| News
Room |
| Essar
ropes in AMA Shipping to bid for SCI |
| The Economic Times - July
21, 2003 |
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The New York-based AMA Shipping
Equity Fund I, a part of American Marine Advisors group,
has joined hands with Essar Shipping (ESL) to bid for Shipping
Corporation of India (SCI).
The joint venture has already
sewn up financing with a clutch of foreign and domestic
financial institutions.
The ministry of disinvestment has
decided to go ahead with the strategic sale for SCI, despite
strong reservations by the shipping ministry. The process,
though running a few weeks behind the earlier schedule,
is expected to be completed by October '03. However, sources
said the ministry might call off the process, and sell
its stake to the public, if the strategic investor fails
to come up with a valuation above the pre-determined
floor price.
All three prospective bidders - the ESL-AMA
combine, Sterlite and Videocon - have competed examining
documents at the data room set up specially for this purpose. |
The only foreign firm in
the fray, 'K' Line of Japan, bowed out of the fray. A senior
official with a bidder said the data room had not thrown
up any surprises. "If the government now decides to
take out a special dividend from SCI, the valuation will
come down by the same amount," said the official.
ESL,
which reported a quantum jump in net profit for the first
quarter, has built up reserves of over Rs 700 crore. It
posted a Rs 30.3 crore profit during April-June '03 as
against Rs 3.3 crore of the corresponding period last year.
This despite a Rs 12-crore book loss on sale of a ship,
mainly on account of unabsorbed depreciation due to disposal
of the ship before the expiry of its estimated life span.
Senior officials claimed that ESL has earned around 15%
of total revenues of Rs 152 crore during the quarter through
logistics services, including lighterage operations in
the US and various advisory services to clients on mix
of crude, parcels, transportation and storage options to
achieve cost-effectiveness. For ESL's logistics consolidation,
acquisition of SCI could be vital, said the official. |
"ESL wants to consolidate
its position in logistics services. It would primarily
help the company mitigate the shipping cycles. For instance,
the Suezmax charter rates, that hovered round $25,000
per day during the first quarter, have dropped further
to $15,000-17,000 levels now," said an official.
Industry
sources said SCI's valuations have dropped after the
European Union banned all single-hull tankers last month,
after the 'Prestige' tanker tragedy off the Spanish coast
last year. Also, the Indian oil industry has recently
clamped age restrictions and CAP ratings (Condition Assessment
Programme rating assigned to a ship by an international
classification society on the request of the owner) in
order to avoid tanker accidents and the inevitable oil
spills.
ESL's fleet includes 32 vessels aggregating 13.5
lakh deadweight tonnage, including six Suezmax carriers,
three product tankers, 11 mini-bulk carriers and five
dry bulk carriers.
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