resist the urge to profit opportunistically and stay invested strategically is
hence critical to reaping the genuine benefits of adopting a strategy. This ability of
organizations is constantly assaulted by the plethora of opportunities that arise in the
dynamic and turbulent business times we live in. A weak commitment results into a
compromise of strategic focus. It is hence necessary to think a strategy through very
carefully and involve the key stakeholders in its design, so that it enjoys strong
ownership and broad endorsement that can consistently withstand doubt, when under
pressure for deviation during implementation.
The process of Strategy formulation has been elaborated in the diagram above. As is
evident, the inputs to the process are in the form of Insights from internal/ external
analysis and a visualization of likely Future Industry Scenarios. The Strategy Formulation
process first entails the Business Strategy to be formulated followed by functional
strategies which are then elaborated and articulated in the from of Projects and Action
Plans.
Key Insights, as mentioned above, are an outcome of an elaborate internal and external
assessment. We have listed several factors that are relevant to ChPT given its location,
its business, its competition - broadly its internal and external environment. Further, the
Vision adopted by ChPT is To be a futuristic port with a foresight. This requires
developing a shared understanding of how ChPT ought to be as a Futuristic Port.
This vision has to be realized in the future. We hence need to develop a view of the
future. Since the future can never be projected with certainty one needs to develop
multiple scenarios in which ChPT might find itself pursuing its vision.
Deciding the Business Strategy at its first level is about determining what business an
entity should be in given its larger mandate. It involves identifying the approach in
which the potential for achievement of the Corporate Vision is the highest. Once strategy
at this level is decided, detailing of supporting strategies at a functional level can be
undertaken. It is hence essential to look at the Vision and Mission and link this right up
to the Projects comprising the Action Plan.
In the strategy formulation, few key insights were identified which are used in the
formulation of industry scenarios and the development of the overall business strategy. .
List of key insights has been discussed in section 5.2.1 of the Interim Report.
3.2.2 Future Industry Scenarios

As the pace of change within an industry accelerates- in technological advances and
consumer demands, in economic and regulatory shifts- exploring the future through
scenarios helps management make informed planning decision. By identifying and
exploring events that may be unfolding, companies can avoid surprises, adapt to
change, and proactively target new business growth activities.
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A Scenario Building Process is made up of two driving forces. These driving forces
usually fall into one of two categories:
o
critical uncertainties
predetermined forces
Critical Uncertainties
We define critical Uncertainties as critical areas / events / developments which are likely
to be important in shaping the future of the Port but which are uncertain at present.
Predetermined Forces
Predetermined Forces are those critical areas / events / developments / trends which are
likely to be important in shaping the future of the Port and happening/non-happening of
which can be predicted at present with reasonable certainty.
Pre-determined forces do not depend on a chain of events to occur, they are already
underway. Critical uncertainties are the forces why organizations develop various
pictures of the future i.e future scenarios.
A list of critical uncertainties & predetermined forces has been discussed in the Annexure
to the Interim Report.
3.2.3 Process of formulation of scenarios

The predetermined forces are expected to happen invariably and hence are to be taken
as given. Any strategy that is developed will have to ensure that this view is factored
into the decision. It is the Key Uncertainties which need to be iterated for scenario
planning. Doing so is practically
impossible unless we have a limited
No
Restrictions
number of variables to permute and

combine. Hence from the list of Key
Uncertainties we have picked up the top
two uncertainties for the purpose of a
scenario development:
o
Restricted
Iron Ore
Exports
Scenario-2
Scenario-1
Scenario-3
Scenario-4
Severe
Restrictions
Reduction in Iron Ore Export /
Poor
Key Stakeholder Support
Good
Coal imports
o
Key Stakeholder support

Figure 3.2-2: Scenario Matrix
Combinations of these two Key uncertainties give rise to four probable scenarios as
tabulated below:
For developing forecasts, we have identified:
o
Base Case Scenario Most Likely Scenario
Optimistic Scenario All positives materialize
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Worst Case Scenario All negatives materialize
Base Case Scenario Most Likely Scenario

We believe that the most probable future scenario in which ChPT will find itself shall be
characterized by the following key factors:
o
Restricted iron ore exports
Good Key Stakeholder Support
Restricted Iron Ore Exports

It is understood that the Indian Iron Ore reserves are depleting at an alarming rate and
are expected to run out at the current rate of exploitation in the next 15 years. The
Steel manufacturers of the country are lobbying for a ban on Ore exports and the
argument is gaining support from the economists and the citizens alike albeit for
different reasons. It is expected that there will be restrictions on iron ore exports and it
could even mean a complete ban.
Our assessment is that given so many interests aligned against the iron ore exports it is
very likely that such exports shall witness increasing regulation and restrictions. Coupled
with the fact that ChPT finds the business of handling iron ore exports (as also the coal
exports) to be a bone of contention with the citizens of Chennai and faces pressure from
growing environmental regulations. Any strategic imperative to forcefully retain such
business therefore is suspect. Also competing Ennore Port has created capacity to
handle bulk cargo (read iron ore) through PSA SICAL. Even if these restrictions do not
materialize, service substitution of such export facilities is foreseen. The end effect
that of depriving ChPT of assured iron ore traffic through it is reasonably anticipated.
Since this is one of the key cargos, its loss is expected to impact the fortunes and
business case of ChPT significantly. It will be constrained to find other ways of
maintaining its profitability e.g. setting up another Container Terminal. On the
environment front however, the effect will be positive with increased public support for
such initiative by ChPT. Also, given that ChPT will be regarded as a Clean Port, it may
be able to attract cargo like automobiles, food grains etc. which need a clean
environment. Absence of Iron Ore will also lead to increased space availability which can
be used to handle alternate cargoes mentioned above.
Key Stakeholders for ChPT include the important customers as well the Central
Government. ChPT being a government organization and likely to remain under
government ownership in the future, it is imperative that there is continued government
support in the years to come for ensuring smooth implementation of ChPT development
initiatives. Support here means policy support and not just financial support. E.g. it is
understood that the two key projects expected to impact the access to ChPT are:
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The Manali Express Highway (MEH)- which shall connect ChPT to NH-4
connecting CHPT to the northern hinterland bypassing Chennai city
Elevated Corridor (EC) - This shall connect ChPT to NH-4 connecting ChPT to
the southern hinterland bypassing the city.
Both these projects are important not only to ChPT but also the city of Chennai as they
would help to decongest the excessive traffic flow through the city that is currently
accounted by ChPT operations. If ChPT enjoys continued government support, it is very
likely that these projects shall enjoy speedy implementation.
It is expected that ChPT will continue to obtain strong stakeholder and Government
support given the current political equations in the State and at the Centre. This may
not continue right through the planning horizon for this business planning exercise. From
a policy perspective however, there is consensus on developing the ports in the
peninsula and providing the required support. Hence, ChPT can too some extent, bank
upon good stakeholder support from the respective governments.
So far as other important stakeholders are concerned, the biggest advantage ChPT has
over upcoming competing ports is that it has an established base of customers, many of
whom have committed investments in ChPTs hinterland e.g. Hyundai and CPCL. Also
important customers have an established supply chain and a working relationship with
ChPT and they are unlikely to shift preferences at a short notice. Given this fact, it is fair
to assume that ChPT will continue to enjoy good support from its important customers.
Optimistic Scenario All positives materialize
This scenario presumes the following:
o
There are no restrictions on iron ore exports
The difference between this scenario and the other earlier is that this scenario assumes
that they are no restrictions on iron ore exports.
Currently, most of the Iron Ore exports from India are to China. China has a huge
demand for Iron Ore and this demand is unlikely to reduce in the near future. While
domestic demand of Iron Ore is also increasing, due to foreign exchange earnings
associated with exports, it is possible that the government may be reluctant to impose
any kind of restrictions on exports of Iron Ore. So far as exports from ChPT port are
concerned, ChPT has the required resources and infrastructure to retain the traffic of
Iron Ore. If, for any reason, cargo does not shift from ChPT to alternate locations like
Ennore, ChPT may still be able to continue Iron Ore exports taking adequate measures
to reduce environmental hazards.
If ChPT is able to retain Iron Ore as a key commodity, it will ensure a steady profitability
for the Port in the near future. At the same time, however, due to severe space
constraints at the Port, continuance of Iron Ore may hamper other plans like setting up
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a 3rd Container Terminal, handling additional cargo like automobiles (which require
significant storage space) etc. Also, if the local citizens are not taken into confidence,
anti-port sentiments may also continue and may have adverse legal ramifications.
Worst Case Scenario All negatives materialize
This scenario presumes the following:
o
There are restrictions on iron ore exports
Poor Key Stakeholder Support
The difference between this scenario and the base case scenario is that this scenario
assumes that along with restrictions on iron ore exports, ChPT suffers from poor key
stakeholder support.
As mentioned earlier, ChPT is primarily a public sector entity and Central government
taking all major policy decisions regarding the Port. With a change in government, a
possibility that a new government will have different ideas about the Port sector than its
predecessor cannot be denied. This might mean a different attitude to development of
Ports in the country.
So far as other key stakeholders important customers are concerned, it may happen
that given the severe competition in the Port sector coupled with aggressive
marketing/services/lower tariffs provided by other ports, these customers may look to
shift to other ports if ChPT is unable to provide similar level of services.
3.2.4 Process of Formulation of Strategies

Once the base case scenario has been developed, then for developing the strategy we
have followed the following process:
1. Identification of the Business Segments: A business segment is a combination of
a product / service and its key / target customers. Based on a review of the current
business scenario, including a stakeholder analysis, the Business Segments were
identified.
2. Evaluation of Key Business Segments: After the identification of the Business
Segments the next step is to evaluate and identify from this exhaustive list the
segments that make the most business sense for ChPT. This is a strategic step, relying
significantly on the experience of ChPT senior management, the experience of the
consultants and the views of the stake holders.
The relative merits and demerits of key business segment have been discussed in
Section 5.4 of the Interim Report.
3. Proposed Strategic postures: Having considered these merits and demerits
associated with the different business segments it becomes necessary to deal with these
business opportunities strategically. We propose three different strategic postures vis-vis these segments:
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Shaping the Future: This posture reflects the overarching confidence we have
in pursuing such a business. It indicates a perception that there is very good
opportunity and that ChPT should capitalize on its strengths to make the most
of it. It implies that in these chosen business segments ChPT shall aspire to
play a leadership role and hence lead the industry. This may mean creating
capacity ahead of anticipated demand, concept selling and other aggressive
posturing in the business with a view to emerge the clear leader in that
segment.
Adapting to the Future: This posture reflects the judgment that the intensity
of pursuit or abandon depends on changing market dynamics. To not lose
opportunity in these segments, it would be necessary to have capacity to be
up and running to deliver at a relatively short notice and hence, while
maintaining a state of readiness, more importantly, a constant monitoring of
the market forces is essential. In these segments focus will be to compete
with the regular players and to be with the trend. This typically happens to be
the area where ChPT has lot of experience and capability to spot and catch
trends.
Reserving the right to Play: This posture is recommended where the level of
uncertainty is very high. It also rests in the confidence that ChPT stays ready
to increase its participation in the market if indicators look up and the haze
around some important market forces clears resulting into a clearer direction.
Thus while keeping a tab on the business dynamics, ChPT does not commit
significant investments or undertake focused projects with a view to tap the
business potential.
These postures are depicted below:
Figure 3.2-3: Strategic Postures
The table below indicates the strategic posture that ChPT should adopt vis--vis the
different business segments identified and whose merits and demerits have been
described earlier. This posturing has also been discussed with ChPT.
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Table No- 3.2-1: Business Segments vis--vis the Strategic Posture
Business Segment
No.
15.
16.
17.
18.
19.
20.
21.
22.
23.
24.
25.
26.
27.
28.
Customer
Shipping Lines
Integrators/Port
Logistic Service
providers
Shipping Lines
Shipping Lines
General Public
Cruise Facility
General Public
Marina Facility
Public Sector
Units
Public Sector /
Private Sector
Units
Integrators/Port
Logistic Service
providers
Public Sector /
Private Sector
Units
Integrators/Port
Logistic Service
providers
Multinational
National
Companies
Local Govt
Organizations
Other Ports
Liquid Cargo
(POL) Handling
Bulk Cargo (Iron
Ore) Handling
Public Sector /
Private Sector
Units
Integrators/Port
30.
Logistic Service
providers
32.
33.
Container
Handling
Container
Handling
Ship Repair
Facilities
Cruise Facility
29.
31.
Service / Product
Other Ports
Acquisition of
Minor Ports
Other Ports
Strategic Posture
Shape
Adapt to
Reserve
the
the
the Right
Future
Future
to Play
Bulk Cargo (Iron

Ore) Handling
Bulk Cargo (Coal)

Handling
Bulk Cargo (Coal)

Handling
Automobile
Handling
Desalination
facilities
Engineering
Consultancy
services
Break Bulk and
Project Cargo
Handling
Break Bulk and
Project Cargo
Handling
Marine Services
Investment
Providing BOT
services
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Summary Strategic Statement

In summary, as a strategy ChPT chooses to focus on becoming a clean port with a
focused attention on container handling, automobile exports and cruise terminal
operations. It sees itself operating in a market where more likely than not, iron ore
exports face restrictions either in view of environmental pressures or due to economic
and political reasons. So also it anticipates the coal cargo to be gradually phased out in
view of the environmental pressures on a city port and emerging alternative capacities
in the vicinity.
Having identified the business segments of the future, it recognizes the need to realign
its focus and proactively prepare for the change. However in appreciation of the fact that
current customer dependencies need to be served and the change over needs to be least
disruptive to the industry, it shall move away from such cargo operations in a phased
manner and over a period of time. While ChPT is sure that intensity of competition shall
increase, it is also confident that it has identified the appropriate business segments
where the demand supply gap is likely to be so wide that it can afford the privilege of
proactively altering its service portfolio.
In keeping with its vision of becoming a Futuristic Port with a Foresight the port
wants to change its image and undertake several strategic initiatives which will position
it as such. In view of the fact that such transformation hinges more on changes to the
way of doing things, to its approach, rather than a long list of physical infrastructure
projects alone, it shall undertake several soft initiatives like organizational reforms,
systems reengineering etc. To obtain foresight and dynamically update its understanding
of the marketplace and the changing competitive landscape, it shall formalize market
and industry research activities in its organization.
ChPT expects to become a clean port handling primarily containers and automobiles and
also operating a cruise terminal that leverages its geographical advantage of being a city
port on a potentially attractive tourist circuit. In view of the fact that it has to contend
with limited land availability, the direction of growth for its real estate has to be vertical.
Its key business decisions shall hence primarily be focused on optimum utilization of its
limited land resources.
It shall also aggressively identify opportunities and take controlling stakes in other ports
to either support the cargo it has decided to attract or to service at a different location
the cargo it is constrained to forego. In that sense it shall turn into a Strategic Landlord
Port rather than a Plain Landlord Port. It shall attempt to achieve the best performance
metrics within its peer class in terms of turn around times etc. and merit recognition as
the Port of preference for shippers and traders alike. In its endeavor to achieve these
objectives it appreciates that its people are one of its most important resource and shall
hence usher flexible human resource policies along with aggressive training especially in
customer focus and service.
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ChPT recognizes that it must have its stakeholders strongly rallying behind it to succeed
in the face of uncertain future and shall hence attempt to maintain excellent strategic
alignment with all its stake holders like key customers, the government and the local
citizens. It shall focus on relationships and where possible, not hesitate to collaborate
with its competitors, in the larger interest of the countrys trade, commerce and
industry; of which it considers itself an important integral facilitator. It thus hopes to
emerge truly as a socially responsible Futuristic Port with a Foresight.
ChPT also realizes that the manner in which the port management is structured at
present i.e. in the form of a Trust is not the most flexible ownership structure for
operating a business entity. Given the pressure of a competitive market, there is a need
to adopt a more flexible and robust management structure that can act swiftly in a
changing environment. At the same time, the Board must also have an efficient
governance structure that can oversee the appropriate utilization of public funds
invested in the port. The port management is therefore conducive to a corporate form (a
public sector company) that has a desired management and decision making autonomy
duly superimposed by adequate corporate governance and statutory legal requirements.
The port is, therefore, willing to participate in any initiative undertaken by its key
stakeholders in amending the required legislations to convert itself from a Trust to a
corporate entity.
3.2.5 Functional Strategies

