State-owned Shipping Corporation of India (SCI) Ltd, will resort to external commercial borrowings (ECBs) for funding acquisitions after the cabinet committee on economic affairs cleared its proposal to acquire 12 new vessels for Rs 3,193 crore.
S Hajara, SCI’s chairman & managing director, said the company wanted to raise $300 million (Rs 1350 crore at today’s rate) via ECBs, but would require a separate green signal from the government to do this. SCI would acquire four Aframax tankers of about 1,10,000dwt each, two product tankers of 95,000dwt each, four Panamax bulk carriers of about 75,000dwt each and two cellular container vessels of about 5,000 TEUs each.
Hajara declined to name the country from where the ships would be bought, but said that SCI would sign the memorandums 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 to borrow.Hajara said that, while SCI is sitting on a cash reserve of Rs 2500 crore, its net worth at present is Rs 4000 crore.
The acquisition of 12 ships?part of SCI’s ambitious plan to acquire more than 60 ships at $4 billion within the next four or five years?would help meet the demand of increased crude transportation.
However, the acquisitions would take time as the decision making process alone could take 12-18 months.