Shipping Corporation of India (SCI) intends to revive asset acquisition plans, albeit in a “very conservative” manner, by adding a few liquefied petroleum gas carriers and offshore vessels to the fleet.
The proposed move, with an estimated spend of Rs.800 crore, is significant and comes in the backdrop of SCI returning to profits after incurring losses for three consecutive fiscals.
SCI Chairman and Managing Director A.K.Gupta said though the plan was not yet finalised, the thinking is to purchase “one or two” second-hand LPG vessels by December. Stating that demand for such vessels is good, he said that for the offshore vessels the SCI planned to place orders with Cochin Shipyard. The offshore vessel is expected to cost $22-25 million each.
Speaking on the sidelines of an event at Indian National Centre for Ocean Information Services here on Tuesday, Mr.Gupta said that the SCI would fund the acquisition through Rs.300 crore equity and Rs.500 crore debt. The Rs.315 proceeds of FPO (follow on public offer) will be used for the equity.
On container shipping business, he said it was a struggle given the intense competition and SCI’s weak economies of scale. The national shipping carrier wants to focus more on coastal container cargo. Three of its five container vessels were already being operated on coastal routes and plans were to deploy the remaining two as well.
While the dry bulk cargo market was in “total shambles” with too many vessels and less cargo, the (crude oil) tanker market remained attractive. SCI will add one more VLCC (very large crude carrier) to its fleet of four. The VLCC is being purchased from China at a cost of $85 million.
As regards GAIL (formerly Gas Authority of India Ltd) scrapping a $7 billion tender for procuring nine LNG carriers, in view of poor response from foreign ship builders, Mr.Gupta said signals were that government has not given up. A key condition of the tender was that three of carriers were to be built in India.
It was “very challenging, but can be done. It is now or never [for Indian shipyards],” he said on the proposal to build LNG carriers in the country. SCI was looking forward to operating the LNG carriers.