These strategies are subordinate to the main Business Strategy. While the Business
Strategy addresses the larger issue of what businesses ChPT should be in, the functional
strategies are designed for ChPT to be in those businesses most effectively, efficiently
and hence successfully. These strategies attempt to articulate the functional direction
relevant in the context of the earlier established corporate direction. They also elaborate
on how in their spheres ChPT should strive to best realize its objectives. They hence
contain an identification of the functional objective, recognition of the various
alternatives considered for achieving the objective and the choice made along with its
rationale.
These strategies are developed for the base case scenario and to this narrative are
suffixed the implications of the two broad variations in the scenario the optimistic and
the pessimistic scenario. Flexibility, dynamism and adaptability are necessarily the
hallmarks of good strategies and factoring a consideration of the vagaries of future
through such scenario planning is hence an important aspect of the strategy
development.
ChPTs functional strategies are classified into three categories as under:
o
Commercial Strategy
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Port Development Strategy (further bifurcated into Infrastructure Strategy,

Institutional Strengthening Strategy, Information Technology Strategy and HR
Strategy)
Financial Strategy
COMMERCIAL STRATEGY
Commercial strategy for each of the focus Business Segments has been given below.
ChPT is expected to focus on the following key service segments:
Containerized Cargo
ChPT chooses to be a Clean Port. An analysis of the historical trends and a review of the
business climate indicates that there is a growing trend of Containerization. The traffic
forecast for containerized cargo is robust and shows a consistent growth pattern. Given
the current capacity and proposed additions expected to expand market capacity, there
will still remain significant gap between demand and supply. This under-capacity
projection gives it the basic confidence that this cargo can be focused upon with benefit.
ChPT currently has a dedicated container terminal operated by a private player under a
BOT arrangement. LOI for the second container Terminal has also been awarded. Thus it
already enjoys a lead and can capitalize on this advantage. Strategically it needs to
become an active partner with the private BOT operator in attracting more and more
container cargo to the Port and also in improving the operating efficiencies. From
sleeping / dormant partnership to strategic partnership is the key change. Such change
must add value and care should be taken that it does not become a burden rather than
an advantage to the BOT operator.
Key customer segments for this service are the Shipping Lines, the Integrators / third
party logistics services providers and the importers / importers. ChPT should focus on
developing close relationships of these three types of customers. It should come out
with special schemes like special tariffs / discounts, special facilities, waivers etc. in
the nature of quantity discounts.
Significant volume of the countrys containerized cargo emanates from the northern
hinterland through various ICDs and CFSs in UP, MP, Haryana & NCR, etc. This however
flows out of western ports. It is possible to attract this cargo for export through Chennai
especially when it is bound for Far East and China. It is however necessary to find return
cargo to reduce costs of empty rake and container movements. Key lies in identifying
imports made by this extended hinterland and structure their imports through Chennai
in a cost effective manner. This may require looking at the profitability of imports and
exports as conjoined and indivisible. ChPT may, after detail study of the import / export
dynamics, identify price and service differentiation through which it can attract and
retain this class of customers.
A calculation of per container cost of transportation from this hinterland to various
destinations through Chennai should be developed and compared with the costs
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currently incurred by the target customers. After suitable restructuring of tariffs (as
merited and if required), such comparisons should be presented by ChPT at suitable
forums and to the appropriate customers and industrial associations to wean them away
to Chennai. These efforts should be made in tandem with the BOT operators.
Since the traffic forecast for this service line is quite attractive, these measures in terms
of price reductions are conceived only to draw in more market share initially. These can
be gradually withdrawn / phased out as the customers appreciate the service, establish
their supply chains through Chennai and get hooked. Effort should be to retain these
customers with ChPT through superior servicing and customized offerings in the long
run, rather than through lower prices. Price competition would have been necessary had
forecast cargo not been sufficient. Tactical resort to price competition in response to
competitor moves should of course be undertaken. But this should be in the nature of an
aberration rather than a norm.
The potential customers operating in proximate hinterlands of other competitors should
be targeted and lured to patronize ChPT through introduction pricing and customized
service offerings.
Automobile Exports
Chennais hinterland is slated to witness handsome and consistent growth in terms of
automobile exports in view of the current and upcoming capacities. It is noticed that
automobile exports are not as lucrative and return lesser revenue per square meter of
port area occupied. ChPT has the opportunity of raising its tariff for this commodity. The
outer limits of pricing for this service need to be tested. ChPTs taking up a multi-tier car
parking facility can provide a good opportunity to escalate the tariff. Competition in this
is relatively unlikely to come, as by removing the dirty cargo, while ChPT becomes clean,
competitors absorbing this cargo servicing may become dirty and hence undesirable for
handling this cargo thus enabling ChPT to virtually monopolize this segment.
ChPT has recently entered into a MoU with Hyundai which will effectively guarantee
cargo for the next 10 years. Similar MoU should be entered into with other exporters
too. Focused marketing teams at ChPT should study customer preferences and supply
chains on a regular basis to detect any shifts in power balance as the key spirit of the
strategy for this cargo depends on such power of being a virtual monopoly.
Investments in Minor / Other Ports
In making investments in other ports an attempt should be made to pick up strategic
partnership in ports that are geographically well positioned, endowed with good drafts
and possibly good connectivity. Strategically if such ports can actually help displace the
dirty cargo from ChPT and absorb the same, ChPT may be able to retain its present
customers. However, unless such ports have definite competitive cost advantage over
other ports such customer retention may be short lived. In that circumstance, it may
make more sense to pick stakes where container handling can be focused upon so that
the experience and insights of this line of business can be leveraged. It may also be a
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good idea to partner with world class port operators to run and manage these ports. It
should be possible to transplant the experience to other business where such
partnerships dont exist, with benefit.
Such ports should be so selected as to bring otherwise excluded hinterland within ChPTs
reach and possibly divert from the clutches of competition. In order that ChPT can
manage these ports investments should preferably be in controlling stakes (e.g. 51% of
control) and not be treated as pure financial investments. ChPT should develop a strong
relationship with Tamilnadu Maritime Board and evince interest in actively promoting
minor ports by investing in them. Relationship with TMB should be that of partners in
progress a win-win for both!
An attempt can be made to identify other ports in nearby locations that enable
consolidate and coastally trans-ship such cargo to and from ChPT and thus cutting down
supply chain costs and resulting into capture of hitherto inaccessible hinterlands.
Cruise Terminal Services
To develop a flourishing cruise business will require a number of cruise liners to call on
Chennai at relatively frequent intervals. It will also require the tourism department to
take a lead and promote cruise tourism to locations around Chennai. Since the revenue
potential of this segment is more owing to non-port activities, this segment provides a
degree of diversification in the Portfolio of a port. To leverage the financial gain attached
to the promotion of this activity at the Port, the Port must take strategic stakes in the
appropriate ancillary non-port activities. Such infrastructure facilities should ideally
provide facilities like accommodation to travelers, shopping malls, multiplexes, spa and
other entertainment, secure but efficient immigration and customs clearances, money
changing, local sight seeing tours packages and possibly other water sports.
ChPT should market these facilities through getting the cruise shipping lines to start
including Chennai up on their itineraries as a port of call. Initially, to invoke interest in
this new concept, it may resort to significant tariff discounts to shipping-lines, and work
to develop tour packages jointly with travel agents and cruise liners. It will also make
sense to structure this business as a separate business unit with a focused empowered
leader. Preferably the cruise part of this may be undertaken in partnership (BOT basis
etc.) with another cruise terminal operator or a cruise shipping company or a global
travel agent, while other strategic partners may be invited to participate in the setting
up of malls, multiplexes etc.
The general public should be attracted to this through publicity and value for money
tourism experience. Advertisement and public information seminars should be organized
in the key ten cities of the country on a repeat basis at least once a quarter.
Iron Ore & Coal
These are identified as cargo requiring a non city port for handling given the
concomitant environmental implications. The strategic posture in respect of these
cargoes is to wait & watch the relevant drivers and forces dynamically and be tactical in
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benefiting from market changes. It is not required to increase the existing exposure and
hence no proactive marketing is called for. Market should be tracked and trends
observed to infer the need for any change in tactics. Coal handling, being relatively less
revenue earning than Iron Ore is likely to be discontinued a lot earlier than Iron Ore.
The base scenario assumes that exports of iron ore are likely to be restricted eventually.
In this case, no marketing efforts will be required for this segment. Even in case there
are no restrictions, in the long term it is clearly the objective to reduce dependence on
these cargoes as ChPT being the city port it is, will be constantly under pressure on
environmental issues and unless these cargoes are given away, the relationship with the
local citizens will remain adversarial..
POL & Liquid Cargo
ChPT shall track the market for any new demand likely to come up in this area and try
to attract this cargo by tailoring their service contracts to the needs of the importers and
offering the most competitive rates. This is considered to be a relatively easy service
that is not labour intensive, gives steady revenues, and while it is hazardous it is not
environment unfriendly. However this demand can grow only once in a while given the
nature of that industry and hence proactive focus is not called for.
Other Cargo
Other business segments are not expected to be key focuses and are to be dealt with
opportunistically.
PORT DEVELOPMENT STRATEGY
The port development strategy has four main components:
o
Infrastructure Strategy
Port Management Strategy
Systems and Information Technology Strategy
HR Strategy
Each of these strategies is described below:

i) Infrastructure strategy
Infrastructure strategy emphasizes upon alignment of proposed investments in the
ports infrastructure facilities with the key business segments identified under the
Business Strategy.
The Business Strategy seeks to Shape the future for containers handling, automobiles,
cruise facility and investment in minor ports. Naturally port infrastructure for these
segments would need to be of global standards and the most efficient.
Other than general and need based infrastructure development measures, no pro-active
efforts need to made for liquid cargo handling, bulk cargo handling, and ship repair
facility where a posture of Adapt the future has been recommended and for segments
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like Break-bulk cargo handling, providing consultancy services in the market place
providing marine facilities where it has been decided to Reserve the right to play
Containerized Cargo: The capacity at the Port for handling containers should be
adequate to handle maximum possible demand with global benchmarks for capacity
utilization factor. In fact, keeping in mind ChPT vision of being a port with a Foresight, it
would be preferable to create infrastructure before the demand rather than playing
catch-up with demand. With an existing container terminal in operation and another to
commence very shortly, there appears to be sufficient capacity for the time being but
there is a need to strategically decide on equipping the port with expected future
requirement and adding similar service facility.
Given the land constraints at the port, the best possible way to add capacity would be to
convert some of the existing facilities which cater to non-strategic segments and/or to
create infrastructure to handle larger cargo ships at the existing terminals. Given that
the future industry scenario assumes that there is a possibility of likely restrictions on
Iron Ore exports and this segment has been perceived to be non-strategic, converting
existing iron ore berth for container operations is proposed as an initiative.
In addition, the strategic focus on containerization also entails further deepening of
berths for increased drafts to handle future sizes of the ships likely to call at Chennai
e.g. Post Panamax.
Given the shortage of ground storage space within the Port, container storage is likely to
be a problem in future. To address this problem, there would be a need for (1) speedy
evacuation of containers from the port and (2) facilities outside the port which serve as
an extended arm of the port wherein some of the ports functions can be performed.
Quick evacuation should be achieved through efficient business processes (this point has
been addressed in Port Management Strategy) and better connectivity to hinterland.
Road connectivity to the Port, presently, is a constraint but this is expected to improve
after construction of the two proposed road connectivity projects. Efforts should be
made to ensure that these projects are completed as quickly as possible. Restructuring
the railway marshalling yard would be another step in ensuring speedier evacuation. The
road and rail connectivity projects would benefit not only the container trade but all
trade from the port and hence they assume an even higher importance.
So far as creating facilities outside the Port is concerned, the Port is already looking at
constructing an off-dock facility which should help faster evacuation.
Automobile Handling: Car export is almost expected to double in the next seven years
but the land presently being utilized for storing the same would not suffice. This
business segment would demand an enormous storage area for its safe and clean
storage. Understanding the land constraint and emerging need of land for future
expansion in container handling facilities, vertical expansion seems to be the best mode
for creating the necessary storage space. Constructing a multi-level car parking is,
therefore, proposed to cater this growing trade.
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Cruise facility: ChPT has an advantage of an operational passenger terminal already

having been set up to cater to any future such requirement. The move towards creating
a cruise terminal or upgrading the existing passenger facility into a full fledged cruise
terminal with duty free shops, restaurants etc. would facilitate ChPT in adding the leisure
business to its profile. Efforts would be required to market this facility and ensure
regular calls of cruise ships. This has been dealt with in detail in the Commercial
Strategy.
ii) Port Management Strategy
Port Development essentially happens through infrastructure creation as well as several
internal initiatives related to port operations, management of stakeholder expectations
and management of the environment. Typically, in the past, Indian ports have focused
on creating infrastructure but emphasized little on streamlining their operations, costs
and overheads. No significant attention was paid to what the society at large and its
customers perceive of the ports services and capabilities. This is also due to the fact
that till recent times, port industry has largely been a suppliers market with most of the
Major Ports being virtual monopolies in their hinterland. Therefore no need felt for such
initiatives.
The Port Management Strategy draws heavily from the overall Business Strategy of
carrying out a transformation that hinges more on changes to the manner in which port
operates its approach, rather than a big list of physical infrastructure projects alone.
Thus, the port development strategy emphasizes on areas like cost reduction,
environment management, and perceptions / expectations management etc. Key
elements of the port management strategy are outlined below:
o
In conjunction with the commercial / marketing strategy to review tariffs for

container operations and offer incentive and promotional schemes to
customers, the port development strategy focuses on better cost identification
and rationalization: In the years to come tariff level is likely to be one of the
main battlegrounds in the competitive scenario. This strategic initiative will
require projects to assess the current cost structure and to identify avenues
of cost reduction. This strategy has been appropriately dovetailed with the
Systems and IT Strategy to improve internal MIS, implement activity based
costing etc.
Being an organization with significant stakeholder influence and with likely

support from key stakeholders unlikely to be the same in the future, it will be
crucial to have measures in place to ensure that stakeholders support is
adequate to facilitate important development initiatives likely to be finalized
in the Business Plan. This is especially true in the context of hinterland
connectivity, which will be extremely crucial to maintain Chennai Ports
competitive position.
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One of the thrust areas in the overall Business strategy is to look at options
for making port related investments or take up management of operations in
any of the minor ports nearby. The Port Management will need to identify
such ports which fulfill the predetermined criteria that make such an
investment strategic.
The overall business strategy emphasizes on the concept of ChPT being a

Clean and Green Port based on core values of being conscious of the
environment obligations. This translates into several strategic initiatives that
the Port has to undertake to manage the environment and the social impact
of ports activities on the city.
The Port has a mission to be recognized as an entity conscious of its social

obligations and to act as a catalyst for sustained development of the region.
In this context it is essential that the Port takes up measures to further
community welfare. ChPT will also undertake a public relations exercise in
order to build awareness among the community about steps being taken by
Chennai Port on various fronts.
iii) Systems and Information Technology Strategy

