The Hindu Business Line : Ministry favours block approval for SCI's acquisition plan

IN a development that could significantly shore up the fortunes of Shipping Corporation of India (SCI), the Ministry of Shipping has initiated a move to provide block approval to the company's $1-billion acquisition plan involving 14 vessels.

The proposed block approval concept, which will be a kind of a single-window clearance, will involve setting up of an empowered committee, having representatives of all Ministries and agencies that have to clear such an acquisition plan. This move is intended to help SCI, which has not been able to make any major acquisitions due to earlier Government restrictions, to cash in on the healthy freight market.

"The Ministry of Shipping will be taking up the proposal with other Ministries. The block approval proposal will not cover the two proposed cape-size vessels that have already received the PIB clearance," Mr. D.T. Joseph, Secretary to the Ministry of Shipping, told Business Line.

He said the Ministry was working out the "exact contours" of the block approval proposal, taking into account the Government regulations involved in acquisition of ships by SCI.

Although sitting on bulging cash reserves, the company has not been able to make any significant purchases due to the earlier Government restrictions.

Even now, SCI is hamstrung in acquiring ships, as it faces considerable delay in getting the final Government approval for the purchase in a market that is given to sharp fluctuations in prices.

And to make matters worse for the company, it generally does not go in for second-hand vessels, as it may come under CBI or CAG microscope.

In the light of this, SCI had proposed that the Government devise a mechanism to enable it get a block approval for its plan to acquire 14 vessels, including Very Large Crude Carriers, two container vessels and six product tankers of 65,000 DWT each.

"The objective is to save time by getting a block approval, instead of having to get clearances for every ship that we propose to acquire. And moreover, we need not go to different Ministries for the approval, as a block approval can be done by an empowered committee," a SCI official pointed out.

Once the block approval is through, the company will be able to purchase the 14 vessels as and when it desires, depending on the prevailing market conditions. As of now, however, it will face problems in ship acquisition, as all the major shipbuilding yards around the world over are booked up to 2007-08.

According to reports, about 45 per cent of the world container fleet and 20 to 25 per cent of cape-size fleet will be added in new capacity by 2008.

SCI, which has a fleet of 86 vessels, had clocked a net profit and turnover of Rs 280.15 crore and Rs 992.92 crore, respectively in the quarter ended December 2004.

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Vodafone, DoCoMo in race for BPL stake

Mobile tariffs set to drop: Maran
Notification on increasing FDI cap by month-end

BSNL mobile network bursting at the seams

IA to assist ONGC lease two business jets

Ministry favours block approval for SCI's acquisition plan

India should not export iron ore: Muthuraman

SBI net jumps 17 pc; to pay Rs 12.5 dividend

Iffco-Tokio may opt for fresh infusion of capital — Net up 54 pc; plans public issue

Federal Bank mulls GDR issue