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Amit Mitra
N.K.Kurup

Mumbai , Dec 19

STATE-owned Shipping Corporation of India (SCI) mirrors a classic case of missed business opportunity due to weak-kneed political will of the Government to push through the disinvestment process and bureaucratic tangles.

While most shipping companies in the private sector are extracting full mileage out of the phenomenal boom in the global freight market by going in for fresh tonnage, the country's shipping giant and largest fleet owner, SCI, is having to battle it out with both hands tied due to the incertitude involved in its disinvestment programme. The reason: it has to put on hold all its major acquisition plans and other business proposals, till the disinvestment programme is completed.

Industry sources said SCI could have made the maximum gain out of the boom in the freight market, but it has missed the business opportunities, as an upshot of the delay in the disinvestments programme. Although the boom period is expected to last for another year, SCI is not likely to make the most out of the bullish market, as the disinvestment programme continues to hang in balance.

Indeed, industry sources say that it is for the first time that every segment of the shipping industry is booming, ranging from the tanker to the bulk and liner markets. The upturn, which actually started after the US invasion of Iraq, is expected to continue till 2005-06, after which there could be a "market correction" as lot of new ships would enter the market resulting in "over supply of ships".

As a matter of fact, according to an analyst, India's expansion in tonnage has been at a level, which was never before experienced. However, SCI has lagged behind in this regard. It had drawn up an acquisition programme involving 29 vessels, including 26 tankers, during the Tenth Plan period, with a capital expenditure of over $ 1 billion. But today it has on order only four vessels, including two LNG tankers that are part of a special purpose vehicle formed by SCI and four other foreign lines to move LNG for Petronet to Dahej.

Moreover, the company has to replace about 25-30 per cent of its tanker fleet within the next few years, for which it should have had initiated the acquisition programme by now. But this had to go into a limbo due to the delayed disinvestments procedure. "SCI has been asked not to make any major investments till the disinvestments procedure is completed. And no body knows when this will happen," pointed out an industry source.

Compare this with the tonnage addition of Great Eastern Shipping, India's largest private fleet owner. The company's capacity addition during the first quarter of the current fiscal has been one crude carrier and two product carriers, while in the second and third quarters it added six more crude carriers, with its current fleet strength being 36 vessels. Its tonnage has thus gone up from 1.317 million DWT as on March 31 2003 to 2.10 million DWT at present.

This apart, in order to make full use of the boom in the market, has laid out a capital expenditure programme involving an outlay of Rs. 1,038 crore for procuring 10 vessels, including one Aframax, one product carrier and two Suezmax vessels that will be delivered between January 2004 and September 2005. The company's tonnage is expected to cross 2.3 million DWT by March 2004, 2.36 million DWT by March 2005 and 2.68 million DWT by March 2006.

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