ChPTs vision for a being a futuristic port and its mission to achieve excellence in port
operations with state-of-the-art technologies require a systems and Information
Technology strategy that demands intensive automation in all customer interface and
support functions. Whereas investments in fully automated port operations will take
some time to come, ChPT realizes that automation of all support functions is inevitable
in todays context. The core components of the Systems and Information Technology
Strategy are as follows:
Systems: ChPT recognizes the need to have robust systems and implement best-in-class
processes that can help optimum efficiencies in all business areas. This entails several
initiatives and projects such as business process re-engineering that will eliminate
unnecessary and wasteful activities, the introduction of activity based costing and
creating capacities within the organization for better financial management, budgeting
and MIS.
Applications: In the future, increased use of Information Technology tools is going to
immensely affect the efficiency of business process. Best-in-Class business processes in
ports all across the world are increasingly getting IT driven. Several initiatives have been
introduced to implement IT applications that would be required to introduce IT driven
processes at the Port. Some of these initiatives would be to take up the implementation
of the Port community system initiated by the IPA, implementation of a very efficient
customer interface CRM solution and very quickly implement the balance modules of the
ongoing ERP custom developed software and thereafter undertake a comprehensive
review of the same. Another key application implementation would be a modern day HR
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MIS which would shape an intersection in between human resource management (HRM)
and information technology.
Hardware and Networking: Key initiatives in this area would be the undertaking of
implementation of a full fledged Port security system. This would also be complemented
by the development of an IT security policy, e-security initiatives and development and
implementation of a disaster management plan. There is also a need for an appropriate
file and print server to store and access common information across the Port.
IT organization: The SWOT analysis identified some key weaknesses in this component
such as inadequate IT training, ageing staff in the same IT department age group,
stagnation and need for inducting younger people. The IT strategy recommends a higher
focus to this function by shifting the IT Department directly under the Chairman and
inducting qualified and trained IT professionals to manage and implement the entire IT
infrastructure.
iv) HR Strategy
The implementation of the Business Strategy requires that skill sets are tailored to
handle containers, cruise and automobile segments. In order to generate efficiencies
training on usage of new equipment and adoption of best business practices shall be
required. Customer relationship handling skills shall need to be imbibed at all levels.
There shall also be an induction of management expertise and if required lateral
inductions and fresh blood shall also be encouraged. Comprehensive use of information
and information technology shall need expertise in IT as well.
Many of these new businesses are expected to be PPP initiatives and in such
circumstances, while required to maintain a certain basic level of expertise and
competence in-house, it shall be even more necessary to have the skills to negotiate and
monitor implementation of these PPP contract and the obligations there under. The
organization structure shall be restructured to align it with the strategy and the
delegation of powers shall be enhanced to ensure fixation of delivery responsibility more
firmly on the concerned and to enable them to deliver.
Thus a critical strategic objective of the HR Strategy is to carry out an organizational
structural re-design that can enable introduction of best in class processes and ensure
organizational readiness for the challenging competitive environment. Another important
strategic objective is to harness the existing employee potential and attract upcoming
talent by being perceived as an Employer of Choice. To achieve the above, the HR
Strategy envisages the implementation of the following:
o
Review and redesign of the Organization structure
Centralize the HR Department with direct reporting to the Chairman instead of

from the current practice of having establishment sections in all departments
To implement robust processes in HR which would go a long way in ensuring

higher work satisfaction and consequently higher employee morale and
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commitment? This is in recognition of the fact that HR is the single most

important asset of Chennai Port and therefore, needs special attention and
secondly, in recent times, employee morale has been an area of concern for
management with skilled staff attrition in certain areas. Some of the projects
here include design and implementation of a Performance Management
System and an HRMIS Software.
o
To ascertain the current manpower position and profile of the Port and also to
find out the needs of the employees. The strategy envisages initiatives to
improve employee satisfaction and to ensure that HR practices and policies
are attractive enough for the present as well as potential employees. Some of
the projects envisaged here are continuous improvement through ongoing
training in select areas, review and improvement of promotion and
recruitment policies, bringing about improvement in Work conditions
infrastructure and review and upgrade remuneration levels
Right size the workforce with attractive retirement and placement schemes.
FINANCIAL STRATEGY
The Current Situation
ChPT is a largely self financed entity deriving its funds by reinvesting its operating
surpluses entirely in its business. Its capital base consists mostly of Reserves with just a
negligible amount in the form of Loan Funds (taken from Government of India). There is
no owners equity as the Port is not a corporatised entity. The Port maintains its funds in
the form of Reserves. The funds in these reserves are available for utilization in the form
of Investments (in Government Loans, Bonds and Securities), Fixed Deposits and Bank
Balances
Trends in these current assets over past five years indicate a steady increase in the
overall funds over the years. From around Rs.13,800 Million in 2001-02 it has increased
to over Rs.20,000 Million in 2005-06, an increase by more than 44%. This indicates the
strengthening of the financial position of ChPT over the period. Of the amount, around
Rs. 14,000 Million are committed reserves and would not be available for projects. The
balance Rs. 6,000 Million are available for utilization by ChPT.
Project Funding Requirements
The total funding requirement of the Port in the next 7 years is given below:
Table No- 3.2-2: ChPT Total Funding Requirements
Project Genesis
Client Investment Projects and Public Investment Projects
suggested by Deloitte
Organizational improvement projects suggested by Deloitte
Current Capital Works already sanctioned/planned by ChPT*
Total
Funds required
(approx)
INR 30,471 mn.
INR 200 mn.
INR 3,400 mn.
INR 33,871 mn.
* Source: ChPT Mgmt/Appendix B of 2005-06 Administrative Report
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Suggested Financial Strategy

For deciding the financial Strategy, we can split financial needs of ChPT in Four distinct
areas:
o

Financing Projects which have already been sanctioned and work on which
has begun and which do not have adequate returns or directly identifiable
returns
Using Surplus Funds

These would be projects like constructing new container terminals, conversion of Iron
Ore berth to a container terminal etc. which are cost intensive but at the same time,
have a potential to generate an income once the projects have been successfully
executed. We suggest that for these projects, the PPP route be adopted. Feasibility for
these projects has already been calculated both from the BOT operator and ChPTs point
of view. Results of the feasibility studies have been given in the project sheets at
Annexure. For Projects which are unviable based on forecasted revenues and expenses,
the following two support mechanisms have been proposed:
Viability Gap Funding: The Central Government has undertaken to fund upto 20% of
the Project Costs for those projects which are not considered financially viable based on
their likely costs and revenues.
Equity Contribution by ChPT: Contribution by ChPT has been assumed for some of
the projects to reduce the capital costs for the promoter and consequently make the
projects feasible. Equity Contribution will also help mitigate any risk and control issues
that may arise in these projects. For this purpose, equity shares could have
disproportionate voting rights to address the control issues (if need be).
Executing projects on a PPP basis will yield two benefits:
o
the inherent benefits of a PPP project as mentioned above efficiency in service

delivery, flexibility in meeting client demands, timely completion of projects
etc. will be realized. This will help improve the competitive position of the Port
and will eventually translate into a healthier bottom-line.
By not using the Ports own resources for these big projects, funds can be
made available for other projects which, while important for the Ports
development, are not expected to earn revenues on their own making them a
relatively unattractive proposition for private sector participation
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Given the number of projects to be undertaken on a PPP basis, would be essential to:
o
build capabilities among the Ports staff to execute and manage such
relationships
take help of professionals (PPP experts) in structuring the transaction, bid

process management and selecting bidders
So far as strategic investment in Minor Ports is concerned, funding would depend on

likely rate of return from the investment as compared with interest to be received if
internally accrued funds are kept idle/invested elsewhere. Given the fact that there are
no precedents in India for such investments, it is uncertain whether financial
institutions/ banks will fund such investment. Even if they do, they may require
substantial monetary commitment by ChPT. Given this scenario, such investment may
have to be funded by internal accruals. In this case, external funding/PPP should be
looked at financing the balance requirements for development of such strategic facility.
Financing Projects which have already been sanctioned and work on which has
begun and which do not have adequate returns and/or directly identifiable
returns
The decision as to whether internal accruals should be used for these projects would
depend on the likely returns (financial and/or strategic) from investment of internal
accruals in these projects as compared to returns if these funds are kept idle. Currently,
Government guidelines restrict investment of surplus funds to government securities and
fixed deposits with Public Sector banks. One alternative is for ChPT (jointly with other
ports) to request the Central Government to relax the investment restrictions so that
surplus funds can be managed/invested through a proper Treasury Management
function. However, we believe that in the near future, this restriction is unlikely to be
removed and ChPT will have to work under the present limitations. Given this scenario,
we suggest that these projects should be funded from internal accruals. The Financial
Model prepared has indicated that internal accruals in the coming years are likely to be
adequate to cater to these requirements.
For one client related project Construction of Off Dock Facility at Tondiarpet given
the market dynamics, returns calculated do not seem to be adequate enough to attract
private sector participation. In this case, to make the proposition attractive for the
private sector, it is recommended that handling costs at the Off Dock be borne by ChPT
and consequently apart from lease rentals, no other revenue share will accrue to ChPT
from this venture. However, the Off Dock facility is likely to facilitate handling or
additional containers at the Container Terminals and consequently revenue is expected
to flow indirectly to ChPT.
As mentioned in the earlier sub-heading, of the current projects planned by ChPT, major
projects include procurement of equipments like Floating Crafts, Mobile Cranes and Fork
Lift Trucks. The total budgeted acquisition cost for all these projects is nearly Rs. 3,100
Million. These equipments should be procured on lease/hire purchase to reduce upfront
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capital commitments. The possibility of outsourcing operation and maintenance of these

equipments should also be examined. Stakeholder analysis undertaken by Deloitte
indicates that Trade may be willing to own and operate some of these equipments.
Ports do not usually have working capital problems as most of the business is carried on
a cash basis. We believe that working capital position is and has been strong over the
years. The projected financial statements also give a similar picture in the years to come
and hence, working capital will not need to be financed through external sources. If
need be, however, we believe, line of credits/bridge finance would be easily available
from the institutional lenders.
Using Surplus Funds
In the later part of the next 20 years, as shown in the graph below, the Financial
Projections show that ChPT is likely to have significant surplus funds. This is because of
increased receipts by way of concession fees from BOT operators with marginal
corresponding expenditure. This would give rise to the question as to which could be
possible avenues of investing these funds. Following table gives some alternatives in this
regards:
Consolidation of stake in
Elevated Corridor and EMRIP Projects are road connectivity
Elevated Corridor and
projects which, effectively, will be the lifeline of ChPT in the
EMRIP Project SPVs
years to come. Both these projects are to be executed on a

BOT basis with a Special Purpose Vehicle (SPV) to be formed
to construct and operate the facility. ChPT has agreed to
invest in both the SPVs equity. Given the critical nature of
these facilities, it may be a wise decision to consolidate
ownership of the SPV or atleast take a majority share as this
would prevent other promoters from taking any decision
detrimental to ChPTs interest.
Land Acquisition
In the years to come, given the steady increase in cargo, it

is possible that the Elevated Corridor and EMRIP road
connectivity projects may not be able to fully cater to the
demand for connectivity. In this case, the Corridor may need
to be extended and/or expanded. Further, in order to
minimize congestion at ChPT gates, it will be preferable that
all procedural formalities happen before trucks actually enter
these two road facilities. In that case land may need to be
acquired to expand/extend to two facilities. Land, for this
purpose, may be procured by ChPT.
Investment in Minor
As mentioned before, investment in Minor Ports will be wise

decision as it would help tap traffic which cannot be met by
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Ports
ChPT due to capacity constraints.
Land Reclamation
Given the land availability constraints, one the possible (but

expensive) ways to obtain more land area is to reclaim land.
Land reclamation projects may be undertaken with available
funds in order to handle cargo which otherwise would have
to be forfeited due to space constraints
Investment in other
If apart from the above two connectivity projects, Rail
connectivity projects
connectivity and/or other Road connectivity projects are

conceptualized, ChPT should invest in these projects as it
would help increase the handling capacity at the Port.
Value Added Services
In the years to come, the trend will be to provide value

added services like Cold Storage Facilities, CFS, Logistics
Parks, RFID based tracking. While these facilities may be
constructed and operated private sector developers, ChPT
can procure land for this purpose and/or also invest equity in
SPV formed to construct and operate the facilities.
Regional Improvement
ChPT traffic ultimately depends on the economic
Projects
development in its primary and secondary hinterland. ChPT

can invest in projects which have a solid potential in
furthering the economic development of the hinterland e.g.
Special Economic Zones, Industrial Parks, Rail/Road/Air
Connectivity Projects etc.
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3.3 Select Projects including motivation

Based on the results and conclusions elaborated in various sections of Chapter-1,
several projects which were identified at Interim Stage were further evaluated in details.
Further evaluation of all those projects resulted in a fine list of select top projects
relating to infrastructure and Organization related developments.
As a whole the motivational factors for deriving and selecting the projects includes;
comparison of present and future trend in the sector, comparison of present and future
capacities for equipping the port to cater the upcoming/future sector trend effectively
and efficiently, and assessing the organization improvement related capabilities.
Detailed project sheets for all the projects listed below along with there financial
elements including financial feasibility parameters have been provided in Annexure-3.
The projects listed below also includes some of the projects which were conceptualized
by ChPT but through the analysis presented in sections above, the need of such projects
has been strategically endorsed by Deloitte.
All select top Projects along with their motivation are as under:
Table No- 3.3-1: ChPT Projects and their Motivation
Sl.
No
Projects
Project
Phase
Phase
Period
Motivation

15.
Development of
which would include;
1.5
Conversion of EQ
& SQ3 berths into
container berths,
1.6
Reclaiming land
at the area north
of sand screen,
1.7
Conversion of a
portion of coal
yard into
container storage
yard.
1.8
Conversion of a
portion of
Marshalling Yard
into container
storage cum
railway yard
Phase-1
20072012
This project is already underway

during the preparation phase of this
Business Plan. This container
terminal project was conceived by
the port 2-3 years back to augment
its container handling capacity from
the existing 0.8 Mteu to 1.7 Mteu.
The project has already been
awarded to a private container
terminal operator recently on a BOT
basis and a concession period of 30
years. The private operator is
expected to commence operation at
this terminal by the end of next two
years.
This terminal is situated in Dr
Ambedkar Dock on the east quay.
This shall provide additional
berthing face of 880 m and storage
facility of around 35 ha.
This business plan covers the
details of this container terminal in
the proposed land use plan.
16.
Peripheral Road
Development from Gate-
Phase-1
20072012
The existing container terminal,

presently being operated by CCTL,
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Sl.
No
Projects
Project
Phase
Phase
Period
1 to Gate-10 to
Motivation
is in an ideal location as it is close
to Gate No. 1. Unfortunately, the
proposed new second container
terminal located on the east side of
the port will not have the same
advantage. The present route to
ChPTs main exit gate is long and
circuitous and subject to much
traffic congestion and potential
delays to vehicular traffic. For this
reason, it is proposed that ChPT
implement the proposed road
connection to Gate No. 10 with the
proposed elevated roadway that will
serve as a direct truck only route
to the location outside of the City
limits.
17.
Developing a Flyover on
southern side of the port
connecting container
Phase-1
20072012
As indicated in item-2 above, a new

perimeter road connecting the eastside terminals to a new proposed
elevated corridor at Gate No. 10 is
required. The road connector
requires a grade-separated
overpass (flyover) spanning a
proposed Port railway yard. The
road will also allow truck passage
to/from Gate No. 1 for traffic
exiting the port in a North West
direction.
18.
Creation of New Cruise

Terminal clubbed with a
multi level car parking
facility
Phase-1
20072012
Export of cars has grown by

manifolds in the last few years.
Starting from a nil base, last three/
four years back, its surge has been
phenomenal. The potential for
further growth is enormous, with
Hyundai and Ford on expansion
spree using Chennai as the
manufacturing hub. Further
additional volumes can be expected
from Toyota-Kirloskar, Ashok
Leyland etc.
It is learnt that Hyundai Motor India
Limited (HMIL) aims to increase its
export from one third to 50% of the
cars manufactured in India. FORD
too will change gear to export in
larger numbers. A third auto-plant
of Malaysian connections is
reported to be in the process of
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Sl.
No
Projects
Project
Phase
Phase
Period
Motivation
setting up. This sector demands
clean friendly environment and will
nudge out the dirty ones.
Car export is expected to growth
with a rate of around 12%. With
this growth rate, annual automobile
traffic after a decade is expected to
grow at least three folds.
Understanding the fact that port
being a city port provides its
exclusive land for various purposes
including car storage. But in order
to cater upcoming requirement of
land for car storage, it is not
feasible for the port to augment its
ground storage area. This is the
right time to conceptualize vertical
expansion of storage capacity as a
Multi level parking facility. This will
facilitate the port to cater future
storage area requirement while
earmarking less land.
19.
Developing a Off-Dock
facility at Tondiarpet
Housing Colony
Phase-1
20072012
In addition to this facility, we also

propose to club this Multi-Level Car
Parking Facility with a Passenger/
Cruise Terminal. Though the port
already has a passenger terminal in
place, but having this facility
created along with Multi-Level Car
Parking facility will enable port to
spare some area for other revenue
generating propositions.
Average modal transportation by
rail is observed to be only around
7% for container handling.
Excessive dependence on road as a
mode for transporting containers
has resulted into the problem
relating to evacuation and
congestion. These problems with
non-existence of good road
connectivity are identified as some
of the biggest weaknesses during
SWOT analysis.
An area of around 9 ha land at the
Tondiarpet Housing Colony (THC) is
proposed as an Off-Dock facility
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Sl.
No
Projects
Project
Phase
Phase
Period
Motivation
which is adjacent to the southern
railway main line running between
Korrukupet and Attipattu. This
makes it possible to develop the
railway line inside the land
earmarked for this facility.
Another important motivational
aspect in the conceptualization of
this project is that it shall provide
additional storage area to stack
around 0.14 Mteu of containers that
too outside the port premises. With
shuttle railway service connecting
port with this facility, it would
enable port to evacuate
containerized cargo faster and
thereby also address the issue of
congestion at the port gates and
the last mile connectivity.
20.
Development of
6.5
Conversion of
JD2, JD4 & JD6
berths into
container berths,
6.6
Conversion of
balance portion of
coal yard into
container storage
yard.
6.7
Strengthening of
berthing face to
handle ships
requiring depths
of 14 m
6.8
Conversion of a
portion of
Marshalling Yard
into container
storage yard
Phase-2
20122017
By the end of Phase-2, the

