Indiaman picks 5 per cent stake in Mercator Lines

The Singapore-based Indiaman Funds (Mauritius) has picked up a stake of around five per cent in the Mercator Lines at Rs 275 per share. The deal was struck last week when Indiaman subscribed to 2.5 lakh shares through the preferential allotment route.

Further, the fund will subscribe to about another three lakh shares of Mercator Lines by May 15, 2004 sources familiar with the development said.

Meanwhile, the promoters of Mercator Lines, the Mittal family and associates, have also subscribed to 2.7 lakh shares at Rs 275 per share last week. The promoter group too plans to pick up another 2.8 lakh shares by May 15, 2004.

Mercator has informed the Bombay Stock Exchange (BSE) that its board has approved, on March 31, 2004, the allotment of 5.20 lakh equity shares of Rs 10 each at a premium of Rs 265- per share aggregating Rs 14.3 crore on a preferential basis.

"The proceeds of the preferential allotment will be utilised to fund the expansion plans of the company," senior Mercator executives said.

Buoyed by the surging freight markets shipping industry scrips have been on a roll in the bourses and the relatively little known Mercator Lines has witnessed the highest appreciation among shipping stocks in percentage terms.

The company's share price at the BSE jumped by 1055.48 per cent from Rs 22.35 on April 1, 2003 to Rs 258.25 on March 31, 2004.

The Mittals had cashed in on the stock market boom earlier this year when they sold around four per cent of their stake to domestic banks for about Rs 6.25 crore through the private placement route.

Founded in 1983, Mercator is a relatively new entrant to the shipping industry. The company is focused on the coastal segment of the industry and its major clients are domestic companies. The chunk of the company's revenues-around 79 per cent-comes from shipping and this is likely to go up even further in the next few years. The company also has lighterage operations.

The company recently bagged two orders from BG Exploration & Production and the ONGC-promoted Mangalore Refinery & Petrochemicals, collectively amounting to between Rs 325 to Rs 350 crore.

The contract from BG Exploration & Production Pvt Ltd is for charter hire of a vessel for a period of five years. The vessel will be deployed as a storage tanker on Panna Mukta Oil Fields.

The company is expecting to earn about $32 million spread over five years from this contract.