The Hindu Business Line : SCI board approves Rs 300-cr fleet acquisition plan

NOT willing to lose any further time, the Shipping Corporation of India (SCI) has begun to put its act together and steam ahead with its fleet acquisition programme, after the recent Government decision to lift the ban that was imposed on the company for taking any major investment decisions in the light of its on-going disinvestment programme.

The SCI board, which met here on Tuesday, approved a broad acquisition programme, that includes purchase of capsize vessels, up to an investment ceiling of Rs 300 crore, company officials told Business Line.

In the course of the next few weeks, the company would be working out the details of the acquisition proposal, after a thorough study on the continuing boom in the freight market, and decide on which category of vessels to procure immediately, said a company official.

Unlike many companies in the private sector, SCI, which is the country's largest fleet owner, has not been able to squeeze out the maximum mileage out of the phenomenal freight market boom in the last 18 months due to the freeze on investment.

The Government had asked SCI to put on hold its capital expenditure programme, as it may affect the interest of the new owners of the company after the disinvestment.

In fact, the freight market boom has prompted many companies in the private sector to go in for fleet expansion. Take the case of Great Eastern Shipping, largest fleet owner in the private sector. The company has acquired seven crude carriers and two product carriers during the first three quarters of the current fiscal, which increased its tonnage from 1.31-million DWT as on March 31, 2003 to 2.1-million DWT as on December 31, 2003. This apart, the company has laid out a capital expenditure programme for Rs 1,038 crore, involving acquisition of 10 vessels, including one Aframax, one product carrier and two Suezmax vessels that are expected to be delivered before September 2005. This would increase its fleet strength to 2.68-million DWT by March 2006.

Originally, SCI also had an expansion programme, involving an outlay of $1 billion for acquiring 29 vessels, including 26 tankers, during the Tenth Plan. Moreover, the company has to replace about 25 to 30 per cent of its tanker fleet within the next few years, for which it should have already had initiated the acquisition programme.