The Hindu Business Line : Shipping Corporation set to get ‘navratna’ status

SCI, which at present has the status of being a mini-navratna company, has been cleared by the apex committee on navratna PSUs for inclusion in the list, which is likely to be unveiled in the next few weeks, sources told Business Line.

Apart from SCI, the apex committee on navratna PSUs, which met last week, has also cleared the name of Oil India. However, the names of the two companies will still have to be cleared by different ministries in the Government, a process which is likely to take three weeks to a month, the sources said.

For SCI, graduating from a mini-navratna to a navratna company will give it the required fuel to speed up its ambitious ship acquisition programme lined up for the next four years. The upgradation in status will give it additional room to order ships without having to go through the cumbersome process of having to get the prior approval of the Government.

Capex programme

About two years ago, SCI had unveiled a capital expenditure programme of Rs 15,000 crore for acquisition of 72 vessels up to 2011 – this also includes replacement of some of its older vessels. Out of this, it has already spent close to Rs 7,000 crore to buy 28 vessels in the last two years. The balance 44 vessels will be acquired during the next three years, with four of them scheduled to join the SCI fleet within a month.

The company, however, has no plans to raise money from the capital market to fund the acquisition programme. “Right now, SCI is sitting on a comfortable cash reserve. For a capital expenditure plan of Rs 15,000 crore, the company needs equity of Rs 4,000 crore over the next five years. Given its financial position, it may not face any financial constraints for funding the acquisition plan,” a source close to the company said.

Even though funding does not pose a problem, SCI, being a Government-owned company, has been facing constraints in the form of delayed decision-making process. With asset prices ruling high, including in the second-hand and resale markets, any delay in buying decisions could upset negotiations between the sellers of the ship and SCI. apart from delaying its acquisition plan.

Complete autonomy

It is in the light of this that SCI has been seeking ‘navratna’ status, which would give its board complete autonomy to take decisions related to ship acquisition. “SCI complies with all the criteria required for gaining navratna status. Right now, it has a mini-navratna status, which gives autonomy to its board to take decisions that involve an expenditure of less than Rs 500 crore. We cannot even acquire a VLCC with this money,” the source said.

The Shipping Ministry had also followed up SCI’s plea, recommending to the Department of Public Enterprises that the company’s status be upgraded.

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