Bangalore: Steel Authority of India Ltd (SAIL) and Shipping Corp. of India Ltd (SCI), the country’s biggest ocean carrier, will not involve strategic partners in the joint venture shipping company they are setting up primarily for providing services to the steel maker.
“It has now been decided to restrict the joint venture shipping company to only SAIL and SCI,” said a Union government official briefed on the matter. The joint venture firm, however, may consider involving partners in activities such as owning and managing ports, coastal shipping (carrying cargo between Indian ports) and trans-loading of coking coal cargo imported by SAIL, he added, on condition of anonymity since the discussions are confidential.
U.C. Grover, SCI’s director for technical and offshore services, only said, “The talks between SAIL and SCI are progressing fast and a final decision would be announced soon.” He declined to give details.
A spokesperson for SAIL declined to comment.
State-run SAIL and SCI are so-called Navratna companies, a tag that gives full financial autonomy to a public firm for capital expenditure in new projects, joint ventures, modernization and purchase of equipment. The new company will start operations with an initial fleet of eight dry bulk carriers, all second-hand, five-year-old ships that will be purchased this year and the next, the official mentioned earlier said.
Last week, Deloitte Touche Tohmatsu India Pvt. Ltd, the consultancy firm hired by the two state-run firms to prepare a project report on the new venture, discussed various details of the joint venture with representatives of SAIL and SCI in Mumbai, he added.
The two firms had signed a memorandum of understanding (MoU) last June to start a joint venture firm that would mainly provide shipping-related services to SAIL in importing the coking coal required for its steel mills, but could also participate in the global dry bulk shipping trade.
“While SAIL and SCI each intend to hold 25% of the paid-up share capital of the proposed JVC (joint venture company), the remaining share capital will be held by other strategic partners, who are yet to be identified,” SAIL had said in a statement while announcing the MoU.
According to this plan, the joint venture firm was to be structured like a private company so it could negotiate and buy ships without going through the tendering process that typically binds public firms in their purchases.
The new shipping firm will handle only a part of SAIL’s coking coal imports of about 12 million tonnes (mt) a year, mostly from Australia, for which the steel maker pays a freight bill of nearly $300 million (Rs1,422 crore).
SAIL’s rival Tata Steel Ltd runs a 50-50 joint venture shipping company with Japan’s NYK Line for operating bulk cargo to transport raw material and finished steel for the steel maker, thereby keeping strategic control over logistics.