The study has been commissioned by the ADB to the US-based Cornell group of management consultants who will begin their work next week. The consultants are likely to give the draft reports by mid-1999 while the final reports on the ports would be submitted in the third quarter of the same year.

The study will focus on evolving a model which will be used to formulate ways and means to grant autonomy in commercial operations to the ports.

According to sources in MoST, the study would also weigh various options including divestment of ports and conferring special status to port trusts. As regards JNPT, the ministry is toying with the idea of granting a special status to the port. This will require an amendment in the Major Port Trusts Act as JNPT would have to be putunder a separate schedule.

JNPT was conceived to be a special port but due to various bureaucratic hurdles was not given a special status and, instead, brought under the Major Port Trusts Act.

The two ports have been especially selected for a corporatisation exercise as it will be easy to introduce changes. As both are young (the around Rs 900 crore Ennore Port is yet to be commissioned) it will be easy to value the assets which is the pre-requisite for corporatisation, sources said.

In JNPT's case, the move will given an option to convert its loans into equity. The Mumbai Port Trust (MbPT) had extended around Rs 380 crore loan to JNPT which is being made in pre-determined instalments. As part of its financial restructuring, the port has also began an in-house study to evaluate the conversion of various loans to either equity or grants.

"JNPT is, perhaps, the only port in the world which is 100 per cent debt financed as whatever government gives is taken as a debt," sources said. Corporatisationintends to give some relief to the port from loans and the freedom to raise money from the market although it is also likely to bring fresh burdens like income tax, they added.

Meanwhile, MoST has also recently set up a committee for chalking out guidelines for corporatisation of the major ports. A committee consisting of members from the Indian Institute of Chartered Accountants (ICAI), experts from the port sector and MoST officials, has been appointed. The guidelines would also finetune commercial accounting practices (the double entry system) currently followed by ports. This has been considered as the first step towards corporatisation of the ports as it will not only help them streamline accounts and take commercial decisions but would also accord the same freedom to regulate its day-to-day functioning.

According to experts, the commercial accounting practices will also mirror the true financial strength of the ports as under the present norms, they are classified as trusts (thus become non-profitorganisations) and cannot reflect the net profit.