India Inc sails into shipping
Move over Indian shipping companies, the traditional buyers of shipping tonnage in the country. Corporates with interests in power, cement, iron ore, etc are adding up fleets through acquisitions as well as going for newbuilds. According to shipping sources familiar with such developments, during the last 6 months or so, nearly a dozen ships have been added by corporate entities. Companies like India Cement, Gujarat Ambuja Cement, Tata Power have either bought ships or are in the process of acquiring. Prominent among those companies said to be thinking about vessel acquisition seriously are Videocon and Reliance Power.
While India Cement has bought 2 ships, Gujarat Ambuja Cement is going to add one in June 30, 2008, when ABG will deliver it a self loading and unloading vessel of 4,000 DWT bulk cements carrier worth $ 9.90 million. The company currently owns some 7 vessels.
Tata power has already created a division and is on its way to buy ships to transport coal so as to “mitigate freight costs”. India’s third-biggest utility by value, the company has various projects across the country at various levels of development. For example, Tata Power will have to import 12 million tonnes of coal from different countries, including Indonesia, for the power plant it is setting up in Mundra, Gujarat.
The $5 billion-Videocon group, which has signed a memorandum of agreement (MoA) with the West Bengal government to set up an integrated steel plant and captive power plant at Barabani in Burdwan is also understood to be on the look out for ships.
“The market is strong, freight rates are high and for those who are in the business with their own cargo, this is the most opportune time to buy ships,” said a director of company that has just added another handymax to its fleet.
‘Corporates are buying ships primarily because it is one of the options of employing surplus they have in hand and to create an asset base for the company which could serve them good,” said a maritime consultant on this development.
Gainfully employing the money for ships would also earn them depreciation and other benefits, he said.
the high prices of ships need not worry the cash rich corporates, because, he said “given the huge cost of setting up, for example, a power plant an another Rs 100 crore is not going to make much of a difference to them.”
“These companies are not interested in shipping per se,” said an analyst of the shipping sector, adding, “but captive cargo is what makes them confident. Earlier, such companies would have gone tie up with existing shipping companies. But now they have money and there is more money to be made from transporting their own cargo.”
Even though many corporates and others are buying ships, that too big ones, how much of that is going to augment Indian national tonnage is anybody’s guess.
This is more so because most of the new acquisitions have ships registered under foreign flags. For example, at least nearly half a dozen ships recently bought are registered under flags like that of Singapore or Panama.
When pointed out the concern expressed by Indian National Shipowners’Assocation (INSA) about deteriorating age profile of local fleet and its declining share in the carriage of country’s overseas trade, one new owner of a ship said, “Insa is an industry body and it will take care of the industry view. We have nothing to do with them and our ships are registered outside India.”
While India Cement has bought 2 ships, Gujarat Ambuja Cement is going to add one in June 30, 2008, when ABG will deliver it a self loading and unloading vessel of 4,000 DWT bulk cements carrier worth $ 9.90 million. The company currently owns some 7 vessels.
Tata power has already created a division and is on its way to buy ships to transport coal so as to “mitigate freight costs”. India’s third-biggest utility by value, the company has various projects across the country at various levels of development. For example, Tata Power will have to import 12 million tonnes of coal from different countries, including Indonesia, for the power plant it is setting up in Mundra, Gujarat.
The $5 billion-Videocon group, which has signed a memorandum of agreement (MoA) with the West Bengal government to set up an integrated steel plant and captive power plant at Barabani in Burdwan is also understood to be on the look out for ships.
“The market is strong, freight rates are high and for those who are in the business with their own cargo, this is the most opportune time to buy ships,” said a director of company that has just added another handymax to its fleet.
‘Corporates are buying ships primarily because it is one of the options of employing surplus they have in hand and to create an asset base for the company which could serve them good,” said a maritime consultant on this development.
Gainfully employing the money for ships would also earn them depreciation and other benefits, he said.
the high prices of ships need not worry the cash rich corporates, because, he said “given the huge cost of setting up, for example, a power plant an another Rs 100 crore is not going to make much of a difference to them.”
“These companies are not interested in shipping per se,” said an analyst of the shipping sector, adding, “but captive cargo is what makes them confident. Earlier, such companies would have gone tie up with existing shipping companies. But now they have money and there is more money to be made from transporting their own cargo.”
Even though many corporates and others are buying ships, that too big ones, how much of that is going to augment Indian national tonnage is anybody’s guess.
This is more so because most of the new acquisitions have ships registered under foreign flags. For example, at least nearly half a dozen ships recently bought are registered under flags like that of Singapore or Panama.
When pointed out the concern expressed by Indian National Shipowners’Assocation (INSA) about deteriorating age profile of local fleet and its declining share in the carriage of country’s overseas trade, one new owner of a ship said, “Insa is an industry body and it will take care of the industry view. We have nothing to do with them and our ships are registered outside India.”