French shipping group Louis Dreyfus Armateurs (LDA) has confirmed to Lloyd's Loading List.com that its joint-venture with India's ABG Infra Logistics has ceased operations at Kolkata's commercial port, Haldia, blaming local corruption and threats to its employees.
Last month, armed men kidnapped three of the JV's managers, along with the wife and baby of one of them. They were taken to a railway station and told never to return to the port.
The JV, ABG-LDA, was set up in July 2009 with the aim of becoming a leader in port logistics operations for bulk cargo in India. For the past two years, it has operated two quays at Haldia-Kolkata, where it has invested Euro20 million in equipment.
However, MD Gurpreet Malhi, claims the company has been up against "the connivance of the port authority, local political parties and other vested interests" from the outset.
As a result of insufficient volumes of traffic being sent to its quays, ABG-LDA has run up losses estimated at Euro8.6 million. In September, the lack of business saw it shed 275 of its 650-strong workforce, triggering a wave of violence.
Despite court injunctions to the port operator to maintain law and order at Haldia-Kolkata, the kidnapping incident hastened the company's decision to cease operations.
Malhi said it had "become impossible to work in an environment where those responsible for law and order had openly abandoned their role".
The jv's main competitor at Haldia-Kolkata is Ripley, a company owned by an MP of the party of Mamata Banerjee, Prime Minister of the state of West Bengal.
Banerjee made headlines in 2008 when in opposition she led a successful campaign, supposedly on behalf of local peasants, to scupper auto manufacturer Tata's plans to set up a plant near Calcutta to produce the Nano, dubbed the world's cheapest car.
The prospect of Banerjee and her party sending another important investor packing has caused a stir in West Bengal, with the business community expressing fears that the state could turn into an economic desert.
LDA MD Edouard Louis-Dreyfus underlined that the problems encountered by ABG-LDA in Kolkata did not threaten the French group's overall strategy in India.
In collaboration with AGB, LDA is present at three other indian ports-Visakhapatnam, Mangalore and Paradip.
"Our operations in these three ports are being carried out in normal fashion and with the support of the local authorities. India remains a country where we wish to develop,"he said.
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