SCI to acquire overseas firm

The Shipping Corporation of India (SCI) is looking for an overseas acquisition to expand its operations. The company is likely to go for a smaller shipping concern, preferably into tanker or container business.

"We are exploring the possibility of alternative ways of expanding and strengthening our fleet than just going for tonnage acquisition," a top SCI executive told Business Standard.

This would help the company to boost its capacity without placing orders for more vessels. The company could also acquire a controlling stake in a shipping company that was complementary to SCI's business, the executive added.

He said that the Shipping Corporation was setting its sights overseas as none of the Indian shipping company fitted the bill in terms of size and area of specialisation.

The idea is at a conceptual stage and the company is yet to firm up a plan of action, executives said.

SCI was also examining other options such as forming more joint ventures or joining shipping consortiums, where companies pool in vessels.

At present, the company has a joint venture with Islamic Republic of Iran and is part of a consortium with three Japanese lines - Mitsui OSK Lines, NYK and K Line for transportation of liquid natural gas (LNG) for Petronet LNG Ltd's Dahej plant.

Even though the company board has approved the fleet acquisition programme worth $ 500 million till 2009, there are still doubts about availability of vessels as shipbuilding yards are overbooked at present.

The company plans to buy 14 vessels, including 2 container vessels of 4,200 Twenty foot equivalent units, six handymax bulk carriers of 55,000 deadweight tonnage (DWT) and six product tankers of 60,000 DWT.

"Shipping Corporation has ample internal resources at its disposal for funding acquisitions. It has a reserve of about Rs 2,500 crore," said an SCI executive.

He, however added that even though SCI had funds to acquire more vessels, it was not going in for major expansions as the shipbuilding prices had shot up.