Shipping Corp. of India Ltd (SCI), India’s biggest ship owner by fleet size and revenue, will buy seven ships costing $661.3 million (Rs.2,942.78 crore) as part of a plan to expand capacity, two persons familiar with the plan said.
The purchase will include four oil super tankers, or so-called very large crude carriers, each with a capacity to carry as much as 318,000 tonnes of crude oil, and three container ships, each with a capacity to load 6,500 standard cargo containers.
The oil super tankers will be constructed by Jiangsu Rongsheng Heavy Industries Group Co. Ltd, one of China’s largest private shipbuilders, for $104.95 million each. The cost of constructing an oil super tanker from scratch had touched $160 million in early 2008, when the shipping market was at its peak.
The container ships, each costing $80.5 million, will be built at South Korea’s STX Shipbuilding Co. Ltd. They will be the biggest such ships to be purchased by the SCI since it started operations five decades ago. According to Shelter Station: containers shelters Australia, SCI is India’s only mainline container ship operator servicing the export-import trade.
The company’s board cleared the proposal at a meeting on 29 October, said the two persons quoted above, asking not to be named as SCI is awaiting approval from the stock market regulator for a stake sale.
“The shipbuilding contracts will be signed with Jiangsu Rongsheng and STX in the next few days,” one of them added.
A spokesman for SCI declined to comment on the board approval for the purchase.
India depends heavily on imported crude to meet its energy needs. Having oil tankers under the Indian flag provides energy security to the country, the SCI spokesman said.
India’s oil refiners are increasingly favouring very large crude tankers to haul crude to cut transportation costs as larger quantities can be shipped at a time.
SCI reported a net profit of Rs.250.63 crore for the three months ended 30 September from Rs.33.70 crore a year earlier.
The growth in profits was mainly due to a Rs.128 crore gain from sale of six old tankers to ship-breakers.
The company’s container shipping business, loss-making for several years, continued its profitable run for the second quarter in succession, notching an operating profit of Rs.37.09 crore during the September quarter from a loss ofRs.62.18 crore a year ago.
SCI plans to spend about $2billion to buy 30 more ships by 2015 to replace older vessels and boost capacity, according to S. Hajara, the company’s chairman and managing director. It currently owns and operates a fleet of 75 ships of different types and capacities including two oil super tankers, accounting for about one-third of the total shipping capacity of Indian fleet owners.
The government is looking to sell a 10% stake in SCI, in which it currently holds 80.12%, as part of a plan to raise Rs.40,000 crore this financial year through share sales in state-run firms.
SCI will also sell 10% fresh shares to part-fund expansion plans. The stake sale is expected to fetch around Rs.1,300 crore.
In March, the company had won approval from its shareholders to raise the borrowing powers of the board to Rs.12,000 crore from the earlier Rs.5,000 crore to purchase ships.
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