Sical Logistics has decided to sell its entire 27% stake in Chennai International Terminal, a joint venture company promoted by itself along with PSA International of Singapore, to the latter for an undisclosed amount.
Sical, involved in developing a few core bulk terminals, is finding it difficult to raise enough funds to meet the expenditure and the decision to exit the JV is primarily aimed at solving its existing financial problems, sources said.
The JV company was set up in 2007 in a 40:60 percentage manner (40% Sical and 60% PSA) to handle 1.5 million tonne standard containers per annum with an expected investment of Rs 480 crore initially. But the project cost rose substantially to Rs 600 crore subsequently owing to various reasons in 2009. Caught in the economic crisis during 2009 coupled with the financial problems of its parent Spic, Sical subsequently decided to scale down its stake to 27% stake in the JV. The company could not arrange any debt as committed by itself in the JV agreement, the sources said.
Sical’s decision to exit the JV will primarily help its parent Spic, which is ridden with huge debt. Spic is in the process to reopen its defunt fertiliser plant at Tuticorin in Tamil Nadu, which requires a few hundred crore of investment to achieve a normal production target, the sources pointed out.
Sical Logistics MD LR Sridhar said, “We have decided to utilise the sale funds from our stake sale in Chennai International Terminals towards our ongoing projects including Rs 270-crore Mangalore iron ore bulk terminal, Rs 360-crore Ennore iron ore terminal and other projects.” With a minority stake, we see our roles will be limited in this JV, he said further. “The move to diverst our stake in the JV has been primarily driven by decision to completely focus on bulk cargo handling than other areas and we have number of projects on hand,” he said. He declined comment on the exact sale proceeds. “It is a strategic decision to sell our stake in the JV,” he pointed out. The company is also involved with Mitsui OSK Line in developing a complete yard for Nissan Motor India to ship the latter’s cars to gobal markets, he added.