targeted container volume at
the port may go upto 1.6 Mteu.
This volume shall be dealt with
existing container terminal and
second container terminal
already in offing. Total area
requirement to handle 1.6 Mteu
is estimated to be around 60 ha
which is expected to be fulfilled
by 25 ha of existing area and
additional 35 ha of second
terminal in offing. It is expected
that the targeted container
volumes at port may reach 2.5
Mteu and first & second
terminals would not be able to
accommodate this additional
volumes. This additional
container volume of 0.9 Mteu
shall require additional berthing
length and storage area.
The berthing length which shall
additionally be required to cater
this increased container volume is
around 1000 m and it poses
additional storage area requirement
of around 34 ha. Understanding
this need, another container
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Sl.
No
Projects
Project
Phase
Phase
Period
21.
Development of
21.1 Conversion of
Iron Ore berths
into container
berths,
21.2 Conversion of
back-up storage
area for iron ore
into container
storage yard.
21.3 Conversion of
existing CFSs into
container storage
yard
Phase-3
20172022
22.
Development of
broadly includes;
22.1 Conversion of
WQ1, WQ 2, WQ
3, WQ 4 & CB
berths into
container berths,
22.2 Reclamation of a
small amount of
water front on
west quay to
create additional
back-up land
22.3 Strengthening of
berthing face to
handle ships
requiring depths
of 14 m
22.4 Dismantling of
warehouses and
passenger
terminal at west
quay, Ambedkar
Dock
Phase-3
20172022
Motivation
terminal is conceptualized by
converting existing berths JD-2, JD4 and JD-6 at Jawahar Dock into a
container terminal with can provide
the berthing length of 655 m and
an additional back-up area of
around 25 ha.
The targeted cargo forecast
indicates that the three terminals
shall not be able to meet increasing
requirements after Phase-2 i.e.
year 2016-17.
As presented in section 1.4 of this
report, existing container terminal
(CCTL) together with proposed
container terminal -2 on east quay
and container terminal-3 in
Jawahar Dock shall be able to meet
the terminal requirements upto 2.5
Mteu. But it is forecasted that by
the end of Phase-3, total traffic
requirement may go upto 4.1 Mteu.
Total additional area requirement to
handle this increased capacity of
1.7 Mteu is estimated to be around
58 ha. The berthing length which
shall additionally be required to
cater this increased container
volume is around 1200 m.
Understanding this need, another
two container terminals are
conceptualized by converting
existing iron ore berth and west
quay in Ambedkar Dock into
container handling facilities as
Container Terminal -4 & 5. The shift
of iron ore facility is also envisaged
due to likely depletion in present
boom and possibility of a ban on
iron ore export due to major thrust
on requirement of iron ore for
domestic steel plants.
We also envisage the need of
higher drafts in the Phase-3 as it is
expected that ships requiring higher
drafts in the range on 15-16 m may
also arrive the port. As the present
available draft in front of iron ore
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Project
Phase
Phase
Period
Motivation
berth is around 17.4 m, this shall
be a perfect match to this future
requirement.
23.
Reclamation of Timber
pond as storage yard for
General Cargo
Phase-4
20222027
With west quay in Ambedkar Dock

proposed to be converted in to a
container handling facility, all the
general cargo shall be handled at
JD-1, JD-3, & JD-5. This may pose
additional requirement of back-up
area. It is proposed that timber
pond, currently not in appropriate
usage, can be reclaimed and used
for general cargo storage.
24.
Reclamation of Port
Basin for container
storage yard
Phase-4
20222027
With west quay in Ambedkar Dock

proposed to be converted in to a
container handling facility, it is
observed that there would be
additional need of back-up storage
land which is not available
immediately near to this proposed
terminal. Therefore, the port basin
which is located near this container
terminal can be made use of for
storage space by reclamation.
25.
Reclaiming land near

Gate no.1 to the north of
Bharathi Dock adjacent
to eastern breakwater.
Phase-4
20222027
The port trust has already proposed

reclamation of approx 60 ha of land
on eastern breakwater near fishing
harbor. The analysis of various
parameters considered for finalizing
the maximum practical container
capacity of the port indicates that
the availability of backup area for
container storage is not the only
constraint over the 20 year period.
Other parameters are also
becoming a limiting factor for
handling container volume beyond
Phase-3. Hence this proposed
reclamation of additional 60 ha of
land is proposed in last phase so
that this can be made available for
any other possible requirement
arising out of increased cargo
operations at the port.
This therefore opens up multiple
options to the port for the
utilization of this new area that can
be made available by reclamation.
One of these options is to set up an
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Project
Phase
Phase
Period
Motivation
Export Processing Zone (EPZ).
Details of exploring this possibility
are provided in section 1.6 of this
report.
Infrastructure Projects (Public Related)

26.
Ennore-Manali Road
Improvement Project
(EMRIP)
Phase-1
20072012
In view of the improving the ports

connectivity on the Eastern side,
improvement and strengthening of
major road network in Ennore and
Manali area is envisaged. This is
proposed to provide much desired
connectivity to the Port from the
national highway and also provide a
facelift to the approach roads to
the Port. Presently the traffic
movement from the Ennore
Expressway to Gate No.1 of ChPT is
through the entry to the fisheries
harbor which is very narrow and
creates traffic hold up causing
inconvenience. The road passing
through the fishing harbor should
also be upgraded under proposed
Ennore Manali Road Improvement
Project (EMRIP). The EMRIP project
has already been taken up by NHAI
through a separate special purpose
vehicle named Chennai Ennore Port
Road Company Limited. Under this
scheme, the following works will be
taken:
- Sea protection works on
Ennore Expressway.
- Widening of Ennore Express
way to 4 lane along with
service Roads on both sides
for 6.8 Km.
- Improvement and widening
of TPP road
- Strengthening of IRR and
MORR road
27.
Dedicated Elevated
Corridor on NH-4 from
Gate-10 at Port to
Maduravoyal
Phase-1
20072012
After assessing the connectivity of

Chennai city with the status of
Golden Quadrilateral and NS &EW
corridor, we can reasonably
consider that Chennai city is
expected to have better
connectivity to the National and
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Project
Phase
Phase
Period
Motivation
State highway network within a
reasonable timeframe.
But the last stretch of 15-20 kms
from North, West and South to the
Chennai Port are clogged and
regulated with traffic restrictions.
The Golden Quadrilateral shall be
connected at Poonamallee outside
Chennai city limits. It is therefore
proposed that one of the stretches
which can improve hinterland
connectivity is Poonamallee to the
Port Gate no.10. A dedicated
elevated expressway from ports
southern gate i.e. Gate No. 10 of
ChPT near the War Memorial on
Kamarajar Salai, over the EVR
Periyar High Road to Maduravoyal
leading to the NH-4 is already
proposed in NMDP program at an
estimated cost of Rs. 750 cr. This
corridor is planned as a four-lane
corridor along the Poonamallee
High Road.
28.
Connecting Off Dock

facility at Tondiarpet
Housing Colony to Port
with Shuttle Railway.
Phase-1
20072012
Although the present railway tracks

within ChPT does not adequately
serve the potential east-side
container terminals, the ultimate
removal of the existing coal yards
presents a golden opportunity for
ChPT to develop a new railway
inter-modal yard that will optimize
the use of rail transport for the
port. In fact, it is envisaged that
ChPT could implement a shuttle
railway that could quickly and
efficiently move container wagons
to an off-dock inter-modal
container yard located within 6
kilometers from the Port.
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Sl.
No
Organization
Improvement Related
Projects
Motivation
Marketing Projects
15.
Marketing Department
Capacity Building Project
16.
Customer Relationship
Management Project
17.
Market Offerings
Expansion Project
Since marketing has never been a focus area for ChPT,

this area requires a slew of organizational reform
initiatives that require the marketing function to be
institutionalized in the Port. This involves setting up a
Marketing research / operations cell, implementing a
CRM solution and a Port community system to cater to
customer care, customer profiling & segmentation, and
developing partnerships with key customers.
The projects listed under this category will address the
organizational issue of Chennai Port having less than
required market and customer driven approach. It also
addresses concerns of customers on existing tariffs. In
terms of Chennai Port expanding its operations beyond
its traditional cargo handling operations, these projects
will help identifying what other logistics services support
could be provided and whether the Port can address its
limitations of being a city based port and therefore
restricted land availability.
Systems and IT projects

18.
Restructuring of the IT
Department
Organization
19.
Process reengineering
and Improvement
Project
20.
21.
Security Enhancement
Projects
These projects are required to address specific

organizational issues such as Cumbersome business
processes and procedures, reduced work efficiencies
due to manual processes, and inadequate IT security
and capabilities to manage IT Infrastructure. A
complete change over in terms of business process reengineering is required. There is a need for renewed
focus on current Implementation of port automation
software, Implementation of IT Security systems and
enhancing the capabilities of the IT organization.
HR Projects
22.
Organization Re-design
and Right-sizing
23.
Employee Upliftment
Project
These projects address some of the critical

organizational issues related to an ageing workforce,
surplus labor, need for retaining existing and attracting
new talent, and addressing employee related problems
on remuneration and work conditions. These projects
Organizational envisage a comprehensive look at
current organizational structure & design, and structure
of the current remuneration policies, The Organizational
design also emphasizes on reduction in workforce
numbers and the need to undertake centralization of
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Final Report
24.
HR Process
Improvement Project
the HR Department & implementation of a centralized

HR MIS software that focuses on skill set requirements,
current availability and sourcing of required skill sets
through training or new recruitments.

25.
Identifying Cost
Reduction Avenues and
Implementing Cost
Reduction Measures
26.
Efficiency Improvement
Project
27.
Institutional
Strengthening Project
28.
Corporate Social
Responsibility Project
These projects address organizational issues in Financial

management relate to high operational costs, and
resultant perceived high tariffs.
Some of these projects also address other concerns
related to the lack of an internal audit function in the
Port, the need to have a stronger stakeholder
relationship management process and the need to have
an appropriate communication framework with internal
and external entities.
There is also a need to convert some of the existing
strengths into core competencies such as strengthening
the engineering function and utilizing the same to spin
off a consulting entity in the port domain.
Apart from the above Projects proposed in the Business Plan, the Port has also
envisaged several other port modernization and infrastructure enhancement projects
some of which are already sanctioned and are in various stages of Implementation.
Since these projects are already underway and meet an overall objective of creation /
maintenance of infrastructure facilities, no motivation statements have been provided.
However, these have been included in the financial projections and financial model. The
administrative report 2005-06 categorizes these projects into section-I and section-II.
The broad understanding of type of these projects is as under:
Projects in Section-I
Buildings, Sheds & Other Structures related projectso
Construction of office complex for Container terminal services - completed
Modernization and extension of Quay- completed
Development of Open storage yard behind WQ berth
Modification of iron ore Berth- completed
Wharves, Roads and Boundaries
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Ennore Manali Expressway
Floating Crafts
o
Purchase of new FC Thangem
Procurement of bullard pull tugs
Docks,Seawells, Piers Jetties & Navigational Aids

o
Extension of SQ-III berths- completed
Construction of naval berths- completed
Deepening of Ambedkar Basin and Entrance channel- completed
Construction of eastern side walls of port basin- completed
Cranes & Vehicles

o
Procurement of wharf, rope grabbing and electric cranes
Installation for water, electricity, telecommunication & firefighting

o
Improvement of oil handling facilities at Bharathi dock
Study on modernization of fire fighting system
Procurement of Marine Loading arms
Major Schemes
o
Replacement of Dredger Coleroon for Dredger Cauvery- completed
SectionII broadly covers many small port modernization related projects.

The Port has also envisaged some new projects in its Annual Plan which are at the
conceptual stage. These were evaluated by the Consultants for inclusion in this Business
Plan document. Most of these projects are in line with the overall vision and strategy
envisaged in this Business Plan and therefore finds their due mention in the client
related and public investments listed above.
The Strategy envisaged in Chapter 2.2 of this Report portrays the strategic postures that
the Port shall take up vis--vis several Business Segments in which the Port can
operate. The Strategy recommends that the Port must actively pursue those Business
Segments which have a Shaping the Future and Adapting to the future strategic
postures. The Strategy also recommends that the Port must not commit significant
investments or undertake focused projects in those Business Segments that have been
earmarked with a Reserve the Right to Play posture. In other words, the strategy
recommends that the Port adopt abundant caution in making investments in Business
Segments that have this latter posture because the level of uncertainty is very high and
there is a haze around some important market forces that prevent the identification of a
strategic direction. The Projects envisaged by the Port which have a Reserve the Right
to Play posture are listed below.
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Installation of a Windmill operated power generator
Construction of a Marina
Annexing of the existing Fishing harbor after construction of a new fishing

harbor
Development of an EPZ near fishing harbor
Development of a new Trade Convention center
These projects are therefore not evaluated in greater detail nor have they been taken
into account in the financial projections. It is however recommended that as a part of
the annual planning process, these business segments are regularly reviewed in the
future in the context of their postures and should the Port arrive at a conclusion to shift
them to the Shaping the Future and Adapting to the future strategic postures, these
projects can be taken up for implementation.
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Final Report
3.4 Plan of Action to Implement Strategy

3.4.1 Translation of strategy into projects
Strategies and plans are required to be translated into specific actions points in an
action plan. This action plan is necessary to achieve desired vision through the
continuous monitoring and produce expected business performance. After formulating
the strategies required for success, another fundamental task is to translate the strategy
into action plans that will facilitate successful implementation.
The strategy formulated in section 2.2 of this report provided us the basic input for
developing the action plan to implement the final strategy.
The strategy was formulated keeping in mind various possible business segments in
future for the port and core competencies required for pursuing those business
segments. After analyzing applicable strategic posture for various business segments
and required core competencies, strategic objectives have been identified.
For achieving these strategic objectives, they have been broken down into smaller
manageable Focus Areas (Initiatives) which would ultimately help decide the Projects to
be undertaken. For each of the objectives, the Strategic Initiatives have been given
below:
Strategic Objectives with required initiatives are identified as under:
o
Foresee future trade requirements and provide required infrastructure

facilities
Creating the Infrastructure for future trade
Ensuring Port Connectivity
Take proactive measures for being recognized as an environmentally and

socially responsible port
Taking environment conservation related initiatives
Taking Community welfare related initiatives
Attract and retain clients through a powerful customer focused approach
Know your customers
Build Market Sensing Capabilities
Collaborate with customers
Provide Value added Services
Be seen as employer of choice for upcoming talent
Current Status and Need Analysis
Enabling Best-in-class HR practices
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Final Report
The projects and related sub-projects are identified under each and every strategic
initiative and are demonstrated below:
Strategic Objective
Strategic Initiatives
Identified Projects/Subprojects
Foresee future trade requirements and provide required

infrastructure facilities
Creating the Infrastructure for future
trade
+
Augmenting Container handling

capabilities by converting facilities
being used by other cargo
commodities in to container terminals
+ Development of Container
Terminal-2 broadly includes- Conversion of EQ & SQ3
berths into container berths,
- Reclaiming land at the area
north of sand screen,
- Conversion of a big portion of
existing coal storage yard into
Terminal-3 broadly includes- Conversion of JD2, JD4 & JD6
berths into container berths,
- Strengthening of berthing face
to handle ships requiring
depths of 14 m
- Conversion of balance portion
of coal yard into container
storage yard.
- Conversion of a portion of
Marshalling Yard into container
storage yard
Terminal-4 broadly includes- Conversion of Iron Ore berth
into container berths,
- Conversion of back-up storage
area for iron ore into container
storage yard.
- Shifting existing CFSs outside
the port to create additional
Ensuring Port Connectivity

+
+
+
Ennore-Manali Road Improvement

Project (EMRIP)
+
Shore protection work along the

Ennore coast;
Four laning of the Ennore Express

way;
Improving the Tiruvottiyur

Ponneri Panjetti (TPP) Road;
Improving of MORR and Inner ring

road and
Rehabilitation and Resettlement of

Project affected families
Dedicated Elevated Corridor on NH-4

from Port to Maduravoyal
Designating personnel to ensure
quick completion of connectivity
projects
Page 137 of 185
Final Report
+
+
storage space.
Terminal-5; broadly includes- Conversion of WQ1, WQ 2, WQ
3, WQ 4 & CB berths into
container berths,
- Reclamation of a small amount
of water front on west quay to
create additional back-up land
- Strengthening of berthing face
to handle ships requiring
depths of 14 m
- Dismantling of existing
warehouses and passenger
terminal at west quay,
Ambedkar Dock
Reclamation of Timber pond for
General Cargo Storage
Creation of new cruise terminal
clubbed with a multi level car parking
facility
Peripheral Road Development from
Gate-1 to Gate-10 to Container
Terminal-2
Developing a Flyover on southern
side of the port connecting container
Reclaiming land near Gate no.1 to the
north of Bharathi Dock adjacent to
eastern breakwater.
Developing Off Dock facility at
Tondiarpet Housing Colony for
handling containers outside the port
Take proactive measures for being recognized as an

environmentally and socially responsible port
Taking environment conservation
related initiatives
+

