Wednesday, February 25, 2009
Shipping Corp of India axes expansion plans
Mumbai: State-run Shipping Corp. of India Ltd (SCI), India’s biggest shipping company by fleet size and revenue, has scrapped a tender to buy four dry bulk cargo carriers as demand for ships declines in the face of a slowdown in global trade.
“Demand has changed; supply has changed. The future looks uncertain,” said U.C. Grover, the Mumbai-based company’s technical and offshore services director told local media. “We didn’t want to keep the tender open till eternity. It makes sense to scrap the tender now.”
Unlike earlier, when the tendering process had to start from scratch, SCI now has greater freedom from government control to take a call on its own.
Last year, the government granted so-called navratna status to SCI, enabling it to take quick decisions on ship purchases and other expenses without having to seek approval from the shipping ministry. The navratna status granted to select public sector enterprises, recognizing them as the most prestigious government-owned companies, allows them greater autonomy.
“The advantage of this is that when the market improves, we can swing into action very quickly. As the technical specifications are frozen and known to the bidders, we can ask for price quotations and finalise the tender in a month,” Grover said.
Typically, SCI takes four-five months to finalize a ship acquisition tender.
The company had announced plans to buy 72 new ships with an investment of $3.1 billion in the five-year period beginning 2007.
SCI has so far ordered 32 new ships worth at least $1.88 billion at various global yards to replace some of its ageing fleet, which has to be decommissioned in line with global maritime regulations.
It plans to buy the remaining 40 new ships worth close to $2.6 billion over the next four years. [25/02/09]
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