The Indian Ministry of Shipping has undertaken a number of initiatives as part of its attempt to enhance profitability across major Indian ports. Namely, India has issued fresh guidelines to all the major ports on the investment of the funds that will be provided.
One major initiative is to improve the returns earned on treasury investments by the ports for pension, provident and surplus funds. Across all major ports, these funds amount for Rs 33,000 crore, yielding interest of around Rs 2,700 crore. The Ministry has also realized an opportunity to improve returns by Rs 150 crore or more through a strategic shift in its guidelines for provident and surplus funds.
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As for the most recent guidelines, major ports have been investing their provident and surplus funds in the fixed deposits of nationalized banks, earning returns in the range of 5.5 to 8%.
However, many PSUs have enjoyed significantly better returns. For example, ONGC earned 8.4% returns through Oil Corporation of India and Government of India special bonds; RECL earned 10 to 11% through Tier I bonds of the UP Power Corporation Limited and SBI bonds. Thus, the Ministry of Shipping has evaluated its recommended investment pattern in comparison to the frameworks followed by other PSUs and government bodies.
Moreover, after a detailed study of investment options available and their achieved performances, the Ministry of Shipping has issued fresh guidelines to all the major ports on the investment of provident funds based on EPFO (Employees Provident Fund Organization) guidelines from the Ministry of Labour and Employment in 2015, and on the investment of surplus funds based on guidelines from the Department of Public Enterprises (Ministry of Heavy Industries & Public Enterprises) in 2017.
These guidelines aim to increase the returns of provident and surplus funds by 1 to 1.5% across ports, adding around Rs 150 crore annually to the current earning figures.
With the new guidelines, many ports, including Kandla, Goa, JNPT, New Mangalore and Visakhapatnam will be able to switch the investment pattern with higher rate of return. The financial benefit estimated would show up in the books of accounts of major ports from 2018–19.
