Shipping Corporation of India (SCI) Ltd, a miniratna company, has decided to take the external commercial borrowing (ECB) route for funding acquisitions after the cabinet committee on economic affairs on Friday cleared its proposal to acquire 12 new vessels at an investment of Rs 3,193 crore.
S Hajara, chairman & managing director, said that the company wants to raise $300 million or around Rs 1350 crore through the ECB route but for that would require another government permission.
He said SCI would acquire four Aframax Tankers of about 1,10,000 dead weight tonne (DWT) each, two large Range-II product tankers of about 95,000 DWT each, four Panamax Bulk Carriers of about 75,000 DWT each and two Cellular Container vessels of about 5,000 TEUs each.
Although Hajara did not want to disclose from where the ships would be sourced, he said that SCI would sign a memorandum of understanding within two weeks to buy six ships.
SCI would be allowed to pay 20% of the contract price from internal resources. For the rest 80%, it has go for debt.
Hajara said while SCI is sitting on a cash reserve of Rs 2500, its net worth is Rs 4000 crore at present.
The acquisition of twelve ships, which is a part of SCI’s ambitious plan to acquire more than 60 ships investing $ 4 billion or around Rs 18,000 crore within the next four -five years, would help meeting the demand of increased crude transportation.
SCI’s rejuvenating the fleet would be a lengthy process because as a government company it takes more than 12-18 months to place an order for a new ship against a private company’s few days to do that.
Observers feel that SCI, which owned 143 ships in 1996 and now owns only 90, if does not acquire more aggressively will be left with about 50 ships only with most of its old ships decommissioned by 2011.