State-owned Shipping Corporation of India (SCI) has inked one of the largest rupee financing deals in the shipping industry of Rs 120 crore. The agreement was signed last week with the Central Bank of India.
Industry sources said the corporation has obtained a very fine interest rate of 12.5 per cent for the 11-year loan. The loan will be repaid in the ninth, tenth and eleventh years with the corporation shelling out Rs 40 crore in each of the three years.
The loan has been raised to part-finance the acquisition of a 83,900 dead weight tonnage crude-oil tanker. The order for which has been placed with the Cochin Shipyard. The cost of acquiring the tanker, which is to be ready within two years, is Rs 156 crore. The company will raise the balance from internal accruals.
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Analysts opine that SCI has obtained a good deal. "The 12.5 per cent rate is fairly attractive considering the fact that term loans from financial institutions too are disbursed at this rate," said K Ramachandran, shipping analyst and head of research at Birla-Sunlife Securities.
SCI had earlier inked the largest rupee financing deal of Rs 128 crore for part-financing another tanker. Over a year ago it had also inked the deal for the largest-ever external commercial borrowing in the shipping industry of about $100 million.
The Rs 2,000-crore SCI is the country's largest shipping company and has a fleet of over 100 ships. This comprises about half the Indian fleet. The government has also identified SCI as a non-core public sector undertaking. It plans to divest up to 40 per cent to a strategic partner. The government at present holds about 80 per cent in the company, about 1 per cent is with the public and the rest is held by a clutch of mutual funds and financial institutions.