Shipping Corp to buy five ships from Cochin Shipyard

Bangalore: State-run Shipping Corporation of India Ltd (SCI) will buy five vessels from Cochin Shipyard Ltd, also state-owned, and issue tenders for buying two used liquefied petroleum gas (LPG) carriers as it looks to re-start ship purchases that were frozen after poor financial performance.

The board of Shipping Corp. met in Delhi on Thursday and approved the signing of a memorandum of understanding with Cochin Shipyard for the five vessels, a spokesman for the company said.

The five ships to be constructed at Cochin Shipyard includes three anchor handling tug-cum-supply vessels and two platform supply vessels used to support offshore oil exploration activities. The price for the five ships has not been decided yet.

Since April 2013, SCI had cancelled orders for building 12 new ships after shipyards jumped delivery dates. This allowed the company to preserve cash.

“Shipping Corp needs to re-deploy Rs.330.65 crore of refund money received from shipyards on order cancellations which were originally part of the proceeds of the follow-on public offer in November 2010. This money can only be used for buying ships because that was the one of the purposes of the follow-on public offer,” the spokesman said.

With three consecutive quarters of profits this fiscal, SCI has earned a cumulative profit of Rs.99.44 crore in the nine months and is only a quarter away from posting a full-year profit, its first in four years.

SCI had reported overall losses in the fiscal years 2012, 2013 and 2014—Rs.428.2 crore, Rs.114.3 crore and Rs.274.66 crore, respectively.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.