Kolkata: Four years after Tata Motors Ltd abandoned its small car factory in Singur partly out of concern for workers’ safety, another company was forced to beat a retreat from West Bengal on Wednesday because the state administration couldn’t protect its executives from being assaulted by retrenched workers and political activists.
Haldia Bulk Terminals Pvt. Ltd (HBT), a joint venture between Indian and French port logistics companies, said on Wednesday it was forced to abruptly terminate operations at the Haldia dock complex in view of the deteriorating law and order situation. The decision comes in the wake of the abduction of three of its key executives at Haldia three days ago. They were later released, but no action has been taken regarding the incident.
Describing the event as “unfortunate”, Kallol Datta, president of the Bengal Chamber of Commerce and Industries, said, “West Bengal has a long history of militant trade unionism—it’s only a repeat of what has been seen many times before.”
Though it is “perhaps a one-off event” stemming from an “unviable business scenario”, it could impact the state’s potential to attract investments, added Datta, who is also chairman of state-owned Andrew Yule and Co. Ltd.
HBT, a joint venture between Mumbai-based ABG Infralogistics Ltd and France’s Louis Dreyfus Armateurs Group, has been handling cargo at two berths of Haldia dock complex for the past two years.
Kolkata Port Trust (KoPT) had selected HBT through competitive bidding. The contract was awarded to it for handling cargo at two berths for 10 years. However, HBT alleged that it didn’t receive as much cargo as was “promised” to it by KoPT, resulting in an accumulated loss of Rs.60 crore from two years of operation.
People with “vested interests put impediments in our path” with the intention of making HBT’s operations unviable from the beginning, the firm’s chief executive officer Gurpreet Malhi said on Wednesday in conference call. HBT was forced to stall operations at the Haldia dock complex a little over a month ago in the wake of political unrest stemming from its retrenchment of 275 people.
HBT on Wednesday decided to unilaterally terminate its contract with KoPT because it realized that it won’t be allowed to function at Haldia in the foreseeable future, Malhi said.
“We have been left with no option...the ever-worsening situation at Haldia has left us feeling betrayed,” a statement from HBT cited Malhi as saying. Wednesday’s event will put at least 348 HBT workers out of work—and as many more currently employed by the firm’s subcontractors also face an uncertain future.
Though no contractual commitment was ever made by KoPT, HBT claims that it was led to expect that it would be handling at least nine million tonnes (mt) of cargo a year. With the equipment that HBT was required to bring in, it could handle up to 18 mt of cargo a year, according to Malhi.
“Is it unreasonable to expect that we would get (to handle) at least half that volume?” he said. If that assumption had come true, HBT’s operations would have been sustainable, Malhi said, answering a question on whether his company’s “lowest ever” bid for securing the cargo-handling contract was unviable from the beginning.
Over the past two years, HBT got to handle only 36% of the cargo received at the Haldia dock complex, the firm said in a media statement on 31 August, while the rest was diverted to other operators. Last year, the Haldia dock complex handled 17 mt of cargo, and HBT could handle only around 5 mt.
HBT issued an ultimatum to KoPT at the end of August, saying that it would be forced to terminate its operations at the Haldia dock complex unless it was given a larger share of business. The company said its banks and French promoters had reviewed operations and concluded that it should close them down unless the situation improved.
KoPT moved the Calcutta high court seeking to restrain HBT from withdrawing from the Haldia dock complex and, eventually, in the middle of September, the two arrived at an agreement under the court’s oversight.
KoPT agreed to allow HBT to unload all vessels carrying so-called dry bulk cargo to the Haldia dock complex. Only if the two berths weren’t free would vessels be diverted to other operators, the agreement said.
“That’s when things took an ugly turn,” said a key KoPT official, who did not want to be identified. Using its clout with the trade unions and the local administration, another cargo-handling firm, which is owned by the family of a Trinamool Congress lawmaker at the Centre, started creating “serious law and order problems” within and outside the Haldia dock complex to undermine HBT’s operations, he added. Mint couldn’t independently verify this.
Things went out of hand after HBT sacked workers—it gave the Trinamool Congress-backed trade union the handle it needed to create roadblocks for HBT, the port official said.
Malhi defended the move saying that the retrenchment was long overdue, but admitted that matters were precipitated after the company faced resistance in running operations even after the agreement with KoPT on increasing cargo-handling volume.
In a bid to restart operations at the Haldia dock complex, HBT moved the Calcutta high court in early October seeking its intervention in strengthening security for employees.
HBT installed equipment worth Rs.140-150 crore at the Haldia dock complex, according to Malhi. The company will seek to remove it and will also claim damages from KoPT for having to abort its operations , he added.
KoPT said it was not accepting HBT’s termination notice, and could claim compensation. The company will not be allowed to remove its equipment from the berths, said KoPT chairman Manish Jain, who described the notice as “illegal”.