Shipping cos drop anchor to beef up fleet

MUMBAI: Indian shipping firms are on a massive vessel acquisition spree. Thanks to the export-import boom, the companies have lined up over Rs 11,000 crore for 70-plus vessels in the next 3 years.

“Indian shipping industry is burdened with over a dozen taxes that virtually neutralise the benefit of tonnage tax regime, which was introduced last year. However, shipping companies are hopeful of charter/freight markets peaking again,” said an industry analyst.

After years of fruitless hunt for a strategic partner and stake sale, the Shipping Corporation of India (SCI) is planning to acquire 35 vessels for Rs 6,500 crore, in addition to a current ship order. The company has chalked out a plan to go for 72 vessels with Rs 13,300 crore by ’12. “If SCI manages to get block approvals, it can cash in on the market fluctuations like any other private company,” added the analyst.

“Tonnage tax has enabled shipping firms to create substantial amount as reserve. This reserve, which does not attract tax, is only meant for tonnage acquisition. Thus, companies are utilising this to augment fleet,” said SS Kulkarni, secretary general, Indian National Shipowners’ Association (INSA).

SCI has ordered for two very large crude carriers (VLCCs), four Aframax, six LRI product tankers, two MR tankers, two cape size bulk carriers, six super handimax, four panamax, four acid carriers, three LPG tankers and four container carriers. “We have applied for block approval, but the decision is getting delayed,” an SCI official told ET.

The country’s largest private shipping company, Great Eastern Shipping company (GE Shipping) recently placed an order for four Long Range One (LR1) and five Medium Range (MR) product tankers. The group has also ordered four Anchor Handling Tug-cum-Supply Vessels (AHTSVs) and one Platform Supply Vessel (PSV), which will be handled by Great Offshore after demerger.

The story is same for Essar Shipping and Logistics (ESLL), which recently raised $200m abroad to fund its $300-m vessel acquisition plan. The company plans to source another $100m from internal accruals. ESLL, which has cash reserves of $550m, is actively looking at options of acquiring tankers.

Mercator Lines, which has 22 vessels including one VLCC and one Suezmax, has not yet firmed up its acquisition plan. Both GE Shipping and Mercator Lines have ordered $160-m jack-up rigs.

Following its decision to enter the offshore segment, Varun Shipping is planning to purchase second-hand offshore supply vessels (OSVs), platform supply vessels (PSVs) and multi support vessels (MSVs) for Rs 450 crore. Varun is also planning to acquire VLCCs based on market conditions. “This phenomenon is not limited to bigger players. Small coastal shipping firms are also augmenting fleet to take advantage of feeder traffic and transhipment,” said an official.

Coastal shipping operator SKS Ship is all set to raise Rs 100 crore from the market to finance its acquisition programme. The company will go for two German-built container carriers and an oil tanker. Shreyas Shipping and Logistics has also announced a Rs 350-crore capital expansion, including acquisition of second-hand and brand new vessels.

Shreyas Shipping will have 15 container vessels in its fleet by ’10. Another dedicated offshore player, Garware Offshore had placed an order for four Platform Supply Vessels with an estimated investment of Rs 200 crore.