Week ending August 2, 2002

News on Shipping

H1 results of Indian shipping companies Southbound The Indian shipping companies have reported by and large negative results or reduced profitability in the first six months of operation, in the aftermath of a volatile and depressed international freight market last fiscal year. Shipping Corporation of India (SCI), the largest of public sector shipping company, currently on the verge of being privatized, has reported a net loss of Rs. 6 crore in the first quarter of the fiscal year, mainly due depressed international tanker market rates. Great Eastern Shipping, the largest of private sector shipping company has also reported 54 per cent drop in its net profit in the first quarter of the fiscal year to Rs.29.54 crore from Rs.63.44 crore in the corresponding period of the previous year. GE Shipping's total earnings for the same period have also come down by 32.5 per cent to Rs. 231.33 crore this year from Rs.342.83 crore same period last year. Essar Shipping has also reported a sharp decline in its net profits for the first quarter ended June 2002 to Rs. 3.31 crore from 25.20 crore in the same quarter last year. Mercator Lines Ltd. which operates small tanker fleet and lighterage services also saw its unaudited net profits for the first three months of 2002 decline to Rs.1.6 crore from Rs.2.6 crore in the same period last year.

GE Shipping to go alone in its bid for SCI GE Shipping, India's largest private sector shipping company has decided to bid for strategic takeover of Shipping Corporation of India (SCI) on its own, Mr. K.M. Sheth, chairman of the company has informed recently held annual general body meeting of the company shareholders. The company has already been short-listed as a qualified interested part in participating for the bidding process for 51 per cent stake in SCI. A number of foreign shipping companies, like Mitsui-OSK, Malaysian International Shipping, Qatar Shipping etc. which had earlier shown interest in tie-ups with Indian companies have withdrawn from the race and only domestic shipping companies GE Shipping and Essar Shipping are now left in the takeover race.

Ministry of Shipping mediating for removal of war risk premia Following the adverse impact of additional war risk premia levied on ships calling on India's West coast ports, by the London-based hull underwriters, the Union Shipping Ministry has reportedly sought the intervention of India's High Commissioner in UK to hold talks with the concerned trade authorities to remedy the situation. All ships taking a war risk premium in the London market and coming to ports in India, including Mumbai, JNPT, Kandla, Papavav are affected by additional war risk premia in the range of 0.025-0.05 per cent of the hull and machinery value since June 2002.

News on Ports

Gangavaram project awarded to DVS Raju-led consortium The greenfield Gangavaram port project near Visakapatanam Andhra Pradesh government has been awarded to DVS Raju-led consortium by the Andhra Pradesh government. Andhra Pradesh Industrial Infrastructure Corporation (APIIC), the nodal agency for the port project had earlier called for the bids from private port operators in October last year and had short-listed four parties in April 2002. The project costing Rs.1520 crore is expected to commence from July 2003 and is scheduled to become operational from July 2005. The project is being taken up on a BOST (build, operate, share and transfer) basis for a period of 30 years, plus two extendable period of 10 year each.

News on Dredging

Jaishu Shipping forms a UK-based joint venture with Miller Dredging Jaishu Shipping Company Pvt. Ltd., a private Indian dredging company has formed a joint venture with a US firm - Miller Dredging Company to participate in the overseas dredging market. The new company is registered in the UK, with Miller Dredging putting in $50 million for a 51 per cent stake, while the Indian partner holds the remaining 49 per cent. The new JV company has already made a head start by securing $ 40 million dredging contract in Bahrain. The two-year contract for dredging two million cum of solid rock from under the sea is scheduled to be to be completed in two years, starting from November. Jaishu Shipping has earlier worked as a sub-contractor for a Chinese dredging company to execute a similar order in the Dubai. Jaishu Shipping is also involved in a number of maintenance dredging works at Ennore, Tuticorin, Mundra and Sikka ports.

News on Logistics

CWC launches reefer service at Vizag CFS The Central Warehousing Corporation (CWC) has started a reefer service from its CFS based in Vizag for exporters of marine products. The CWC move is expected to give a boost to container traffic through the Visakapatanam port. There are a number of seafood exporters and aquaculture farms in the region, which generate exports to Far East region, notably Japan. The CFS had so far been mainly handling dry cargo. Marine product export from the region was earlier handled through Chennai port.

Cargo handling and warehousing services brought under services tax net The Union Finance Ministry has in move aimed at broadening the service tax net has brought in cargo handling and warehousing services, among ten other services under the service tax net. The new guidelines on service tax come into effect from August 16. However, the directives of the Finance Ministry have excluded agricultural produce or goods from the purview of new tax levy.

News on Commodity Trade

Marine exports decline by 9 per cent in 2001-02 Following reduced off take of marine products imports by Japan, one of India's major customers, exports of the commodity have registered 9 per cent decline from 0.68 million tonnes in 2000-01 to 0.64 million tonnes in 201-02, as per analysis of Associated Chamber of Commerce and Industry of India (Assocham). Japan imported over 15 per cent of India's total marine exports, which stood at 1.4 million tonnes in 2001-02. Besides Japan, India exports marine products South Korea, Taiwan, US and Canada.

India's tea exports take a 3 per cent dip in first half of fiscal year India's tea exports have declined by over 3 per cent in the first half of 2002 to 74.1 million kg compared to the level in the corresponding period of the previous year, as per the Tea Board. Exports for June 2001 fell by 8 per cent to 13.01 million kg from 14.13 million kg in the same month last year. Lower production of tea is believed to be the main reasons for reduced export off take. Production of tea in the country during the first six months of 2002 has also come down by 4.55 per cent to 284.62 million kg from 298.20 million kg in the same period last year.

Rubber industry wants curbs on port of entry for rubber imports removed The government is set to review the curbs on port of entry for rubber imports, which currently allows importers to use only Kolkata and Visakapatanam ports to handle the imports of the commodity. The restrictions on other ports from handling rubber imports was imposed by the Commerce ministry to ensure closer monitoring of the rubber imports by the Director General of Commercial Intelligence and Statistics (DGCIS) based in Kolkata. International natural rubber prices have been historically lower than the domestic natural rubber prices and import a regulation is aimed at limiting the impact of the disparity in prices of imported and domestic natural rubber prices. The rubber industry is demanding that keeping in view the expected slump in the international rubber prices and improved systems of information and data capture at different ports, the government must review its decision and allow imports through any port of convenience for the importer.