SCI's major vessel acquisition halted

Shipping Corporation of India (SCI) may have to slow down its vessel acquisition plans, despite sitting on more than Rs 2,000-crore of reserves.

The public investment board (PIB) has objected to a proposal by the SCI for the acquisition of two Rs 500 crore-capsize bulk carriers due to lack of bids from ship building companies.

"The PIB felt that there was no point giving a green signal for acquisitions when there was no response for bulk carrier tenders floated by the SCI," an official said.

It was suggested during the PIB meeting that SCI should, instead, charter-in vessels for meeting its requirements. The board is expected to meet shortly to take a final decision on the issue.

The shipping ministry officials said they were planning to request the board again for clearing the proposal, at least for the time being. In the meanwhile, the company would try to place orders when it would found bidders at a price close to $65 million proposed at present, they added.

Officials also said the lack of response was due to overbooking in the industry, both in India and abroad. Moreover, prices were spiralling up due to huge demand and rising steel prices, they added. Citing an example, they said the price of bulk carriers has jumped up by nearly 44 per cent to reach $65 million in the past six months.

Officials said the company had to put on hold its acquisition programme for two years because of the proposed disinvestment. "Earlier, SCI was buying vessels at economical rates, but now prices have shot up," they said.

The situation does not augur well for the company's fresh acquisition programmes. It is already having a hard time trying to persuade the government for buying two vessels with its own resources.

Hope sinks

• PIB against Rs 500 crore acquisition plans
• Lack of bids from shipcos is the main reason
• PIB for chartering-in vessels
• Spiralling prices of bulk carriers is also cited as a reason