Project
+ Developing an Environment
Management Plan
+ Periodic assessment of
Environment Impact of Chennai
Ports activities
+ Creation of Green area / belt
inside the port premises
Taking Social & Community welfare

related initiative
+

Project
+ Contribute certain portion of
capital expenditure required to
create a secondary care hospital
+ May contribute towards setting up
of vocational training school for
providing education to poor and
backward people in the immediate
vicinity of the port. This will also
help the port in meeting the
Page 138 of 185
Final Report
+
+
future requirements of skilled

technical manpower.
Promoting / Opening counseling
centre in the region
Taking up City Development
Projects like; creation of
parks/gardens, design/build traffic
junctions
Attract and retain clients through a powerful customer focused

approach
Know your customers
+
Management Project
+ Profiling and
segmenting
Customer portfolio
+ Implementing a
Client Relation
Management CRM
Solution
Institutional
+ Stakeholder
expectations
management
Introducing Best-InClass processes
Process Reengineering
and Improvement
Project
+ Reengineering
Business Process
+ Implementing Full
Scale ERP system
Employing Activity
Based Costing at the
port
Market Offering
Expansion Project
+ Comparative Study
of pricing / tariffs of
international ports
Identifying Cost
Reduction Avenues &
Implementing Cost
Reduction Measures
Build Market Sensing

Capabilities
+
Market Department
+ Formulating a
Marketing Plan
+ Restructuring the
marketing cell
+ Developing a cell
specifically for
conducting Market
Research
Collaborate with
customers
+
Improved organizational
capabilities
+
Security Enhancemant
Project
+ Port Security System
+ IT Security System
Restructuring of the IT
Department/Organizatio
n
Organization redesign
and right sizing through
restructuring and reintroduction of VRS
Market Department
+ Building an
Engineering
Research Cell
Institutional
Management Project
+ Developing
partnership with
the key customers
Market Offering
Expansion Project
+ Identifying
Comprehensive
Logistics Services
for seamless
service offerings
to the customers
Provide Value added
Services
Management Project
+ Port Community
System
Market Offering
Expansion Project
+ Simplification and
Realignment of
current tariff
structure
+ Study for
identifying
strategic
investments /
management of
cargo handling in
other Minor ports
nearby.
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Final Report
Setting up the
Internal Audit
Function
Establishing a
Consulting Entity
Be seen as employer of choice for upcoming talent

Current Status and Need Analysis
+

+ Carry out a need analysis of current
and potential future employees
Enabling Best-in-class HR
practices
+
+
Employee Initiative
+

+ Periodically analyzing working climate
at the port
+ Improving the facilities like drinking
water etc for better environment
+ Conducting Remuneration review
+ Fulfilling Training requirements of
employees

+ HR Process optimization
software
+ Establishing standard
Performance Management
System
+ Review and improvement of
Promotion and Recruitment
policies
Organization redesign
+ Centralized HR Department
To be recognized as a strong
brand

+ Establish an appropriate interdepartment Communication
Plan
3.4.2 Corporate Planning Capability

Need for establishing a corporate planning capability within the Port Trust
The Chennai Port Trust is expected to embark on a structured process of expansion and
financial and management reforms. It has adopted a fresh vision and a business plan for
the next 20 years. The achievement of this vision will require effective execution of the
business plan. Such effectiveness is achieved by breaking down the process of
implementing the long term Business Plan into Short Term Action Plans or Annual Plans.
Their progress then needs to be monitored actively.
For the short term action plans supporting the long term business plan to be realistic
they will need to be responsive to the changing times and circumstances. CHPT shall
need to develop a formal corporate planning capability within the Trust to pursue this
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Final Report
responsibility on a regular basis. The key attributes that this capability should be able to
demonstrate are:
o
Understand thoroughly the adopted business strategy, business plan and the
action plans and be committed to their realization
Understand the decision making dynamics within the CHPT
Ability to track and understand the changes to the business context and
business content
Have a comprehensive understanding of the challenges faced by CHPT
Willing to be inclusive and at the same time forceful / persuasive
Have a structured and transparent process of developing annual plans and

securing the necessary acceptance
Have a dependable mechanism for monitoring the progress towards

implementation of the business plan and receiving feedback
Have the authority and the mandate to perform these functions
Proposed Specific Actions to set up Corporate Planning Capability

In order to setup this capability at the disposal of the CHPT, it would hence appear
desirable to undertake the following steps:
o
Constitute a separate section / cell to be in-charge of this role. All the

members of the cell need not be full time dedicated to this role but at least
the core members of the section must be so dedicated.
Recruit skill sets required for the Cell and not available internally.
Through appropriate administrative orders / other suitable mechanism clarify

/ articulate the Cells mandate, key result areas and initial nominees.
Establish within the Cell a responsibility framework for data collection,

progress monitoring, analysis, forecasting, consolidating, planning/integrating
etc.
Establish systems and processes for the Cell to execute its mandate
effectively and efficiently
Develop forms, tools and methods as necessary and to ensure consistency
Fix intervals, manner and forum for review of the functioning of this Cell
In this section some of these aspects are addressed.

Organization Structure for the start-up Planning Unit
In organization structuring for this Cell one needs to consider the process of slice and
dice. Vertical slicing is to break down the over all mandate from the point of view of
functional / technical / disciplinary differentiation, whereas horizontal dicing results into
Page 141 of 185
Final Report
separating the responsibility for each segregated function by level of managerial

responsibility, degree of judgment in decision making and the abstractness or
structured-ness of the issues to be dealt with at that level.
Considering this the following start-up Organization Structure is proposed:
Corporate Planning Cell- ChPT
Level
/Section
Level
Level
Level
Level
Level
Level
Level
0
1
2
3
4
5
6
Implementation
Monitoring &
MIS
Environmental
Analysis,
Scanning &
Consolidation
Research
and Strategy
Board of Trustees
CHPT Chairman
Chief Of Corporate Planning
Head IMM
Head ESR
Head - ACS
Executive- IMM
Executive- ESR
Executive- ACS
Pooled Technical & Administrative Assistants (TAA)
Pooled Technical & Administrative Assistants (TAA)
Business
Advisory
Council
Reporting Relationships
The Business Advisory Council may be constituted of a cross section of stakeholders
including customers, industry associations, citizens councils, service providers, industry
experts and PPP partners. The Council would provide a reality check on the annual plan
and ensure that the Corporate Planning Department (especially the Environmental
Scanning and Research section) does not miss out any important development and nor
does it give imbalanced treatment to such issues. It would strictly be advisory in nature
and not have any formal authority.
At the highest level the Planning Cell would be headed by the Chairman of the CHPT exofficio. The Cell may initially be constituted of a Chief supported by three Heads of the
three technical areas namely:
o
Implementation Monitoring & MIS (IMM)
Environmental Scanning & Research (ESR)
Analysis, Consolidation & Strategy (ACS)
These Heads may each be supported by a technically competent, professionally qualified

Executive. These Executives may draw upon a pool of technical and administrative
assistants as necessary. The hierarchical designations that can be used may be drawn
from the current organization structure and the parities worked out accordingly.
Job Descriptions (for key personnel to be appointed to the unit)
1. For Chief of Corporate Planning (CCP)
Position
Reporting to
Chief Of Corporate
Planning (CCP)
Chairman
Department
Reported by
Corporate Planning
Cell CHPT
Head IMM
Head ESR
Head ACS
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Final Report
KRAs
Responsibilities
Qualifications &
Skill Sets
required
To ensure that the Annual Business Planning

requirements are fulfilled
To drive the implementation of 20 year business plan
He will be responsible for Implementation Monitoring
and MIS
He will ensure that CHPT has at its disposal all the
market intelligence that is required for it to implement
its Business Plan and Strategy
He will ensure that the information from all parts of
CHPT is correctly consolidated, analyzed and input into
the annual strategic planning process
He will guide the team in the Corporate Planning Cell
as its head and address all the knowledge and
technical guidance requirements of the cell
He will lead and be primarily responsible for generating
the annual plans to meet the requirements of CHPT
Would preferably a qualified management graduate
with Strategic Management as a specialization from a
reputed tier-1 management school
Should be thoroughly experienced in the process and
practice of strategic planning and budgeting
Should desirably (not essentially) have a transport
sector / port sector background
Should have worked at senior levels of management
for at least 15 years
2. For Head IMM

Position
Reporting to
KRAs
Responsibilities
Qualifications &
Skill Sets
required
Head IMM
Corporate Planning
Cell CHPT
Chief Of Corporate
Reported by
Executive
Planning
IMM
Monitor closely the progress of the various strategic
projects undertaken by CHPT pursuant to the Strategy
adopted and the Business Plan taken up
Follow-up for data collection and MIS on the project
implementation status on a real time basis
To assist the CCP in obtaining a regular dynamically
updated account of status of implementation of the
Business Plan projects
To follow up for collecting data / statistics and
information regarding technical, commercial and
managerial aspects of project implementation
To validate the information so received and cross check
for accuracy and consistency
To generate the standardized MIS
Any other support that the CCP requires with reference
to the working of the CHPT and its operations in
general
Should be a management graduate with around 8-10
years of middle management / hands on experience in
Systems Implementation
Department
Page 143 of 185
Final Report
Should have ERP implementation or MIS

implementation background
Preferably have Project Monitoring background
Engineer MBA would be an ideal combination
3. For Head ESR

Position
Reporting to
KRAs
Responsibilities
Qualifications &
Skill Sets
required
Head ESR
Department
Corporate Planning
Cell CHPT
Chief Of Corporate
Reported by
Executive
Planning
ESR
Monitor closely the changes to the variables impacting
the key strategic projects
Undertake focused research in the various domains of
interest for the strategic planning process at CHPT
To assist the CCP in obtaining a regular dynamically
updated account of
o Regulatory Framework of the Ports Sector
o Supply Chains of the key business segments:
Containers
Automobiles
Cruise
o Cargo analysis
o Market perception of CHPT service
To track how and when the erosion of competitive edge
occurs in cargo planned to be phased out
To study the trends in vessel sizes
To study competition and adjacent ports and their
plans / moves
To follow up for collecting data / statistics and
information regarding technical, commercial and
managerial aspects of project implementation
To remain up-to-date and apprise the CHPT
management from time to time on the status of
information technology in the ports sector
To identify futuristic business opportunities for CHPT
Should be a Transport Economist with around 8-10
Market Research
Should have been exposed to Port & Shipping Sector
Should be good at number crunching and statistical
analyses
Head ACS
Department
4. For Head ACS

Position
Reporting to
KRAs
Corporate Planning
Cell CHPT
Chief Of Corporate
Reported by
Executive
Planning
IMM
To analyze and synthesize the data obtained in respect
of CHPT internally and externally from the market
To draw intelligent inferences from the analyses and
Page 144 of 185
Final Report
Responsibilities
Qualifications &
Skill Sets
required
propose optional responses

To develop the annual plans and modify the 20-year
strategic plan as necessary in view of the annual plan
To pursue the need for adherence to strategy and
avoidance of deviation from adopted strategy during
the future annual planning process
To run the process of annual planning exercise through
the release of data collection forms and requests,
following up for collecting them and validating them
To consolidate the data obtained and perform high
level data integrity checks
To develop the draft annual plans
To develop presentations for taking up the annual
planning discussions with the Advisory Board, the
Trustees and the Chairman
To convene the planning meetings and maintaining
suitable documentation
Any other support that the CCP requires with reference
to the working of the CHPT and its operations in
general
Should be a management graduate with around 8-10
Strategic Management
Should have Planning experience
Preference may be given to candidates with Project
Management experience
5, 6 & 7 For Executive (IMM / ESR / ACS)

Position
Reporting to
KRAs
Responsibilities
Qualifications &
Skill Sets
required
Executive (IMM /
Department
Corporate Planning
ESR / ACS)
Cell CHPT
Head (IMM / ESR /
Reported by
Executive
ACS)
IMM
To assist the respective Head as required
Provide hands on support in terms of documentation,
report writing, number crunching, presentation design
and development to the head
To undertake follow up and emailing for information
collection and dissemination
Fresh MBA, Chartered Accountants, Economists
Excellent capabilities in spreadsheet applications
including macro writing, presentation development,
word documentation etc
Excellent English (written and spoken) skills
Schedule Of Activities - Initial 12 Months of Operation

We present below a start-up schedule of activities to be performed by the Corporate
Planning Cell. This list is by no means exhaustive. It would serve as the initial guide on
action and would need to be updated to build on the experience of actual execution.
Page 145 of 185
Final Report
Table No- 3.4-1: Corporate Planning Cells Schedule of Activities
No.
Activity
1.
Maintain authorized documentation of the Long

Term Plan & Vision
Maintain authorized documentation of the 7 Year
Action Plan
Maintain documentation of the Annual Plan
Obtain information and data on progress on
implementation of the Annual Plan and the 7
year action plan
Analyze the achievements under / over along
with the causes
Study the deviations and perform root cause
analysis
Meet with concerned departments to understand
their perspective on performance
Review performance on a monthly basis, identify
the bottlenecks and report
Perform a SWOT analysis on a semi-annual basis
and track perception of plan progress
Communicate internally on the Plan Progress
Undertake in-depth research on trends in the
industry
Track Competition and emergence of substitutes
in the multimodal scenario
Identify opportunities for business tie-ups,
strategic alliances, buy-outs, sell-outs etc.
Develop in-depth analyses of supply chains of
key customers touching CHPT
Analyze the key customer supply chains and
locate opportunities for value addition / service
cost efficiencies
Participate in Conferences / Seminars and build
knowledgebase on best practices
Develop concise and relevant summaries of
industry analysis & trends and circulate these to
all concerned with Planning and decision making
Participate in business planning discussions
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
22.
23.
Consolidate data from departments and develop

business estimates and forecasts bottom up
Communicate basis for forecasting and
moderation
Moderate the numbers committed by the
departments
Undertake mid-term reviews of the progress
along the annual business plan
Till a more formalized MIS becomes available,
collect manually data on plan achievement and
generate decision support reports for executing
and monitoring the plan
Section
Responsible
ACS
When
On going
ACS
On going
ACS
IMM
On going
January
IMM & ACS
January
ACS
January
IMM
On going
IMM / ACS
Every Month
IMM
ACS
ESR
Semi
Annually
On going
On going
ESR
On going
ESR
On going
ESR
On going
ESR
On going
ESR
On going
ESR
ESR
IMM / ESR/
ACS
ACS
February /
March
February
ACS
February
ACS
March
ACS / IMM
October
IMM
On going
Page 146 of 185
Final Report
The Annual Planning Process

The annual planning process will be kick started by the Corporate Planning Cell (CPC)
every year by mid-January. The CPC shall collect data on the actual achievement vis-vis the annual plan and hold a presentation to the Business Advisory Council before end
of January. This discussion will also cover sufficiently in detail the progress cumulatively
achieved till date on the Long Term Business Plan (the 20 year Plan). It will provide an
analysis of the key issues and the causes of any underachievement. These may initially
be in the nature of some quick hypothesis cursorily validated and yet to be confirmed
with detailed analysis. The CPC shall also present its market analysis and the key trends
impacting the business.
The key directions for the next years plans will emerge from this presentation in terms
of the thrust required by the existing initiatives and the need to add new initiatives for
the next year. The CPC shall then set about to validate specific market assumptions and
the initial hypothesis in terms of correcting the aberrations of the past and making a
choice of new initiatives. It will develop a comprehensive bouquet of strategically
blended initiatives and design supporting projects. It will review the 20 Year Business
Plan and pick up the parts requiring action in that year. It will develop detailed action
plans for those projects and identify the needs for project initialization and contracting.
The various initiatives so identified along with the related projects shall then be devolved
on to the Owner Departments. CPC will nominate Project Sponsors and develop the
statement of special powers required by the Project Sponsors (by default these will be
the departmental heads, but the CPC should be at liberty to nominate another individual
in consultation with the Chairman). The necessary delegation of powers for execution of
such projects shall be separately implemented and will be restricted to the execution of
those projects. The Project Sponsors shall then pursue the implementation of the
Projects.
The CPC shall mandate the reporting requirements from all projects to track and monitor
them. The CPC shall have only reporting responsibility for timely completion or meeting
of deadlines / budgets. The CPC shall only be responsible for compiling the accurate
status and updating the Chairman on a regular (monthly) basis. To this end it will
develop suitable MIS formats.
On a continuing basis and to feed the planning process the CPC shall monitor regularly
the market developments and competition moves. It shall also track the changing
stakeholder interest and update the Chairman. It shall also participate in various
seminars / conferences and keep the ChPT management updated on the latest
developments in Port Management and Technology. The CPC shall strive to ensure that
the futuristic edge and flavor required to ChPTs endeavors is actually brought in
through such thought leadership and knowledge management efforts.
Page 147 of 185
Final Report
Detailed Action Plan
In continuation to section 2.4 of this report which talks about translating strategy into projects, please find below the detailed
action plan indicating the time frame estimated tentatively for each project. The time plan below illustrated all infrastructure
and organization improvement related projects with their start and end quarters.
Infrastructure Related Projects:
2026
2025
2024
2023
2022
4th Phase
2021
2020
2019
2018
2017
3rd Phase
2016
2015
2014
2013
2012
2nd Phase
2011
2010
2009
Client Related Projects
1st Phase
2008
Project Description
2007
S. No.

