ICTSI ends India port contract
Businessman Enrique Razon Jr.’s International Container Terminal Services Inc. (ICTSI) is ending a port-management deal in Tamil Nadu, India, that it bagged in 2011, saying the contract “isolated” it from day-to-day operations, hindering the growth of the business.
ICTSI, through subsidiaries ICTSI Ltd. and ICTS (India) Pte. Ltd., and L&T Shipbuilding Ltd. signed a termination agreement canceling ICTSI’s container port contract for the management and operation of the Kattupalli Container Terminal, a stock exchange filing showed yesterday. ICTSI treasurer and vice president Rafael Consing Jr. said in a text message that the parting of ways was amicable.
The company added that it would continue to actively search for opportunities in India, one of the region’s largest economies, as part of a broader strategy to operate ports in emerging markets.
“The marketing and regulatory management were the responsibilities of our landlord as were many of the sourcing and procurement activities,” Consing said of the Kattupalli contract.
“This limited our ability to add the value required to make a real impact to the terminal’s success,” he added. Reports overseas also cited the struggles of the Indian port to attract business given its proximity to rival cargo terminals.
The mutual decision for the contract cancellation came after lengthy discussions and thorough consideration by both ICTSI and L&T Shipbuilding, the filing showed.
“ICTSI deems the cancellation of the Kattupalli contract in keeping with the ICTSI group’s overall strategy of moving away from contracts that isolate ICTSI from the facility’s day-to-day operations, including regulatory and commercial activities,” it added.
Kattupalli International Container, which is ICTSI’s first venture in India, is located north of Ennore Port near Kattupalli village in Thiruvallur district near Chennai, information on its website showed. It has an initial capacity of 1.2 million twenty-foot equivalent units.
L&T Shipbuilding is a venture between Tamil Nadu Industrial Development Corp. and Larsen & Toubro.
ICTSI will be reimbursed for the license fee it paid to operate Kattupalli International Container, it said in its filing.
The company, one of the biggest global port operators, earlier reported that first-quarter profit hit $52.4 million, up 29 percent, due to a non-recurring gain, and $45.1 million, or up 6 percent, on a recurring basis. Revenues during the period were up 19 percent to $248.9 million.
Its seven key terminal operations in Manila, Brazil, Poland, Ecuador, Madagascar, China and Pakistan accounted for 71 percent of the group’s consolidated volume in the first quarter of 2014.
