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Thursday, Mar 28, 2002

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Corporate - Restructuring
Logistics - Shipping

SCI recasting debt portfolio -- Leveraging on sovereign status

P. Manoj

NEW DELHI, March 27

WITH privatisation round the corner, state-run Shipping Corporation of India (SCI) is restructuring some of its debt worth about Rs 350 crore, taking advantage of its sovereign status in a falling interest rate regime.

The company has decided to repay an outstanding loan of Rs 255 crore taken from the Union Government. SCI will retire the Government loan by availing an amount of Rs 200 crore from Bank of Baroda (BoB) while the remaining Rs 55 crore would come from its internal resources, Government sources said.

SCI has finalised an agreement with Bank of Baroda for a five-year loan worth Rs 200 crore at an attractive rate of 8.75 per cent, which is lower than the prevailing prime lending rate (PLR).

By paying Rs 255 crore towards full and final settlement of the Government loan, SCI would be able to get about 40 vessels released from the mortgage of the Government. These vessels were mortgaged with the Government for taking the loan.

Under the loan agreement with Bank of Baroda, SCI has mortgaged only 7 vessels with the bank.

SCI is also talking to State Bank of India (SBI) for re-financing a residual loan amount of Rs 102 crore. The company had borrowed Rs 128 crore from SBI at a rate of 13.37 per cent in 1999 to repay a costly loan of Rs 128 crore taken from the Mumbai Port Trust in 1998.

Under pressure from the Ministry of Surface Transport, SCI had availed of an inter-corporate loan of Rs 128 crore from the Mumbai Port Trust at a whopping rate of 17 per cent.

Out of the total loan amount of Rs 128 crore, SCI has repaid about Rs 27 crore to SBI, leaving a residual amount of Rs 101 crore to be paid to the bank.

SCI is negotiating with SBI to scale down the interest rate for the residual loan amount from 13.37 per cent to 9.5 per cent.

"The interest rates are declining. If this trend continues and once SCI is privatised, it may not have the sovereign status to get competitive rates from the market,'' the sources said.

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