SBI offers Rs 2,000 cr to SCI to buy vessels

State Bank of India (SBI) has offered an in-principle sanction to loan Rs 2,000 crore to Shipping Corporation of India (SCI) to acquire nine vessels, for which the shipping major had hit the capital market with an FPO for the equity portion.

"SCI has received in-principle (rpt) in-principle sanction of Rs 2,000-crore debt for acquiring nine vessels that would cost Rs 2,663.96 crore," SCI Director J N Das said.

SCI has hit the capital market with a follow-on-public offer to (FPO) raise fresh capital of extent of 10 per cent and similar would be divested by government.

The price band is between Rs 135-140 per equity share of Rs 10 each and the issue will close on December 3.

SCI plans to raise Rs 637 crore from the public offer to meet the equity portion for the propsoed nine vessels.

SCI will buy four Kamsarmax Bulk carrier costing Rs 626 crore, two VLCC at Rs 987 crore and three container vessels worth Rs 1,050 crore, respectively.

Delivery of these vessels will begin from 2013 and all the ships are expected to be delivered by 2014, SCI officials said.

SCI had already formulated a plan to raise its tonnage capacity to 7.5 million Dwt (Deadweight tonnage) from 5.5 million Dwt by finalising acquisition of 46 vessels in total.

"We have already placed an order for 31 vessels and we hope to place order for another 15 vessels within this fiscal. Taking account of these vessesls our cargo handling capacity will increase to 7.5 million Dwt," Das said.

The estimated cost of additional 15 ships would be somwhere in the region of USD 1 billion, the company officials indicated, adding that the company does not forsee any hurdle to the fund flow, as it has a cash balance of close to Rs 2,800 crore.

The 31 vessels which have already been ordered are scheduled to be delivered within 2014.