1
Developing Multilevel car parking facility

clubbed with passenger cruise facility
Development of Container Terminal-3
Converting existing Iron Ore Berth to a

Container Terminal facility: Container
Terminal-4
Construction of Container Terminal 5
Converting Tondiarpet Housing colony

into an Off-Dock facility for containers
Public Related Projects

1
Ennore-Manali Road Improvement

Project (EMRIP)
Dedicated Elevated Corridor on NH-4

from Port to Maduravoyal
Page 148 of 185
Final Report
2026
2025
2024
2023
2022
4th Phase
2021
2020
2019
2018
2017
2016
3rd Phase
2015
2014
2013
2012
2nd Phase
2011
2010
2009
1st Phase
2008
Project Description
2007
S. No.
Connecting Off Dock facility at

Tondiarpet Housing Colony to Port with
Shuttle Railway
Organization Related Projects

It is learnt that almost all most of the organization improvement related projects are to be taken up in the first phase for
equipping the port for the better future. The figure depicts the year-quarter wise action plan for all such projects.
Sl. No.
07-08
Project Description
1
08-09
4
09-10
4
10-11
4
Marketing related projects

1.
Marketing Department Capacity Building Project
2.
Customer Relationship Management Project
3.
Market Offerings Expansion Project
System and IT related Projects

4.
Restructuring of the IT Department Organization
5.
Process reengineering and Improvement Project
6.
7.
Security Enhancement Projects
Page 149 of 185
Final Report
HR Projects
8.
Organization Re-design and Right-sizing
9.
10.

11.
Identifying Cost Reduction Avenues and Implementing Cost Reduction Measures
12.
Efficiency Improvement Project
13.
14.
Corporate Social Responsibility Project
Page 150 of 185
Final Report
Financial Aspects
5.1 Overview of Investments

Based on the Proposed Business Plan recommendations, the total funding requirement of
the Port in the next 20 years is given below:
Table No- 5.1-1: Total Funding Requirements
Proposed Projects
Funds required
(approx)
INR 30,471 mn.
Client Investment Projects and Public Investment Projects

suggested by Deloitte
INR 200 mn.
Organizational improvement projects suggested by Deloitte
INR 3,400 mn.
Current Capital Works planned by ChPT*
INR 33,871 mn.
Total
* Source: ChPT Mgmt/Appendix B of 2005-06 Administrative Report
Further elaboration for the funding strategy suggested to be adopted by ChPT is given in
the table below:
Overview of Investments (Rs. Million)
Table No- 5.1-2: Overview of Investments
Sr
No
Year
Description
Client Related
Investments
Govt
ChPT
BOT
Support
4
5
6
7
8
200708
200708
200708
200708
200809
200809
200910
201011
Multilevel Car
Parking and
Cruise
Terminal
Dedicated
Elevated
Corridor
Madhuravoyal
Ennore
Manali
Expressway
Various
Public Related
Investments
Govt
ChPT Support
-
1,333
200
200
38
-
508
Development
of Container
Terminal 2
Various
Organizational
Improvement
Projects
11
NA
NA
1,000
576
Various
6
-
678
Various
1,201
1
1
Page 151 of 185
Final Report
9
10
11
12
13
14
201112
201213
201718
201921
202122
202223
Various
678
Converting
Tondiarpet
Housing
colony into
an Off-Dock
container
stacking
facility
Development
of Container
Terminal 3
Development
of Container
Terminal 5
Reclamation
Iron Ore
Berth
Conversion
50
1,000
452
1,630
2,000
5,521
9,290
20
7,495
Total
9,045
1,630
22,758
238
200
19
As will be seen from the above, the BOT model has been recommended for bulk of the
major projects proposed followed by internal accrual and then other available sources.
Reasons for the same have been highlighted in the section in Financial Strategy.
It will also be observed that quite a large part of the financial commitments are taking
place in the first Phase of the Business Plan. The Financial Projections however show
that ChPTs financial position in these years will be strong enough to meet these
requirements.
5.2 Approach for Financial Projections

Approach followed for Financial Projections is given below:
Stage 1: Financial Statement Analysis
The first stage in financial forecasting was developing a basic understanding of ChPTs
Financial Statements. This was carried out in the Interim Report, wherein, as part of
ChPTs internal assessment, a detailed trend analysis was presented for ChPT financial
position and performance.
Stage 2: In Depth understanding of Financial Statement Elements
After developing the first level understanding of ChPTs financial statements and its
performance over past few years, the next step was to develop a deeper understanding
of the nature of each of the elements of ChPTs Balance Sheet and P&L Accounts. Being
a Government Sector entity, accounting policies and practices of ChPT are also different
from commercial accounting principles to a limited extent. These policies/procedures
Page 152 of 185
Final Report
were also discussed and understood. The understanding was developed through the
following methods:
o
Personal Interactions: Deloittes team members had detailed personal

interactions with senior and middle level managers in ChPTs Accounts/Finance
Department. Questionnaires were prepared and responses recorded.
Documentation: Apart from the publicly available documents like Administration

Report, financial elements were analysed through study of supporting schedules
and groupings to the financial statements, costing statements, MIS report etc.. A
product wise Cost Sheet was also developed.
Inputs from Industry Experts: for certain items, the nature of the element
was understood through interactions with industry experts within the Deloitte
team.
Stage 3: Deciding the Key Projection Drivers for each Element

After developing a sound understanding of each of the elements of ChPTs financial
Statements, Key Projection Drivers were arrived at for each of the elements. Key
Projection Drivers are the factors which will determine the forecast figures for each of
the elements. The Key Projection Drivers arrived at are given in the table below:
o
For Profit & Loss Account

Table No- 5.2-1: Profit & Loss Account Projection Drivers
Particulars
Sub - category
Port Dues
Projection Drivers
- Category wise (i.e. port dues, storage
etc.) average revenue per ton of
relevant cargo ascertained from
revenue data for past four years
Other Dues
Stevedoring Revenue
- Where the revenues are not being

charged as per the tonnage, GRT of
ships and number of ships calling
ascertained
Storage
Wharf Handling
- Rates so identified have been

adjusted for inflation. However given
the likely competitive scenario, rates
have not been just marginally.
- Rates so arrived at have been
multiplied with projected traffic for
each category to arrive at total
revenue under each revenue category
Concession Fees
Lease Rentals +
Share in revenue
- Cargo projected for existing container

terminal plus four more proposed
terminals
- Concession fees calculated based on:
Page 153 of 185
Final Report
Particulars
Sub - category
Projection Drivers
Average revenue per container to
be earned by the concessionaire
Likely Revenue Share of ChPT
Likely area of each terminal
Lease rentals as per present tariff
levels
- Revenue per container adjusted for
inflation. However given the likely
competitive scenario, rates have not
been just marginally.
Other operational
income
Finance Income
- Revenue calculated based on past

growth trends in this category.
- Interest is not included in this income
and has been shown separately in the
P&L Account
Salaries
- Number of Employees in each year

was forecasted based on assumptions
for employees expected to retire each
year, new recruits and employees
opting for VRS schemes proposed to
be introduced periodically
- Average Salary per employee in
2005-06 was ascertained the same
was increased each year during the
forecast period by an average rate.
Additional increase has been assumed
in two years where Central
Governments periodic Pay
Commission revisions are expected to
be implemented.
- Total Salary is a product of the
forecast number of employees and
average salary for each year.
Social Charges &

Pension Payments
- Contributions to retirement benefit

schemes have been made based on
recommendations in a recent
actuarial valuation report,
- Contributions have been made as a
percentage of Total Salary costs
determined earlier
- This category also includes ex-gratia
payments made to employees
assumed to opt for VRS during the
forecast period
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Final Report
Particulars
Sub - category
Running Costs
Operating
Expenses
Projection Drivers
- The starting point for forecasting
running cost was determination of
past operating cost ratios
- Maintaining these ratios, based on
forecasted revenues, operating costs
were forecasted.
- These costs were then adjusted
based on expected inflation rates
Administrative Costs
Admin & Mgmt

overheads
- Trends in administrative costs in past

few years was ascertained and
expressed as a percentage of running
costs.
- This percentage was used to forecast
administrative costs.
- The cost so arrived at was increased
depending on new BOT projects being
commissioned
Other Costs
Estate Rentals
related, Finance
expenses other
than Interest
- Estate rental expenses as a

percentage of rental revenues was
identified and the same ratio was
used for future projects.
- Other expenses were forecast based
on their respective past trends
- Expenses were also adjusted for
inflation
Depreciation
- Depreciation for assets currently with

ChPT was calculated based on
government notified rates/useful lives
for these assets.
- For assets to be procured,
depreciation has been calculated on
Straight Line Method at government
notified rates/useful lives for the
relevant category of assets.
Interest
Interest Expense
- Average rate of interest paid on loans

outstanding at present was calculated
- Interest at the rate so determined
was calculated for principal
outstanding at the beginning of each
year
- For new loans to be taken, interest
has calculated based on prevalent
Page 155 of 185
Final Report
Particulars
Sub - category
Projection Drivers
market rates.
Interest Income
- For funds invested at present,

average rate of interest earned over
past few years was calculated.
- Interest was calculated at the above
rate for general reserve funds
available with the Port at the end of
each year.
Tax
- Tax has been calculated as a

percentage of profits based on
currently prevalent tax laws
For Balance Sheet

Table No- 5.2-2: Balance Sheet Projection Drivers
Particulars
Sub category
Fixed Assets
Projection Driver
- Fixed Asset figures have been arrived
at based on assets currently with
ChPT and assets to be procured by
ChPT during the forecast period from
internal accruals and/or external
funding.
- Fixed assets have been depreciated
each year based on calculations
explained in the row for depreciation
in the table above.
Current Assets
Interest Accrued
on Investments
- The ratio of interest accrued to total

annual interest income in the past
few years was ascertained
- The ratio so arrived at was used for
projecting year-on-year balance in
accrued interest on investments
Stores Material
- Ratio of stores material to total

running costs was identified and the
same was used to project stores
inventories
- Given that bulk of the operations are
to be undertaken on BOT basis in the
forecast years, stores inventory has
been projected to decrease in the
later years of the forecast period
Sundry Debtors
- Ratio of debtors to concerned
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Final Report
Particulars
Sub category
Projection Driver
revenue categories was arrived at
and the same was used to debtors at
the end of each year
Liquid means
Loans and
Advances
- Loans granted at present, their likely

repayment and likelihood of new
loans to be granted in the forecast
period
Cash & Bank

Balances
- This represents available liquid funds

with ChPT after all expenses and
investments.
Investments
- Funds like pension, gratuity,

provident fund etc as well as general
reserve funds are invested in various
Government Securities and Fixed
Deposits.
- Of the total funds available under
each of the above heads (i.e.
pension, gratuity etc.) in past few
years, trend analysis of amounts
usually invested in the Govt
Securities/FDs was determined
- Amounts available under each of the
above heads during the forecast
years was determined after taking
into account contributions, additions
and expenses during each of the
forecast years.
- Based on recent trends determined
earlier, of the total amounts
available, specific percentage has
been assumed to be invested in Gov
Securities/FDs and are consequently
shown under this account head.
Equity
Reserves
- The Government Grants given till

date have been reclassified as Equity
Capital Reserve
- Capital Reserve is an account head

created to ascertain assets
acquired/constructed by ChPT from
internal accruals. The amount is equal
to total acquisition/construction costs
of fixed assets less outstanding loans
- Amounts in Capital Reserve have
been forecasted assuming that the
current accounting practice will
Page 157 of 185
Final Report
Particulars
Sub category
Projection Driver
continue
Revenue Reserve
- Revenue Reserve mostly consists of

General Reserve which, in turn, is
made up of net surplus after all
appropriations year-on-year.
- Other Revenue reserves are certain
specific reserves for employee
welfare, insurance etc. Current
policies for contributions to these
reserves have been assumed to
remain in force during the forecast
period.
Statutory
Reserve
- There are two statutory reserves to

which amounts have to be
appropriated by ChPT every year
- Current policies for contributions to
these reserves have been assumed to
remain in force during the forecast
period.
Provisions
Retirement
Benefits related
liabilities
- Provisions mostly consist of

contributions to retirement benefit
schemes. Contributions have been
made based on recommendations in a
recent actuarial valuation report.
- Contributions have been made as a
percentage of Total Salary costs
determined earlier
Tax provision
- Tax provision has been made based

on currently prevalent tax law
- Short term liabilities consist of mostly
of salary payable and various
miscellaneous payables.
- Given the wide multitude of payables
and also since a large part of the
payable amount consists of salary
payable, trend analysis of short term
liabilities vis--vis total salary
expenses in past few years was
conducted and short term liabilities
have been forecast based on this
trend.
Page 158 of 185
Final Report
Stage 4: Preparation of Financial Model

The Final stage in financial forecasting was preparation of the Financial Model. While
preparing the Model, the following fundamental principles were adhered to:
o
Simplicity: Given the fact that the Model is to be reviewed and further utilised
by ChPT personnel in the coming years when Deloitte may not be available to
resolve any queries that may arise and also since the concerned personnel may
not have the expertise in extremely complex Models and formulae, the Model has
been kept as simple and straight-forward as possible.
Comprehensive: The Model adheres fully to the format provided by the Central
Advisor and is, therefore, comprehensive in its coverage. Within each major
category i.e. revenues, each of the sub-elements have also be calculated and
forecasted.
Realistic: Assumptions and calculations in the Model have been sought to be as

realistic as possible to ensure future utility of the Model.
Flexible: Since the Model is to be utilised and reviewed each year by ChPT it was
very important to make the Model as flexible as possible so that effects of actual
happenings in the future years can be captured and forecast figures can be
changed in those year. The basic idea was to make modifications to the Model as
easy and convenient as possible to facilitate easier scenario analysis and
resultant decision making.
Capacity Building: The Model contains detailed instructions for review by ChPT
so ensure that ChPT is able to understand the Model calculations and functionality
and that from the next year onwards, review and consequent changes in the
Model can be carried out easily by ChPT.
5.3 Projected Financial Statements

The projected financial statements include the projected balance sheets, profit-loss
account and cash flow statements and well defined key figures. These financial
statements are an outcome of a comprehensive Financial Model which is being submitted
separately as a soft copy deliverable. In the subsequent sections we have explained the
following:
-
Key Assumptions used in preparing the Financial Model
Key Outcomes i.e. Projected Balance Sheet, Projected Profit & Loss Account and
Projected Cash Flow Statement
Analysis of Outcomes (including well defined key ratios)
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Final Report
Key Assumptions used for Building the Financial Model

A
Fixed Assets
-
The Depreciation has been provided on SLM basis based on the estimated useful
life of the assets.
The estimated useful life of the existing block of assets will not be
reviewed/changed in future.
The Estimated useful life of the new assets which has been considered for
depreciation is given below:
Asset Type
Useful Life
Capital Dredging
20
Building, Sheds & Other Structures
20
Wharves, Roads & Boundaries
20
Floating Crafts
20
Railway and Rolling Stock
20
Docks, Seawalls, Piers & Navigational Aids
20
Cranes & Vehicles
20
Plant and Machinery
20
Installation for Water, Electricity, Telecom Systems & Fire
20
Fighting
Oil Pipeline Installations
20
Ore Handling Facilities
20
Container Handling
20
Capital Work in Progress

-
Capitalisation policy will be as follows:

Capitalisation Policy
CWIP Addition of Sanctioned Projects (as per the

capital works section of the administrative report
for 2005-06)
CWIP Addition of New Projects (proposed by
Deloitte)
Capitalisation of CWIP
C
Years over which

capitalisation is
spread
5
1
1
The balance in the CWIP account as on 31.3.06 shall be capitalised in 2006-07.

