Week ending June 14, 2003

News on Shipping

Four bidders short-listed for SCI stake sale :The government has reportedly short-listed four bidders in the second round of bidding for the strategic sale of its stake in the Shipping Corporation of India (SCI). All the four bids, one of them from a overseas firm were found to be fulfilling the net worth criterion set by the Inter-Ministerial Group (IMG), which met on June 10 to chalk out divestment strategy for the shipping major. The IMG had raised the net worth criterion for bidders from Rs.800 crore to Rs.1000 crore. Sterlite Industries, Videocon group and Essar Shipping are believed to among the domestic companies short-listed that fulfill the net worth criteria, besides K-Line, the only foreign shipping liner in the race from Japan. According to latest indications, the SCI sell-out deal is likely to be closed by October.

Shreyas to buy two feeder container vessels: Shreyas Shipping, a leading coastal feeder operator in India is planning to increase its fleet of container feeder vessels with the planned acquisition of two more vessels taking the total size of its fleet to eight vessels. The proposed acquisition planned for the year will consist of second-hand container vessels with a capacity of 400-500 TEUs each and will be funded through internal accruals and debt. Shreyas has currently six feeder vessels, which operate on the coastal routes connecting Pipavav/Nhava Sheva, Kandla/Tuticorin, while the remaining vessels are deployed on charter hire basis between Muscat, Jabel Ali and Dammam. Shreyas Shipping is reported to have handled in excess of 45,000 TEUs during 2001-02.

News on Ports

L&T, Hutchinson Port out of the race for third box terminal : The JNPT has dropped Larsen & Toubro and the Hong Kong-based Hutchinson Port Holdings, while short-listing bidders for the re-development of its bulk terminal into a container terminal. The list of contenders for the project now stands pruned to ten. Bidders left in the race include: Stevedore Services of America (SSA), Westport, Malaysia, NYK Lines, Tokyo, Marubeni Corp., Tokyo, CSX World Terminals, UK (along with Skanska International Civil Engineering AB), Sea King Infrastructure, Mumbai, Mearsk AS (APM Terminals), Mumbai, PSA Corporation, Singapore, Terminal Link (Container Marine Agencies Pvt. Ltd., Mumbai). The bidding process will be completed by December 2003. The re-development of the new box terminal involves designing, financing, construction, management and operation for a maximum license period of 30 years. The re-development of the terminal in a phased manner is estimated to cost Rs.850-900 crore and entails increased container handling capacity of about 1.2 million TEUs.

MoU for SBM at Cochin signed : Cochin Refineries Ltd., (CRL), and Cochin Port Trust (CoPT) have signed a memorandum of understanding (MoU) for setting up of a Single Bouy Mooring (SBM), off Puthuvypeen near Cochin, with an investment of Rs.719 crore. Under MoU terms, the SBM facility would be established by the CRL within next 24-36 months. Cochin port has leased 89 hectares of land at Puthuvypeen initially and another 20 hectares of land additionally for the enhanced tank farm. While the SBM and other supporting facilities would be set up by Cochin Refineries Ltd., Cochin Port Trust will earn Rs. 25 per tonne as wharfage charges.

Slippage in food exports to impact Kandla port : Kandla port is expected to witness drop in volume of cargo handled in the fiscal 2003-04, with the slippage in rice exports. The port, which had handled a total cargo of 40.5 million tonnes in 2002-03 mainly driven by spurt in food grain exports last year has now set a modest target of 40 million tonnes in 2003-04. The port handled exports of 3.3 million tonnes of rice and 2.2 million tonnes of wheat in 2002-03. However, with the government deciding to allot surplus grains to drought-hit regions, quantum of rice exports has been reduced and overall rice exports would be lower than last fiscal year. India's wheat and rice exports reached a peak of 12.2 million tonnes in 2002-03 from mere 4.7 million in the previous year, following incentives to exporters to purchase surplus stocks. The grain stocks with the state agencies have since dropped to 42 million tonnes from 62.5 million tonnes due to exports and good off-take by states for domestic consumption. Besides, domestic rice production during 2002-03 in the country were hit by droughts and was estimated at 76.91 million tonnes, down by 17.4 per cent.

