Govt's stake in SCI to decline to 63.75% after FPO

The Government's stake in the State owned-Shipping Corporation of India Ltd will come down to 63.75 per cent from 80.12 per cent currently after the company's follow-on issue slated to open in end November or early December, a top company official said here.

Post stake sale, the government's holding in the company will come down to 63.75 per cent from 80.12 per cent currently, SCI's Chairman and Managing Director, S Hajara told reporters here.

SCI is coming come out with its follow-on public offer by end November or early December.

"We are expecting approval from the Securities and Exchange Board of India (SEBI) approval shortly, following which we will file the final copy of the red-herring prospectus with the registrar of companies. We are hopeful of coming out with an follow-on offer by end of this month or early December," Hajara said.

The issue comprises fresh issue of 42.35 million shares and an offer for sale of another 42.35 million shares.

The company plans road shows in London, New York, Singapore and Hong Kong from the next week.

Declining to comment on pricing and amount to be raised through FPO, Hajra said, the stake sale proceeds will be used to buy new vessels.

The company has drawn up capex plan of $1 billion per annum for the next three years period, Hajara said, adding that the capex will be financed through internal accruals and debt.

The company has strong balance sheet with Rs 2,400 crore cash with a debt to equity ratio of 0.45.
   
"We believe that our strong balance sheet and cash on hand provides us with greater working capital and the flexibility to sustain our business during difficult economic times.
       
"In addition, our strong balance sheet has allowed us to service interest and principal payments on our debt in a timely manner. We believe that our strong balance sheet and history of timely loan payments permit us to enter into favourable financing terms for the acquisition of vessels," Hajara said.
   
As part of ambitious expansion plan, SCI plans to add 62 vessels in the 11th Five Year Plan.
   
"We have already ordered 32 vessels and will place orders for 30 more vessels by end of March 2012," Hajara said.
   
The ships being acquired by SCI would be predominantly used for catering to import/export trade of India. Some of the vessels would also participate in global trade depending on opportunities available, Hajara said.
   
Hajara pointed out that the shipping rates are likely to remain under pressure till the end of calendar year 2011, and rates in the container segment will hold firm.