Loans & Advances
Additions/Reductions in loans and advances will continue as per past years' trends.
Page 160 of 185
Final Report
Inflation & Tax Rates

Rate of Inflation
4%
Inflation rate for revenue
1%
Rate of Tax
E
33.66%
Reserves
-
The interest earned and expenditures for the General Insurance Fund, Family
Security Fund and Employees Welfare fund will continue as per past years' trends.
Interest earned for Loss in Wages Compensation funds will continue as per past
years' trends.
Fund Contributions will be as follows:

Fund
General Insurance Fund
ChPT
Contribution (Rs)
10000000 p.a.
Employee
contribution (Rs)
Not Applicable
Family Security Fund
1800000 p.a.
16 per employee
p.m.
Loss in Wages Compensation
100000 p.a.
Fund
Employee Welfare Fund
2 per employee
p.m.
37500000 in
Not Applicable
2006-07 Increasing by
4% every year
Reserve for Replacement,
520000000 p.a.
Not Applicable
520000000 p.a.
Not Applicable
Rehabilitation, Modernization of
Fixed Assets
Reserve for Development,
Repayment, Contingencies
-
Expenses from Loss in Wages Compensation Fund will be as follows:

2007-08 to 2011-12
Rs. 500000 p.a.
2012-13 to 2016-17
Rs. 1000000 p.a.
2017-18 to 2018-19
Rs. 500000 p.a.
Expenses from other Funds will continue as per past years' trends will added
outlays for inflation.
For Capital Reserve, contributions to and deduction from the reserve balance will
be based on current accounting practice
Loans
-
The amount in Rs. to be repaid every year for the existing loan is assumed to be
the same as that in 2005-06 i.e. Rs. 25055300
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Final Report
Interest on the existing loan is assumed to be @ 11%
No new loans assumed in the forecast period.
Fund Applications
-
The Fund mix in terms of Investments, Fixed Deposits and Bank Balances has been
assumed to continue as per past years' trends.
Short Term Liabilities

-
From the year of implementation of new BOT projects, Deposits/Advances to be

received assumed to be 10% of Project Costs.
The year-on-year decrease/ reduction in the Deposits/ Advances on Opening

Balance is assumed to be 5% of opening balance.
The balance of Creditors for Stores, Accrued Expenses, Misc. creditors and credit
balances will continue as per past years' trends.
Interest Income & Interest Accrued

-
The Interest received for each year and the interest accrued but not received will
continue as per past years' trends.
For calculation of Interest, it has been assumed that the General Reserve Fund
balance as on 31.3.03 is the same as the balance as on 31.3.04.
Retirement Benefits
-
The interest earned and expenditures for Pension Fund and Gratuity fund will
continue as per past years' trends.
The contributions to the Funds have been calculated as under:

Pension Fund
26.10 % of salary
Gratuity Contribution
Provident Fund Contribution
K
3.01 % of salary
6.00 % of Basic Salary & DA
The new employees shall not be eligible for Pension & Gratuity.
Miscellaneous Provisions
Miscellaneous provisions mostly consist of Salaries payable
Provisions to be calculated at 10% of Salary
Salary Costs
-
The average salary costs have been taken based on 2005-06 figures.
Year-on-year increase in the average salary costs per employee is as follows:
Page 162 of 185
Final Report
Year Ended
2007
% Increase
2008 to
2010
5
2011*
25
2012 to
2021
5
2022**
25
2023 to
2027
5
* Effect of 6th pay commission

** Effect of 7th pay commission
-
In 2006-07,number of employees as on the beginning of the year have been

assumed to retire 2 % of employees at the beginning of the year
In subsequent years, the number of employees assumed to retire 105 % of

employees retired in the previous year
Years in which Voluntary Retirement Schemes are to be introduced and number of

employees opting for VRS are:
2011-12
15% of employees at the beginning of the year
2016-17
2021-22
New employees recruited each year 10% of old employees retiring each year
New Employees retiring each year 5 % of employees at the beginning of the year
The total salary costs have been bifurcated as under:

Basic Salary
100.00
Dearness Allowance
48.00
HRA
30.00
5.00
183.00
Others
Total Salary
-
In case of opting for VRS, the retiring employees shall be paid a VRS compensation
of Rs. 500000
M
-
Equity
The Government Grants received by ChPT till date have been assumed to be the
equity of the Port and hence have been reclassified accordingly.
Concession Fees
-
Concession Fees includes only Lease Rentals and Share in Revenue of Operators.
The upfront premium which is also received in such cases has been ignored.
Assumptions for revenue calculations are as under:

See next page
Facility
Revenue
Share %
Revenue
per
TEU*
Maximum
Capacity
(TEUs)**
Land
Area
(sq
Lease
Rent#
Commencement of
operations
Page 163 of 185
Final Report
mtrs.)
Terminal 1
37.32%
2700
1100000
250600
3800
Already
commenced
Terminal 2
45%
2700
900000
350000
3800
2007-08
Terminal 3
17.50%
2700
600000
248700
3800
2017-18
Terminal 5
17.50%
2700
900000
188200
3800
2017-18
Terminal 4
20%
2700
900000
296700
3800
2022-23
0%++
1200
144000
90000
2000
2012-13
(Ore Berth
Conversion)
Off Dock
* At 2005-06 prices. This shall be adjusted by inflation.

** For Terminal 1, cargo traffic shall be handled @ 80% in the first year of
projections and then shall increase @ 10% every year. For other Terminals,
cargo traffic shall be handled @ 60% in the first year of operations and then
shall increase @ 10% every year. For the Off Dock facility, cargo traffic shall be
handled @ 50% in the first year of operations and then shall increase @ 5%
every year.
# Lease Rent p.m. per 100 sq mtrs in Rs.
++ Feasibility study and industry analysis indicates that for this Project, unless
charges are borne by ChPT and are not passed on to the customers, will
become commercially unviable. Hence it is assumed that ChPT will pay
handling charges to the BOT operator.
O
-
Administrative costs have been assumed to depend on Running costs and assumed
to continue as per past years' trends.
Debtors
-
Debtors have been assumed to depend on Revenues other than Cargo Handling
and assumed to continue as per past years' trends.
Stores
-
Stores have been assumed to depend on Running costs and assumed to continue
as per past years' trends.
Revenues
-
Traffic forecasts & GRT forecasts given by Deloittes traffic experts taken for
revenue calculations.
Wherever the revenue is charged on the basis of tonnage, the average rate per ton
has been assumed to continue as per past years' trends.
Page 164 of 185
Final Report
Where revenue is charged on a different basis like GRT of ships, the average rate
has been calculated on the basis of the rates given in the Schedule of Port Charges
and this rate has been assumed to continue in the forecast period.
Revenue per ton/per GRT assumed to increase by 1% p.a.
Exchange rate used for conversion: 1 USD = Rs. 45
Running Costs
-
Running costs have been projected based on past years' trends.
Costs assumed to increase by 4% p.a. on account of inflation.
Other Costs
-
Other costs (of soft projects - organisational improvements) have been assumed to
be apportioned equally over their expected years of incurrence.
Page 165 of 185
Final Report
Financial Model Outcomes

Projected Balance Sheet
(Rs. in millions)
Mar-07 Mar-08
Assets
Fixed Assets
Current Assets
Investments
Liquid Means
Mar-09
Mar-10
Mar-11
Mar-12
Mar-13
Mar-17
Mar-22
Mar-27
Total Assets
6020
5316
21834
498
33668
7601
6451
21226
450
35728
7863
6483
23039
510
37896
8595
6569
24516
554
40235
8776
6983
27003
639
43401
8293
7120
29289
720
45423
7814
7269
32749
851
48684
5958
9097
49196
1497
65748
3878
12334
73640
2500
92352
2129
14241
109783
4077
130229
Equity & Liabilities

Equity
Reserves
Total Own Equity
Provisions
Long term loans
Total Equity & Liabilities
237
16290
16527
14561
186
2393
33668
237
17617
17854
15223
161
2489
35728
237
19031
19268
15905
136
2586
37896
237
20574
20812
16606
111
2705
40235
237
22519
22757
17448
86
3110
43401
237
24208
24445
18042
61
2875
45423
237
26338
26576
18817
36
3255
48684
237
37635
37872
21746
0
6129
65748
237
59360
59597
25052
0
7703
92352
237
93080
93317
27222
0
9690
130229
Page 166 of 185
Final Report
Projected Profit & Loss Account

(Rs. in millions)
Mar-07
Mar-08
Revenue
Port Dues
Other Dues
Stevedoring Revenue
Storage
Wharf Handling
Concession Fees
1423
601
315
214
1278
1011
1534
649
332
225
1340
1134
1656
698
349
237
1406
1260
1794
714
368
250
1469
1272
1926
899
389
264
1533
2136
1845
903
297
202
1292
2273
1946
909
281
191
1257
2436
2457
1017
299
204
1336
2779
3245
1057
166
114
786
3386
4248
1448
142
98
794
4052
4842
5213
5607
5867
7147
6811
7020
8092
8753
10782
Expenses
Salaries
Social Charges & Pension Payments
Running Costs
Other Costs
1727
502
561
421
0
3210
1778
515
617
463
108
3482
1828
529
680
511
58
3605
1876
542
741
555
10
3723
2288
659
845
643
10
4445
2078
1156
811
620
0
4666
2111
596
945
719
0
4371
1979
950
1263
955
0
5147
1989
764
1611
1216
0
5579
1022
190
2325
1743
0
5280
Operational Net Earnings before

Depreciation, Interest & Tax
1632
1731
2001
2143
2702
2145
2650
2945
3174
5501
297
392
416
469
498
483
479
452
417
304
1335
533
1339
676
1585
554
1674
655
2204
722
1663
870
2171
1021
2493
2180
2757
3998
5197
6728
23
21
18
15
12
1845
1995
2122
2314
2914
2523
3185
4673
6755
11925
621
672
714
779
981
849
1072
1573
2274
4014
1224
1324
1408
1535
1933
1674
2113
3100
4481
7911
25
49
25
51
25
52
25
54
25
56
25
58
25
59
0
67
0
79
0
94
520
520
520
520
520
520
520
520
520
520
520
520
520
520
520
520
520
520
520
520
110
208
290
416
812
551
989
1993
3362
6777
Depreciation
Net Earnings before Interest & Tax
Interest Income
Interest Expense
Tax
Net Earnings
Mar-09
Mar-10 Mar-11 Mar-12 Mar-13 Mar-17 Mar-22 Mar-27
APPROPRIATIONS
Loan Repayments
Contributions to Employee Welfare Schemes
rehabilitation, modernisation of Fixed
Assets
Contribution to Reserve for Development,
repayment of loans & contingencies
Balance transferred to General Reserve
Page 167 of 185
Final Report
Projected Cash Flow Statement

(Rs. in millions)
Mar-07
Source of Funds
Net Earnings
Increase in Dedicated Reserves/Funds
Depreciation
Cash Flow
Loans
Total Source of funds
Use of Funds
Asset acquisition
Investments
Increase in Working Capital (see note 1)
Repayment of Loans
Total Use of Funds
Mar-08
Mar-09
Mar-10
Mar-11
Mar-12
Mar-13
Mar-17
Mar-22
Mar-27
1,175
692
297
2,164
1,273
717
392
2,381
1,355
741
416
2,512
1,481
764
469
2,714
1,877
909
498
3,284
1,616
666
483
2,765
2,054
852
479
3,385
3,033
670
452
4,154
4,402
757
417
5,575
7,817
443
304
8,565
2,164
2,381
2,512
2,714
3,284
2,765
3,385
4,154
5,575
8,565
508
1,827
(407)
25
1,953
1,973
77
355
25
2,429
678
675
1,073
25
2,452
1,201
598
845
25
2,670
678
891
1,604
25
3,199
761
1,899
25
2,684
1,106
2,122
25
3,254
904
3,139
0
4,042
20
1,404
3,932
5,355
2,071
6,125
8,196
Balance Flow of Funds (see note 2)
211
(48)
60
44
85
81
131
112
220
369
Liquid Means Opening Balance

Liquid Means Closing Balance
Increase / (Decrease) Liquid Means
287
498
211
498
450
(48)
450
510
60
510
554
44
554
639
85
639
720
81
720
851
131
1,337
1,449
112
2,291
2,496
205
3,700
4,068
369
Page 168 of 185
Final Report
Detailed Outcome Analysis

Balance Sheet - Assets
Overview of Assets
120000
Rs. in Millions
100000
80000
60000
40000
20000
0
2007
2012
2017
2022
2027
Year
Fixed Assets
Current Assets
Investments
Liquid Means
The above graph shows the total picture of the assets of ChPT over the projection
period. Investments show a very high increase and form more than 80% of the total
assets as on 2026-27. Current Assets and Liquid Means also show a steady increase
throughout the 20 year period. Fixed Assets (net block) shows a steady fall in the latter
years as no significant capitalizations are projected. Detailed analysis of each item has
been done below.
Fixed Assets
Fixed Assets
Overview of Fixed Assets
projections show an
increase in the
10000
2010-11. These
represent the
capitalization of
existing projects in
pipeline and also the
Rs in million
period of 2006-07 to
8000
6000
4000
2000
0
2007
2012
2017
2022
2027
capitalization of the
costs towards the
Multilevel Car
Year
Fixed Assets
Parking. After 201011 no significant capitalization has been projected (just some small projects which are
not material enough to increase the net block) as all the other proposed projects have
Page 169 of 185
Final Report
been stated to be undertaken on BOT basis and hence the operators shall be responsible
for incurring the costs.
Current Assets
Current Assets
consist of Loans &
Overview of Current Assets
Advances, Stores,
16000
Accrued income. The
14000
two steep rises in

the adjacent graph
represent the equity
contribution to BOT
Rs. in m illio n
Debtors and Interest
12000
10000
8000
6000
4000
operators amounting
2007
to Rs.1000 million in
2012
2016-17 and
2017
2022
2027
Year
Rs.2000 million in
Current Assets
2020-21. Other
items such as debtors have been projected to show a steady increase, while stores have
been projected to show a significant fall over the projected period due to the increased
operations on BOT basis.
Investments
Investments
Overview of Investm ents
constitute of more
120000
total assets as on
100000
80000
2026-27 and consist

of long term
investments and
fixed deposits. They
increase from
Rs.21,834 million in
Rs. in million
than 80% of the
60000
40000
20000
0
2007
2012
2017
2022
2027
Years
2006-07 to
Rs.1,09,783 million
Investments
in 2026-27. This significant rise is on account of high surplus generated by the port each
year which in turn are invested. Although investments are maintained for both general
purposes as well as specific purposes (like pension fund, etc), the increase is mainly
observed in the general funds. This is because a large part of the operations of the port
are stated to be undertaken on BOT basis and hence no significant amounts are needed
for capital assets. This can be evidently seen from the second graph given below where
general reserve funds increase from 34% to 74% over the projection period.
Page 170 of 185
Final Report
Total Re le vant Fund Balance s
%Composition
100%
80%
60%
40%
20%
0%
2007
2012
2017
2022
2027
Ye ar
General Reserve
Pension Fund
Provident Fund
Gratuity Fund
Other Funds
Liquid Means
Liquid Means
Overview of Liquid Means
consist of mainly
5000
These balances
4000
have been
projected to show
a steady increase
over the projection
period. These
Rs. in million
Bank Balances.
3000
2000
1000
0
2007
2012
2017
2022
2027
Year
funds are stated to

be used for
Liquid Means
working capital
requirements. They show an increase from Rs.498 million in 2006-07 to Rs.4077 million
in 2026-27. Like investments, the high surplus each year is the key contributor to its
rise.
Page 171 of 185
Final Report
Balance Sheet - Liabilities

Overview of Liabilities
100000
90000
80000
Rs. in Million
70000
60000
50000
40000
30000
20000
10000
0
2007
2012
2017
2022
2027
Year
Equity
Reserves
Provisions
Long term loans
The above graph shows the total picture of the equity and liabilities of ChPT over the
projection period. As evident reserves show a significant rise and constitute more than
70% of the total equity/liabilities. Provisions also show a steady rise on account of the
increase in the retirement benefit liabilities. While equity remains constant throughout
the 20 year period, long term loans have been projected to gradually reduce. Short term
liabilities show some rise in the latter years. A more detailed analysis of each item has
been done below.
Equity
Equity of the port
Overview of Equity
remains stagnant
at Rs.237 million
250
projection period.
No contributions
are expected to
be made towards
the equity of the
port. This is
Rs. in million
throughout the
200
2007
2012
because the port
2017
2022
2027
Years
is expected to
fund its
Equity
requirments
through a mix of internal sources and PPP.
Page 172 of 185
Final Report
Reserves
As mentioned
Overview of Reserves
earlier, reserves
100000
than 70% of the
80000
total equity/
liabilities of the
port by the end of
Rs. in million
constitutes more
the projection
60000
40000
20000
0
period. Substantial
2007
increase in the
2012
2017
2022
2027
2022
2027
Year
reserves can be
Reserves
observed on
account of the
significant rise in
% Composition of Reserves
the revenue
Reserves increase
from Rs.3,892
million in 2006-07
to Rs.55,146
million in 2026-27.
This rise is
100%
% Composition
balances. Revenue
80%
60%
40%
20%
0%
2007
surplus which are
2017
Year
attributable to the
high amounts of
2012
Capital Reserve
Statutory Reserve
Revenue Reserve
generated by the port each year and which get transferred to the revenue reserve. The
rise is steeper after 2016-17 as three container terminals to be set up on BOT basis
commence their operations during this period. The second graph evidently shows this.
This reduction in the balance of the revenue reserves in the initial 5 years is on account
of the funding of the assets from it.
Other reserves such as capital reserve has been projected to remain stable after 201516 as the loans are expected to be fully repaid and no significant fixed asset
capitalizations are projected. Statutory reserves show a steady rise as yearly
contributions have been projected to be made to these reserves under statutory
obligations. Its balance increases from Rs.4,111 million in 2006-07 to Rs.24,911 million
in 2026-27.
Page 173 of 185
Final Report
Provisions
Provisions largely
Overview of Provisions
consist of retirement
benefits related
30000
an increase from
2006-07 to
2026-27. This is
Rs. in million
liabilities and show
25000
20000
15000
10000
2007
largely on account of
2012
2017
2022
2027
Year
the increase in the

pension fund
Provisions
liabilities which
increase from Rs.12,949 million to Rs.26,167 million in the projection period. This is
because with the increase in the number of existing employees retiring over the
projection period, this balance is bound to increase as the existing employees are
eligible for pension. Other benefits such as provident fund and gratuity show a fall over
the 20 year period as there is a significant fall in the number of employees.
Long Term Loans
No additional funding
from loans has been
Overview Long term loans
projected for the port.

