MSPL diversifies into shipping with Rs 1,200-cr investment

T. E. Raja Simhan Chennai | Updated on January 24, 2011 Published on January 24, 2011

MSPL Ltd, a Karnataka-based iron ore exporter is diversifying into shipping business.

The Baldota Group company will invest Rs 1,200 crore to acquire four post-Panamax size ships, according to the group's Chairman and Managing Director, Mr Narendrakumar A. Baldota.

The first ship is to be delivered by the month-end or in the first week of February, and the second vessel in the next six months. Funding will be through internal accruals.

The company has formed a wholly owned subsidiary in Singapore — MSPL Diamond Maritime Pte Ltd — to acquire the ships being built at Taizhou Sanfu Ship Engineering Co. in China's Jiangsu Province, he said.

Each of the four bulk carriers — Indus Prosperity, Indus Fortune, Indus Triumph and Indus Victory — will have a capacity of 92,500 dead-weight tonne.

With revenue of Rs 1,845 crore in 2009 (last year's financial number is yet to be finalised) the company produced more than three million tonnes of iron ore products, which were mostly exported to China with marginal quantities sold in the domestic market, he said.

According to Mr M. Suresh Kumar, Vice-President (Shipping and Projects), MSPL Ltd, the company will charter its vessels on medium-to-long-term fixed-rate time charter basis. It will enter into time charter employment contracts for ‘good amount' of the fleet to provide fixed fortnightly payments in advance.

The combination of charters of the fleet will range from three to five months (short term range); one to three years (medium range) and six to eight years (long term range). This will provide a stable cash flow and high utilisation of assets and also mitigates the risk of seasonality in the spot market business, he said.

While the company will remain focused on securing charters with fixed rates, it will also explore opportunities with fixed “minimum rates” and “profit sharing arrangements” that will enable the company to benefit from an increasing rate environment while protecting the downside risk.

The ships will be registered at Singapore and will be of Singapore flag. MSPL has reserved the names of the ships with Maritime Port Authority, he said.

Published on January 24, 2011
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