Week ending December 21, 2002


News on Shipping

Essar Shipping prepays Rs.136 crore loan from ICICI Essar Shipping Ltd. has reportedly prepaid Rs 136-crore loan to ICICI Bank, three years ahead of maturity period. With this, the company expects to save Rs. 10.56 crore per annum by way of interest charges on the loan advanced in January 1999 at 12.88 per cent. The second tranche of pre-payment of debt by Essar Shipping follows the earlier payment of Rs. 18.74 crore. A company statement says prepayment of outstanding loans is part of the company's effort to clear the balance sheet. Essar's debt equity ratio now stands at 0.63:1. The company now has outstanding long-term loans of Rs 550 crore and short-term borrowing of Rs 30 crore.

GE Shipping plans flagging out new acquisitions GE Shipping, India's largest private ship operator, is considering flagging its fleet out of the Indian registry, Mr. K.M. Sheth, executive chairman of the company has recently told a business daily. The report quotes Mr. Sheth as saying that GE Shipping has no particular benefit in operating its fleet under the Indian flag under existing tax regime. The company has also recently been in the news for putting on hold its plans for acquisition of strategic stake in SCI, for which it is reckoned one of the serious contenders. The company owns 27 cargo-carrying ships with an aggregate tonnage of 1.21 million dwt, with 17 tankers and 10 dry bulk carriers. It also owns 31 offshore supply vessels (OSVs), while another four vessels (two tankers and two product carriers) are on order. GE Shipping has three subsidiaries in Singapore, London and Dubai. So far only the London subsidiary owns ships. Besides, GE Shipping, Tolani Shipping has also recently decided to register its newly acquired ship in Singapore. Varun Shipping had also registered two LPG carriers outside India.

Seaman's Provident Fund setup revamped The government has decided to revamp the functioning of the Seamen's Provident Fund Organization (SPFO) in an effort to prevent recurrence of the Rs 93-crore fraud, which was detected few months earlier. The board of trustees of the SPFO has constituted a finance sub-committee for considering investment proposals involving the fund, following the recent scam, the, Mr. Thirunavukkarasar, the minister of state for shipping stated in a written reply to the Lok Sabha. An accounting firm been appointed as internal auditor for submitting quarterly progress report, which would be placed before the board of trustees of the SPFO. All physical securities would be converted into demat form.

SCI to deploy bigger vessels to Europe Shipping Corporation of India (SCI) and its partner lines from the India Sub-continent Europe Service (ISES) are planning to deploy higher capacity vessels on the European service. The ISES arrangement besides SCI includes Zim Lines, Yang Ming Line, Malaysian International Shipping Company (MISC), Evergreen, K-Line. The vessel sizes operated on the INDFEX service JNP and Busan, also covering ports like Colombo, Singapore, Port Klang, Hong Kong and Shanghai are also being increased from February. SCI's partner lines on this route include K-Line, Donganama and PIL.

Global shipping bodies decry EU restrictions In a joint statement four powerful global shipping bodies - International Chamber of Shipping, the International Association of Independent Tanker Owners (Intertanko) the international Association of Dry Cargo Shipowners and the Baltic & International Maritime Council - have condemned the continuing expulsion of aged tankers from French and Spanish coastal waters, terming them as violation of the law of sea. The statement says that while sympathies of ship owners were with the people affected by the marine pollution caused recent ship accident, off the Spanish coast, there was no justification for ordering a number of ships out of the 200-mile exclusive economic zone.

Norwegian Ship sinks in North Sea A Norwegian-registered car carrier - The Tricolour loaded with 2,862 cars, including BMWs, Volvos and Saabs, each worth about $ 40-50 million sank in the North Sea, after it colluded with a container ship because of poor visibility under thick fog. The collusion occurred at the entrance of the Dover Strait between England and France. All the 24 crew members, mostly Filipinos were rescued after the collusion. The car carrier had 2,000 tonnes of oil on board. The owners of the ship, which sank in the middle of the busiest shipping lane in the world have been told to take prompt action to have it refloated and removed.

IMO adopts amendment to maritime security procedures The International Maritime Organization (IMO) has approved a series of amendments signed by 108 countries to its security procedures aimed at preventing terrorist attacks on passenger ships and cargo vessels. The new security law comes into effect from 2004. The new procedures include installation of black-box style ship identification devices. International Council of Cruise Lines (ICCL), which was spearheading the campaign for tightening the security procedures, has welcomed the new security regulations, which now brings the entire shipping industry in line with the procedures already adopted and followed by the cruise liner industry.

Oil tanker runs aground at Klaipeda A Panama registered oil tanker - Princess Pia carrying 50,000 tonnes of fuel oil ran aground in the Lithuanian port of Klaipeda. The ship lost control while turning for unknown reason and ran aground 43 metres from the breakwater. However, no oil spill was reported from the ship.

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News on Dredging

Disinvestment Commission for offloading 51 % stake in DCI The Disinvestment Commission has in a report submitted to the government has favored the strategic sale of 51 per cent government equity in the Dredging Corporation of India (DCI) after withdrawing cash surplus of Rs.280 crore from the company, through payment of a special dividend to the government. However, the commission has suggested that government should retain at least 26 per cent stake in the DCI for a minimum period of five years after disinvestments. This is to ensure that is no cartels in the domestic dredging sector, after the disinvestments in DCI. The report of the commission also cautions against potential takeover of the company leading to asset stripping, which could adversely affect dredging operations in the country.

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News on Logistics

Petropole CLS to be made a land port A senior-level Commerce ministry team has proposed that land customs station (LCS) at Petropole on the Indo-Bangladesh border be notified as a land port authority under the Foreign Trade Development and Regulation Act. It has also asked the Central Warehousing Corporation (CWC) to strengthen its on-site truck terminal and create additional facilities inside the complex. The team has also proposed that the land port can be created in an encircled area and administered by a single authority comprising State, district administration, Customs, Border Security Force, Customs house agents and other trading communities, as is being done on the other side of the border at Benapole. During 2001-02, the export trade from India through the three CLS points at Hili, Kotwalighat and Petropole aggregated to Rs. 2,563 crore out of which Petropole alone accounted for 1695 crore.

CLM seminar focuses on 3pl services Third party logistics will have a crucial role to play with the growing trend among business organizations to outsource non-core functions. This was the overriding message at the round table seminar, organized by the Council of Logistics Management (CLM) on 11 December. Speaking at the seminar, Mr. Sanjay Handu, head supply chain and IT, Tyco Electronics Corporation (India) Pvt. Ltd said that while the customer, the supplier and the vendor were three clearly demarcated segments with many points of delay between each segment, today the line of demarcation had got eroded. He said the 3pl market in the country, currently worth Rs 1,000 crore, was still in a nascent stage. Among the companies that participated in the round table included Forbes Gokak Ltd, Panalpina Worldwide Transport (India) Pvt Ltd, Volvo India, HLL, Satyam Computers and Reliance Logistics et al.

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