250
Hence the current loan

be repaid by the year
2014-15. After that
most projects have
been envisaged to be
undertaken on PPP
basis, any equity
contribution/ loans if
200
Rs.in million
has been projected to
150
100
50
0
2007
2012
2017
2022
2027
Year
Long term loans
required has been

assumed to be made by the port out of its own internal sources. Hence the port is not
expected to have any borrowed funds after the year 2014-15.
Page 174 of 185
Final Report
Short Term Liabilities

Short term liabilities
Overview of Short term Liabilities
show a rising trend

12000
projection period with
10000
significantly steep
rises in 2015-16 and
2020-21. This is on
Rs in million
throughout the
account of projected
8000
6000
4000
2000
0
deposits expected to
2007
2012
2017
be received from BOT
2022
2027
Year
operators to the tune
of Rs.1027 million in
2015-16 and Rs.2141 million in 2020-21. Other major contributor to the increase in the
short term liabilities is the tax provision which shows an increase with the increase in
profits each year.
Profit and Loss Account

Overview of Profit & Loss Account
14000
Rs. in Million
12000
10000
8000
6000
4000
2000
0
2007
2012
2017
Year
2022
Operational Net Earnings before Depreciation, Interest & Tax
2027
Net Earnings
The above graph gives the overall picture of the profitability of the port over the
projection period. As evident the operating revenues show an increasing trend, while the
related operating expenses are comparatively constant and actually decline towards the
last 5 years of the projection period. Hence, the net operating profits which largely show
an increasing trend show a significant rise after the year 2022-23. As a significant
amount is expected to available in the form of investments, interest income will further
contribute to increase the profits. This is evident as the earnings before tax show a
significant rise throughout the 20 year period and eventually rise above the operating
Page 175 of 185
Final Report
revenue figures. Net earnings grow more or less in the same lines as the earnings before
tax. A more detailed analysis of the revenues and expenses has been given below.
Profit and Loss Account - Revenues

% Com pos ition of Re ve nue
%Composition
100%
80%
60%
40%
20%
0%
2007
2012
2017
2022
2027
Ye ar
Port Dues
Other Dues
Stevedoring Revenue
Storage
Wharf Handling
Concession Fees
This chart shows the % composition of revenues and is followed by the Detailed analysis
of each revenue stream is given below.
Port Dues
Port dues largely
Ove rvie w of Port Due s
show an increasing
4500
2011-12 and 2021-
4000
23 period. These
reductions are on
account of the
Rs in million
trend except in
3500
3000
2500
2000
1500
1000
decrease in the
2007
general cargo traffic
2012
2017
2022
2027
Year
in 2011-12 and the

Port Dues
gradual reduction in
the iron ore traffic
prior to the conversion of iron ore berth into a container terminal in the year 2022-23.
Port dues are expected to increase after 2022-23 with commencement of operations at 2
container terminals.
Overview of Other Dues
Other Dues
1600
On the lines of Port

too show a very high
rising trend with
1400
Rs in million
Dues, Other Dues
1200
1000
800
substantial rises in
600
2010-11, 2017-18
400
and 2022-23. In
2007
2012
2017
2022
2027
Ye ar
Other Dues
Page 176 of 185
Final Report
each case the rise is on account of the increase in container traffic on account of the
commencement of operations of a new container terminal (i.e. Container terminal No.2
in 2010-11, Container terminal No.3 in 2017-18 and Container terminal No. 4 & 5 in
2022-23).
Stevedoring Revenue
Stevedoring revenue is
Overview of Steve doring Reve nue
largely dependant on
500
coal and general
400
Rs in million
the tonnage of iron,

cargo. Since there is a
substantial reduction
300
200
100
of general cargo traffic
in 2011-12 there is an
2007
2012
2017
2022
2027
Year
evident reduction in
this revenue. Also
Stevedoring Revenue
after year 2018-19 the

iron ore traffic gradually phases out and hence there is a constant decrease in the
stevedoring revenue over this period.
Overview of Storage
Storage Revenue
Storage fees can be
300
commodities like
containers, iron ore
and general cargo.
Hence it shall also
show the same trend
as stevedoring
revenue and the
Rs in million
attributable to
250
200
150
100
50
2007
2012
2017
2022
2027
Ye ar
Storage
reasons for its

reduction will remain the same as those explained in the above case.
Page 177 of 185
Final Report
Wharf Handling Revenue

Wharf Handling revenue show a largely decreasing trend. Significant fall can be seen in
2011-12. This is on
Overview of Wharf Handling
account of the
1600
general cargo traffic.
1400
A further reduction
can be seen in the
period of 2018-
Rs in million
reduction in the
1200
1000
800
2022-23. This is on
600
account of the
2007
2012
phased reduction of
2017
2022
2027
Years
the iron ore traffic.
Wharf Handling
The increase after

that year is due to the increase in the container traffic and marginally on account of
general inflation.
Concession Fees
Concession fees
show a very
Overview of Concession Fees
substantial increase
period. This is
obvious considering
the strategy of the
port of conduct most
of its projects on
BOT basis, which
leads to concession
revenue in the form
Rs in million
over the 20 year
4500
4000
3500
3000
2500
2000
1500
1000
500
0
2007
2012
2017
2022
2027
Year
Concession Fees
of share in revenue
and lease rentals. The share of concession fees to in the total revenue also rises from
around 21% to 38% over the projection period due to this reason. The 3 significant rises
in the years 2010-11, 2017-18 and 2022-23 are on account of the commencement of
operations of new container terminals during these years.
Page 178 of 185
Final Report
Profit and Loss Account - Expenses

The below chart shows the % composition of expenses and is followed below by the
detailed analysis of each major expense.
% Composition of Expenses
% Comoposition
100%
80%
60%
40%
20%
0%
2007
2012
2017
2022
2027
Year
Salaries
Running Costs
Other Costs

Salaries
Although the salaries
Overview of Salaries
show an initially
increasing trend,
2500
number of
employees from
8510 in the
beginning of 2007 to
Rs in m illiion
with the reduction of

2000
1500
1000
just 1316 at the end

of the 20 year
period, it is bound to
show a significant
reduction. The steep
500
2007
2012
2017
2022
2027
Year
Salaries
fall in 2011-12 is on
account of a substantial reduction of employees due to VRS. A similar trend can be
observed in 2016-17 where a second VRS is proposed. Also projected is a 25% rise in
the average salary cost in 2010-11 and 2021-22. This is assuming implementation of
Central Governments Pay Commission Recommendations in these years.
Page 179 of 185
Final Report
Social Charges and Pension Payments

These expenses
Overview of Social Charges & Pension Paym ents
show a steady
1400
of the contributions
1200
to the pension and
1000
gratuity fund, which

in turn are linked
Rs in million
decrease on account
with salary. However
800
600
400
200
0
the significant
2007
increase in the 3
2012
2017
2022
2027
Year
years is on account
of the payment of
the VRS
compensations to the employees opting for the said scheme.
Running Costs
The running costs
Overview of Running Costs
show an increasing
trend throughout the
2500
contribution to the
total operating
expenses increases
Rs in million
projection period. Its
2000
1500
1000
from 17% to 44%

over the 20 years.
500
This rise is mostly on
2007
2012
2017
2022
2027
Year
account of the
increase in the port
Running Costs
and dock activities,

which constitute more than half of the running costs and coupled with inflationary
pressures. Also contributing to its increase are the running expenses to be paid to the
Off Dock Facility at Tondiarpet.
Page 180 of 185
Final Report
The administrative
Overview of Adm inistrative Costs
costs show a very

2000
throughout the 20
1800
1600
Rs in million
significant rise
year period. This is
obvious as with the
increase operations
1400
1200
1000
800
600
400
of the project on
BOT basis, there will
2007
2012
be a corresponding
2017
2022
2027
Years
effect on the
increase
administrative work to be done by the port. This is validated by the fact that the share
of administrative costs in the total operating costs increase from a mere 13% to 33% in
the 20 years.
Other Costs
The other costs
represent the costs
Overview of Other Costs
towards the
120
improvements like
100
Information
Technology and
Human Resource
based projects.
These are
supposed to be one
time improvement
Rs in million
organizational
80
60
40
20
0
2007
costs and are not

expected to be
2012
2017
2022
2027
Year
Other Costs
incurred
repetitively over the forecast period.
Page 181 of 185
Final Report
Analysis of Well Defined Key Ratios (Ratio Analysis)

Some of the key ratios have been analyzed and interpreted in this section.
Debt to Asset Ratio
Also known as Debt Asset
Debt to Asset Ratio
Ratio, it measures the
0.5500
extent to which the
0.5000
acquisition of assets has
0.4500
been financed by creditors.
0.4000
The ratio is calculated by
0.3500
dividing total Liabilities with
0.3000
Fixed + Current Assets.
0.2500
27
26
20
20
24
23
25
20
20
20
21
20
19
18
22
20
20
20
20
16
17
20
20
20
14
13
15
20
20
20
11
10
12
20
20
20
08
09
20
07
0.2000
20
Assets esp. investments
20
Given the steady rise in
Ye ar
with no corresponding
debt/other liabilities, this ratio is seen to be steadily declining over the forecast period.
Current Ratio
Current Ratio determines
the working capital position
Current Ratio
3.0000
of a firm. In the earlier

years, since ChPT is
2.5000
expected to have higher

amount of stores etc. with
no advances etc. received,
2.0000
1.5000
Current Ratio is quite high.

In the later years, however,
1.0000
current ratio had declined

due to a dual effect of
reduces stores (due to
0.5000
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027
Year
increased BOT operations) and high level of forecasted advances from BOT operators.
Nonetheless, Current Ratio is still expected to be at a healthy 1.5 times in the later
years.
Page 182 of 185
Final Report
Fixed Asset Utilisation Ratio

Calculated by dividing total
operating revenues by Fixed
Assets in books, this ratio
presents how well assets of
an entity are being utilised.
Fixed Asset Utilization Ratio

5.0000
4.5000
4.0000
3.5000
Given the fact that most of
3.0000
the operations are slated to
2.5000
be undertaken on a BOT with
2.0000
1.5000
1.0000
shown in the BOT operators
0.5000
accounts, the ratio shows a
0.0000
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
20
17
20
18
20
19
20
20
20
21
20
22
20
23
20
24
20
25
20
26
20
27
assets consequently being
substantial rise in the
Year
forecast period.
The total Asset utilisation
Asset Utilization Ratio
ratio, however, shows a
0.1700
steady decline as
0.1600
investments accumulate over
0.1500
the forecast period and
0.1400
revenue, of course, does not

rise in the same proportion.
0.1300
0.1200
0.1100
The occasional surge in the
0.1000
ratio is because of the fact
0.0900
that in these years, ChPT
0.0800
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027
Year
has been forecasted to
provide equity/loan contributions to new BOT projects being constructed in these years.
Return on Total Assets
Return on Total Assets is
derived by dividing Profit
Return on Total Assets

7.00%
from Operations by average

Total Assets during the
6.50%
year. While the graph shows
6.00%
fluctuations, on an overall
basis, the returns has been
5.50%
5.00%
26
27
20
20
24
23
22
21
20
25
20
20
20
20
20
20
18
19
20
16
15
14
13
12
11
10
09
17
20
20
20
20
20
20
20
20
20
years, the growth in
20
4.00%
20
2022 is because in these
07
4.50%
20
drop in the years 2019 to
08
between 4.5% to 6.5%. The
Year
revenue is expected to slow
Page 183 of 185
Final Report
down but assets (esp. investments) are expected to grow year-on-year. From 2023
onwards, with the addition of two Container Terminals, revenue are forecast to rise
again.
Net Profit Margin
Net Profit Margin shows a
steady rise reflecting the fact
that operations are being
undertaken increasingly on a
BOT Basis wherein revenue
rise but there is no
corresponding rise in
expenses. The slight dip in
margins in a few years is due
to ex-gratia payments to
Net Profit Margin

80.00%
70.00%
60.00%
50.00%
40.00%
30.00%
employees opting for VRS in

these years.
20.00%
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027
Year
Concession Fees as a percentage of Operating Revenue

Concession fees as a
percentage of Operating
Revenues show a steep rise in
Concession Fees as a % to Operating Revenue

50.00%
those years where new BOT

Projects are being
commissioned i.e. in 2009-
45.00%
40.00%
10, 2017-18 and 2022-23. In
comparatively higher rate
26
25
24
23
27
20
20
20
20
20
21
20
19
18
22
20
20
20
20
16
17
20
20
20
14
13
12
11
10
15
20
20
20
20
20
20
08
projected to rise at a
20.00%
09
other similar Ports dues are
25.00%
20
Charges, Stevedoring charges
07
percentage declines as Marine
30.00%
20
these, however, the
35.00%
20
the years subsequent to
Year
than the rate at which

revenues from concession fees is expected to rise in these years.
Page 184 of 185
Final Report
Revenue per Employee

Given the fact the
Revenue per Employee
employee strength is
9.0000
gradually expected to
8.0000
7.0000
revenue, revenue per
6.0000
employee is expected to
rise during the forecast
period.
Rs. in Million
decrease with a rise in
5.0000
4.0000
3.0000
2.0000
1.0000
0.0000
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027
Year
Page 185 of 185

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Business Plan for Chennai Port Trust

Above and beyond

EXECUTIVE SUMMARY ........................................................................................................ 7

MAJOR RESULTS AND CONCLUSIONS........................................................................... 24

PORT DESCRIPTION ................................................................................................................ 24

BUSINESS PLAN ELEMENTS .............................................................................................. 96

DEVELOPING THE VISION AND MISSION ............................................................................... 99

TRANSLATION OF STRATEGY INTO PROJECTS ..................................................................... 136

DETAILED ACTION PLAN................................................................................................. 148

FINANCIAL ASPECTS......................................................................................................... 151

OVERVIEW OF INVESTMENTS .............................................................................................. 151

Analysis, Consolidation and Strategy

Multi Trailer System

Demand Forecast Multiple

Fine tuning by qualitative

It does not impact our strategic conclusion

Targeted Traffic ChPT (in Mtpa)

it does not impact our strategic conclusion

Targeted Traffic ChPT (in Mtpa)

Demand Forecast in Mtpa

Targeted ChPT Traffic (in Mtpa)

Demand Forecast in Mtpa

Likely share for Ennore Port

Targeted ChPT Traffic (in Mtpa)

Targeted ChPT Traffic (in

Demand Forecast in numbers

Targeted ChPT Traffic (in numbers)

Containers (in Mteu )

Coal (in Mtpa)

Passengers (in Nos.)

POL (in Mtpa)

General Cargo (in Mtpa)

Ground Storage Area,

Requirement of berth length,

No. of vessel and their sizes

2007-12 2012-17 2017-22 2022-27

No. of Containers (in Mteu )

No. of Berths Required

Total berth length required

No. of Berths required*

No. of Berths Available

*Average berth length considered as 275.0 m

Infrastructure Projects (Client Related)

Development of Container Terminal-2; which would include;

Peripheral Road Development from Gate-1 to Gate-10 to Container Terminal-2

Developing a Flyover on southern side of the port connecting container

Developing a Off-Dock facility at Tondiarpet Housing Colony

Development of Container Terminal-3; which would include;

Infrastructure Projects (Client Related)

Strengthening of berthing face to handle ships requiring depths of 14 m

Development of Container Terminal-4; which would include;

Development of Container Terminal-5; broadly includes;

Reclamation of Timber pond as storage yard for General Cargo

Reclamation of Port Basin for container storage yard

Ennore-Manali Road Improvement Project (EMRIP)

Dedicated Elevated Corridor on NH-4 from Gate-10 at Port to Maduravoyal

Connecting Off Dock facility at Tondiarpet to Port with Shuttle Railway.

Organization Improvement Related Projects

Marketing Department Capacity Building Project

Customer Relationship Management Project

Market Offerings Expansion Project

System and IT related Projects

Restructuring of the IT Department Organization