Shipping Corp of India Ltd has scrapped its plan to set up a greenfield shipyard and will instead participate in an existing shipyard by taking a minority stake of 10-15%, chairman and managing director Sabyasachi Hajara said on Friday.However, Shipping Corp may consider a greenfield shipyard project if floated by the government to replace Hindustan Shipyard, which has been brought under the administrative control of the Ministry of Defence for building only naval warships and submarines.“There are thoughts (in the government) of building another shipyard to replace Hindustan Shipyard, and if there’s an opportunity, we would like to participate in it but with other partners too... but we will still look at participating in an existing shipyard by taking a minority stake,” Hajara said.The company is in talks with international and domestic companies for the same, he added, but declined to give names or a timeframe for the investment.Shipping Corp had been planning a foray into shipbuilding as a backward integration project via a joint venture for the past two years, and had also reportedly initiated talks with companies such as ABG Shipyard Ltd, and South Korea’s STX Shipbuilding Co.However, the talks did not come to fruition, and the company’s joint venture plans did not materialise. At the same time, opportunities to build greenfield shipyard projects have been availed by other players and new opportunities have dwindled.Shipping Corp has not met with much success in acquiring second-hand ships, and is consequently shifting its focus to new ships to build its fleet, Hajara said.“We have had problems with second-hand ships that we acquired...not all are in the desirable condition. Also ship-owners are quoting very high prices.” These factors forced the company to cancel a tender recently, and it has decided to shift focus to new ships.But shipyards in India are currently operating at 100% capacity with an order backlog running into two years, so the company will continue to scout for second-hand ships albeit selectively.“We will not buy ships that are more than five years old. The average age of our fleet is 17-18 years, and we need to urgently bring this down to 11-12 this fiscal,” said Hajara.The company is retiring four to five single hull vessels this financial year that are over 25 years old, and will be looking for replacements.Shipping Corp has appointed three merchant bankers—ICICI Securities Ltd, SBI Capital and IDFC Capital—for its proposed follow-on public issue, a company official said.

COMMERCIAL BREAK
SCROLL TO CONTINUE READING

“We are in the process of signing the mandates,” he said.The follow-on issue will consist of sale of 20% stake, including a 10% stake sale by the government and 10% fresh equity offer by the company, Hajara said. The government currently owns 80.12% in the company, and this could fall to around 65% post the issue. LIC holds over 10%, and the rest is with the public.Hajara did not detail the likely size of the issue, but analysts said the company could look to raise `1,300-1,500 crore though the issue, which would be used to expand its fleet and for investment in new businesses. NewsWire18