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The Tata Power Company Ltd has exited from ship ownership by selling three big dry bulk cargo carriers it owned through a Singapore-based unit for $212.76 million.
Capesize bulk carriers M V Trust Agility and M V Trust Integrity and the Newcastlemax carrier (bigger than a Capesize ship) M V Trust Amity owned by Singapore-based Trust Energy Resources Pte Ltd (TERPL), a fully-owned subsidiary of The Tata Power Company Ltd (TPCL), have been sold to Germany’s top dry bulk shipping company, Oldendorff Carriers GmbH & Co. KG.
Oldendorff is one of the world’s biggest dry bulk ship operators.
The ship sale is expected to be concluded in July subject to regulatory approvals.
Tata Power had bought the three ships primarily to ship coal from Indonesia to its power plants in India, mainly the ultra-mega power plant at Mundra in Gujarat.
Trust Energy Resources collaborated with other large dry bulk ship operators to optimise the utilisation of the three ships.
After the sale, The Tata Power will pursue an asset-light model for its shipping requirements, and the sale proceeds will be used to cut debt as part of the overall restructuring plan of the company.
Tata Power had a net debt of ₹43,578 crore as of March 2020.
“The sale of our shipping assets announced today is in line with our long-term plans to reduce debt and raise funds to invest in our future growth plans, including expanding our presence in the renewable energy business. The sale is also part of the restructuring within Tata Power to chalk out the roadmap for growth over the next decade,” said Praveer Sinha, CEO & MD, Tata Power.
The sale includes the residual period of the 20-year contracts for the ships with another subsidiary for transporting coal.
In FY19, Trust Energy Resources reported lower profits as coal shipments were hit by the rising cost of Indonesian coal.
The ship sale is a part of Tata Power’s efforts to scale down its international business by selling off non-core assets as it looks to double down on India.
Last July, Sinha told BusinessLine that the company is looking to exit some countries. “None of these countries give us big benefits. So, we feel that we can better utilise that money for our growth plans in India,” he had said. Tata Power has presence in Zambia, South Africa, Singapore, Indonesia and Georgia.
In September last year, Tata Power exited its wind power joint venture in South Africa by selling its entire stake to Exxaro for $106 million.
Tata Power is in the process of selling its defence business (Tata Power SED) to Tata Advanced Systems Limited (TASL). The transfer of the business to TASL is already approved by NCLT and is expected to be completed once regulatory and other routine approvals are received.
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