MUMBAI: With the global shipping industry in hot water, Shipping Corporation of India (SCI), the country’s biggest shipping firm by fleet size and revenues, plans to enter a wait-and-watch mode. The company has postponed its new vessel acquisition plans of Rs 5,000 crore by at least six months.
SCI is now eyeing the secondhand ships market as prices have fallen almost 70%.
The plan to acquire four Capesize vessels - ships that can sail through the Cape of Good Hope on the Horn of Africa - for $600 million has been put on hold. Besides, the company is going slow on the tender it had issued for the purchase of four very large crude carriers (VLCCs) for $320 million.
Also on hold will be the purchase of 10 offshore support vessels for $200 million that was planned to give impetus to SCI’s offshore segment.
Umesh Grover, director (technical and offshore), SCI, said the company wants to explore the opportunities available at the moment but delay new purchases. “We are looking at the secondhand market for our Capesize purchase, as we might get some good deals. Besides, the new-built prices are also expected to come down and we want to take advantage of that,” he said.
The Indian shipping major is also exploring the possibility of acquiring an ailing shipping company with good assets. Grover said opportunities were aplenty and the company had looked at the assets of Hong Kong-based CIDO Shipping, which had put up its tanker fleet of 49 vessels for sale.
Industry experts feel the demand for vessels is dropping due to the global economic slowdown that has hampered trade. Secondhand ship prices have already fallen from their exceptional highs of last year. “The fall in secondhand prices will eventually stabilise and then even the new-built prices will fall. This is the opportunity SCI will take,” said a Mumbai-based analyst, who did not wish to be named.
As part of the Eleventh Five-Year Plan, the Navratna company has announced an investment of Rs 13,000 crore for acquiring 62 vessels. Of this, it has already ordered 20 vessels, which are mainly tankers.
SCI’s share closed at Rs 68.15 on the Bombay Stock Exchange on Monday. The company’s share price has fallen 79% from its 52-week high of Rs 332.
