The Hindu Business Line : Sethusamudram Corpn to raise $100 million — Apart from foreign currency loans, IPO planned

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Sethusamudram Corpn to raise $100 million — Apart from foreign currency loans, IPO planned

Amit Mitra

While the Government of India will pump in equity of Rs 495 crore, Shipping Corporation of India and Tuticorin Port will chip in with Rs 50 crore each and the Chennai and Ennore ports will contribute Rs 30 crore each.

Mumbai , Oct. 21

SETHUSAMUDRAM Corporation Ltd (SCL), which is implementing the Rs 2,427-crore Sethusamudram sea canal project off the east coast, has kicked off extensive road shows in Singapore, Hong Kong, and other places to raise about $100 million through foreign currency loans.

SCL, which is expected to wrap up financial closure by the end of this month, will also be raising some money through zero-coupon bonds and term deposits.

The proposed investment of Rs 2,427 crore consists of an equity component of Rs 971 crore and a debt package of Rs 1,456 crore. The company proposes to raise part of the equity through an IPO of Rs 227 crore. "We will be deciding on the date at the appropriate time," Mr N. K. Raghupathy, Chairman of Tuticorin Port Trust and Chairman of SCL, told Business Line.

SCL will raise the debt component of Rs 1,456 crore through a term deposit to the extent of 30 per cent and foreign currency loan of $100 million that will constitute another 30 per cent, while the remaining 40 per cent will be raised through zero-coupon bonds.

The project essentially envisages dredging of a 167-km canal in the sea off the east coast up to a draft of 12 m. The canal is expected to save considerable time for ships that ply along that route, as these will no more have to take a long detour.

Dredging Corporation of India has already been awarded, on nomination basis, the first of the four sections in the 167-km canal - this section involves dredging to the extent of 13.5 million cubic metres.

The other three sections are open to competitive bidding, with foreign dredging majors competing. Totally, the project envisages dredging of 82.5 million cubic metres.

According to Mr Raghupathy, the canal will save ships up to an average of 24 hours, with a high of 32 hours for certain categories of vessels.

SCL proposes to levy tariff ranging from Rs 16 to Rs 46 per gross registered tonnage (GRT) of the ships that use the sea canal. With a draft of 12 m, it has been estimated that ships of only below 50,000 DWT can use it.

SCL studies have shown that by 2008, about 7,030 ships will be plying along the route, of which 3,055 vessels will be below 50,000 DWT size.

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