The Hindu Business Line : SCI to steam ahead with sell-off out of the way

THE mood at Shipping Corporation of India (SCI) is upbeat in the wake of the clear indication given by the new Shipping and Surface Transport Minister, Mr T.R. Baalu, that disinvestment of India's flagship shipping company is now out of the question.

The impending disinvestment process during the earlier disposition at the Centre had been compelling India's largest fleet owner to compete with one hand tied behind its back. But now, the State-owned company intends to go full steam to make use of the remaining period of the freight-market boom.

On account of the disinvesment proposal, the company has been under a ban to make any major fleet acquisition programme, while its competitors, especially Great Eastern Shipping that had a capital expenditure programme of over Rs 1,000 crore, had been on a buying spree to make hay while the sun shone on the freight market. SCI had to even seek for a partial lifting of the ban on its capex proposal, which was agreed during the last days of the NDA Government.

Now, as a first step, SCI is putting up on its drawing board a proposal to acquire six vessels, including tankers and large carriers, at a cost of $200 million. "We will be floating global tenders soon and the vessels will be joining our fleet in a staggered phase during the next two years. We expect the first of the vessels to join us within six months," Mr P.K. Srivastava, the company's chairman and managing director, told Business Line.

SCI will also recast its acquisition period for the Tenth Plan Period to make up for "lost time." "I agree we had lost vital time when the freight market soared to unprecedented levels. But we now have to look at the future and how best we make use of the remaining time," he said.

Mr Srivastava feels that the freight rates will continue to be healthy till 2006, after which there may be a "market correction" due to oversupply of ships in the global market.

In fact, SCI had drawn up an ambitious acquisition programme involving 29 vessels, including 26 tankers, during the Tenth Plan period, with a capital expenditure of over $1 billion. But till a couple of months ago, it had on order only four vessels, apart from 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.

The company is also aware of the fact that it has to replace about 25 to 30 per cent of its tanker fleet within the next few years, for which it should have had initiated the acquisition programme some time ago.

"Now with the Damocles sword of disinvestment removed from over our head, we will be recasting our plans and try to (recover) whatever additional revenue we could have earned during the actual boom period," a senior company official said.

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