24 SEP, 2012, PTI
MUMBAI: State-run Shipping Corporation of India (SCI) has earmarked Rs 2,500 crore to pay for the ships which it has already ordered, but will not place new orders given the bleak global situation, a top official said today.
"We have a capex (capital expenditure) plan of Rs 2,500 crore for our 21 vessels under order and will not be placing any new orders," SCI finance director B K Mandal told shareholders at its annual general meeting here.
SCI will fund the acquisition through debt, he added. Chairman S Hajara, who retires in December after eight-year term, said the cash-flow is under stress due to over-capacities in the sector globally, and hence the ship liner will not go for new orders.
He cited huge dips in charter charges (up to 95 per cent in some cases) in the period after 2008 crisis, to make the point that times are currently tough.
However, Hajara also added that assets are available at lowest prices right now, and this is an ideal time to invest in assets.
Commissioning of the new vessels is expected to take the total capacity of the company to 6 DWT by the end of FY13 and 7 DWT by the end of FY14, and also result in reduction in average age of the fleet to international standards, he said.
The supply-demand situation, which is lopsided towards supply right now, will reach a respectable equilibrium by mid 2013 after which there would be an increase in freight rates, Hajara said.
SCI had charted out a plan to acquire 45 vessels during the 11th Plan (2007-12), but has fallen short by 17 vessels, he said, attributing this to the global slowdown.
Hajara said there had been huge orders for assets globally in the period leading to 2007 as the rates were very conducive. However, the 2008 crisis changed all that and shipping companies were burdened with heavy orders, he said, adding that starting 2010, when the orders started getting delivered, there was a supply glut.
On the future of its joint venture with Iranian shipping company Irano Hind, Hajara said most probably the government will dissolve the company as a result of the difficulties SCI is witnessing in its regular operations due to the sanctions against Iranian entities.
"Irano Hind being under the UN, US and EU sanctions is in a difficult stage and even our other dealings with the commercial organisations, (like) European banks, is becoming problematic because of our exposure to Irano Hind. So we have taken up the matter with the government, and we expect the dissolution or whatever is the final decision, to be taken very shortly by the government," he said.
To take care of the piracy, SCI is contemplating armed private guards aboard its vessels passing through troubled waters of Middle East and Eastern African coasts and has also requested the government to train the CISF personnel so that they can be inducted on merchant ships, Hajara said.
MUMBAI: State-run Shipping Corporation of India (SCI) has earmarked Rs 2,500 crore to pay for the ships which it has already ordered, but will not place new orders given the bleak global situation, a top official said today.
"We have a capex (capital expenditure) plan of Rs 2,500 crore for our 21 vessels under order and will not be placing any new orders," SCI finance director B K Mandal told shareholders at its annual general meeting here.
SCI will fund the acquisition through debt, he added. Chairman S Hajara, who retires in December after eight-year term, said the cash-flow is under stress due to over-capacities in the sector globally, and hence the ship liner will not go for new orders.
He cited huge dips in charter charges (up to 95 per cent in some cases) in the period after 2008 crisis, to make the point that times are currently tough.
However, Hajara also added that assets are available at lowest prices right now, and this is an ideal time to invest in assets.
Commissioning of the new vessels is expected to take the total capacity of the company to 6 DWT by the end of FY13 and 7 DWT by the end of FY14, and also result in reduction in average age of the fleet to international standards, he said.
The supply-demand situation, which is lopsided towards supply right now, will reach a respectable equilibrium by mid 2013 after which there would be an increase in freight rates, Hajara said.
SCI had charted out a plan to acquire 45 vessels during the 11th Plan (2007-12), but has fallen short by 17 vessels, he said, attributing this to the global slowdown.
Hajara said there had been huge orders for assets globally in the period leading to 2007 as the rates were very conducive. However, the 2008 crisis changed all that and shipping companies were burdened with heavy orders, he said, adding that starting 2010, when the orders started getting delivered, there was a supply glut.
On the future of its joint venture with Iranian shipping company Irano Hind, Hajara said most probably the government will dissolve the company as a result of the difficulties SCI is witnessing in its regular operations due to the sanctions against Iranian entities.
"Irano Hind being under the UN, US and EU sanctions is in a difficult stage and even our other dealings with the commercial organisations, (like) European banks, is becoming problematic because of our exposure to Irano Hind. So we have taken up the matter with the government, and we expect the dissolution or whatever is the final decision, to be taken very shortly by the government," he said.
To take care of the piracy, SCI is contemplating armed private guards aboard its vessels passing through troubled waters of Middle East and Eastern African coasts and has also requested the government to train the CISF personnel so that they can be inducted on merchant ships, Hajara said.
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