Vizag port plans cutback in vessel-related charges : Visakapatanam Port Trust (VPT) has approached Tariff Authority for Major Ports (TAMP) with a proposal to reduce the vessel-related charges at the port for container vessels. The VPT proposal also has sought imposition of levy of 80 paise per tonne on importers and exporters of dirty cargoes to meet the cost of environment management (Vizag port handles about 8 million tonnes of dirty cargoes annually, consisting of various grades of imported coal) and also fix the tariff for the newly set up container terminal at the port, by Visaka Container Terminal Private Limited (VCTPL). VPT has been considering substantial reduction in vessel-related charges of about 35 per cent for vessels up to the capacity of 27,000 dwt each and 25 per cent for vessels above that capacity. Presently, 10 per cent reduction from the scale of rates is granted to container ships, irrespective of the capacity. The reduction in vessel-related charges has been sought by VPT both in respect of mainline as well as feeder vessels. The port has handled about 21,000 TEUs in 2002-03.

P&O Ports acquires Kulpi port : P&O Ports (India) has added yet another feather to its cap, through reported acquisition of management control over Bengal Port Limited (BPL), the company developing the Kulpi port 60 kms off Kolkata. The investment deal by P&O in the second container port terminal on the East Coast, after Chennai container terminal is believed to be finalized at $ 60 million, including costs of acquisition of 11 per cent stake held West Bengal government in the venture. Currently, Keventor Agro and the Mukund group hold 44.5 per cent of equity stakes each in the venture, which is proposed to involve an investment of $240 million. P&O has also evinced interest in the proposed Special Economic Zone (SEZ) spread around 4,400 acres located around the port. Subject to its conditions being met, P&O Ports India has expressed its intention to acquire 74 per cent stake in the port company and majority 51 per cent stake in the SEZ. The P&O Ports India had been negotiating with the West Bengal government over the past several months to sort out various contentious issues related to acquisition of land and rehabilitation of those likely to be displaced under SEZ project.

News on Shipyards

CSL ties with Saudi Arabian company : Cochin Shipyard Ltd.(CSL) has signed a contract for the construction of nine fire fighting tugs for the port of Jeddah. AA Turki Corporation of Saudi Arabia has placed the order. CSL won the contract against stiff international competition from other international shipyards in Singapore, China and other countries. The contract comprises of construction of three numbers 1500 KW, five numbers of 2,400 KW and one 3,300 KW fire fighting tugs.

News on Logistics

No takers for SEZs in Gujarat : Gujarat government's ambitious plans for development of its Special Economic Zones (SEZs) in the state have failed to elicit investment interest. The state government had announced its SEZ policy in July last year and proposed development of SEZs in Dahej and Hazira. Similar situation confronts the Positra project, developed by Gujarat Positra Port Infrastructure Ltd. (GPPIL) and another project at Mundra, developed by the Adani group. While the Dahej and Hazira SEZs are in a nascent stage of development, the Positra and Mundra projects are yet to take off to an advanced stage. The development of SEZs in the state are believed to be suffering due to a number of procedural delays and improper handling of the project-related issues by the state government. The development of SEZs have been considered critical for generating necessary cargo traffic flow to a number of ports that have sprung up along the State's coastline. The Gujarat government has been among one of the earliest to announce a policy on development of SEZs.

CoPT asks MoC help for ICD shipments :Cochin Port Trust (CoPT) has sought the intervention of Ministry of Commerce (MoC) to resolve the issue of ban on exports of ICD shipments from ports other than those notified under the recent Customs notification. The Central Board of Excise & Customs (CBEC) had issued a public notice stating that ICD shipments would be only permitted through the seaports of Mumbai, Nhava Sheva, Kandla, Chennai and Kolkata and ports of Tuticorin and Kochi have been excluded from the list.

CBEC allows "change of port" for hosiery exporters : The Central Board of Excise and Customs (CBEC) has allowed a request from the exporters of hosiery products to permit change of port other than one mentioned in the export document issued by the Apparel Export Promotion Council (AEPC), so that shipments are cleared expeditiously. The board has taken the decision to permit the change of port in consultation with the Ministry of Commerce following reports of difficulties experienced by hosiery exporters.