Mercator Lines promoters offload 4% stake to Canara Bank, BoI

Promoters net about Rs 6.25 crore

The promoters of Mercator Lines, the Mittal family, have sold about 4% of their stake in the company to Canara Bank and Bank of India.

The deal was struck recently through a private placement at around Rs 250 per share, netting the promoters about Rs 6.25 crore, sources familiar with the development said.

H.K. Mittal, CMD, confirmed the sale. "We thought that the stake sale will improve the shareholding pattern in the company," he said.

The promoters are clearly riding the boom in shipping stocks driven by buoyant freight rates. Shipping stocks have outperformed the Sensex and the BSE-500 this fiscal.

The Mercator scrip has been the star performer on the bourses with its price jumping by over 1000 per cent between March 31, 2003 and December 31, 2003.

Even after the stake sale, the promoters continue to be in control of the company with an equity holding of over 45 per cent.

Meanwhile, the board of Mercator Lines is meeting on January 14, 2003 to consider a preferential issue of equity shares.

Mercator is a relatively young company incorporated in 1983. It has a total fleet of eight tankers, aggregating to 3.70 lakh dead weight tonne (DWT).

The bulk of the company's revenues (around 79 per cent) comes from shipping and this is likely to cross 90 per cent in the next few years.

Mercator Lines is a major player in coastal cargo segment and its major clients are domestic companies.

The company is also engaged in lighterage operations. The advantage of focusing on coastal operations is that this segment of the industry has a huge entry barrier in the form of the cabotage law. This is in line with international practise which protects coastal cargo for domestic shipping companies.