Shipping Corporation puts on hold vessels acquisition

The company has earmarked a Rs 2,300 crore capex for the current financial year, SCI Director (Finance) B K Mandal told reporters on the sidelines of the company's annual general meeting here. "Our order-book today stands at 32 vessels of about 1.9-million deadweight tonnage. We had planned to acquire more vessels but in view of a likely correction in shipbuilding prices, other acquisition projects are kept on hold," SCI Chairman and Managing Director S Hajara told shareholders.

The size of the order-book is worth USD 1.6 billion. The company had formulated a plan to acquire 70 vessels in the 11th Five-Year Plan (2007-12). The plan included acquisition of bulk carriers, crude tankers and container vessels, among others. SCI is also mulling buying second-hand ships instead of new ones, Hajara said. "Second-hand ships are substantially cheaper than new ships, so in the near future we will consider acquisition of second-hand ships," he said.

While SCI's plan to acquire 70 vessels in the 11th Plan remains intact, some second-hand vessels which are 3-5 years old would be bought instead of new vessels, he said. The company, whose debt-equity ratio is 0.4 per cent, will find difficult to raise debt this year on account of the current economic meltdown, Hajara said.

"Earlier, our debt component used to be at 80 per cent but with the current financial meltdown it will be a challenge to raise debt up to 80 per cent in this financial year." "We will have to settle for 70 or 75 per cent," Hajara added. However, liquidity has improved in the market and this will help the company to raise loans, he said.

Mandal said the company was planning to raise around USD 300-million via debt this fiscal and would tie-up with foreign banks for the loan. Earlier in his speech, Hajara said the environment for the shipping industry would be difficult in the months ahead. "International trade in 2008 contracted and this year also it will not grow," Hajara said. The consumption of oil during the year would also come down, he added. On expansion, the SCI chief said that the company would pursue its plans of expansion in shipping markets through the inorganic route.