The Shipping Corporation of India is planning to tap the global depositary receipts (GDR) market with an issue of around Rs 547.50 crore during the ninth five-year plan (1997-2002). The issue proceeds will be used to part-finance the corporations new and on-going projects during this period.
Apart from the GDR issue, the corporation will also depend on its internal resources, budgetary support and external commercial borrowings to finance its proposed outlay of Rs 5,611.70 crore during the ninth plan.
Budgetary support is projected at about Rs 679.54 crore, with external borrowings accounting for another Rs 3,163.54 crore. The remaining Rs 1,768.61 crore would be financed through the corporations internal resources.
However, the corporations internal resource generation during this period is expected to be only about Rs 1221.11 crore after meeting the debt service obligation and other capital expenditure. Therefore, it plans to tap the GDR market for meeting the Rs 547.50 crore shortfall (Rs 1768.61 crore-Rs 1221.11 crore).
The budgetary support of Rs 679.54 crore represents the government commitment for past projects for which the liabilities are still current. The ninth plan proposal states: In case budgetary support is not given, SCIs internal resources will have to be diverted for meeting its debt service obligation and to that extent SCIs acquisition plan will suffer.
The proposal further states: In fact, the term budgetary support is a misnomer and the amount released to SCI is actually a loan to be repaid with interest. Thus, it is not a sunk cost to the government as in other cases. Hence, it is imperative that the amount of Rs 679.54 crore is released to SCI as a loan so that the tonnage acquisition plan of SCI can fructify.
The corporation has already submitted its tonnage acquisition plan to the government. The plan envisages the acquisition of 44 vessels
