India Steamship to merge with Chambal

The K K Birla group is merging Kolkata-based India Steamship Company Ltd into Chambal Fertilisers and Chemicals Ltd, the group flagship.

The proposal was cleared by the Chambal board of directors which met here today.

The K K Birla group holds a majority stake of 78 per cent in India Steamship through its investment company called Zuari Investments which, in turn, is a 50:50 joint venture between Zuari Industries and Chambal.

The final merger is likely to take a few months after all shareholder and regulatory approvals have been taken.

Sources close to the development said there are synergies between the businesses of Chambal and India Steamship and the merger would leverage these.

Chambal buys large quantities of liquid ammonia and phosphoric acid from the international markets for the Paradeep Phosphates plant in Orissa. India Steamship operates carriers which can be used by Chambal for this purpose.

The K K Birla group also sees a bright future for the shipping business with the upturn in the global business environment and this too could have driven the merger, the sources added.

"A medium term business plan, for expansion over the next three years, is currently under review. The Plan primarily focuses on expanding the company's tanker fleet with a mix of vessels catering to a diverse range of cargo parcels, flexible in serving not only as transporters for India's oil imports but fully capable of participating in worldwide trading. The Company forecasts a steady tanker market, both in the short and the medium term, and will actively pursue, additional tonnage," the company's last directors' report had said.

India Steamship owns two carriers. The company had drawn up plans to add a third carrier to its fleet this year.

Though India Steamship made a net profit of Rs 9.7 crore on a turnover of Rs 66.7 for 2003-04, it had carried forward losses of Rs 18.5 crore. Chambal, in contrast, had reported a net profit of Rs 125 crore on net sales of Rs 2,217 crore during the year.

Though India Steamship belonged to the K K Birla Group, it was never a part of the Zuari-Chambal conglomerate, which has a turnover of Rs 5,000 crore and an asset base of Rs 4,500 crore.