How has the slowdown affected shipping and Mercator Lines?
The global slowdown has affected every one and Mercator is no exception. However, we feel that the worst of the economic slowdown is over and whatever is in the future will be better and our company has diversified into related fields to face this situation.
What will be Mercator's growth strategy in years to come?
Since last 10 years, Mercator's growth on an average is more than 35 per cent on year-on-year basis based on top line and bottom line. We feel that there is enough scope to maintain this growth rate for the next 10 years. However, other than shipping, Mercator has diversified its activity into coal mining, dredging and offshore, and the main thrust will be to expand more into these new sectors, where each sector has unlimited potential.
Do you have fleet expansion and modernisation plans?Mercator will keep on adding some tankers and bulk
ers to its fleet. Very recently, we exercised our option to purchase a Panamax which was on time charter with us, and three more brand new Post Panamaxes of 92,000 dwt will be arriving by 2009-10 and 2010-11 (which we have taken on long-term lease with nil cash outflow in capital account. Out of these, the first vessel has already been chartered to an A-class charterer for three years; the second and third vessel will join the fleet in late 2009-10 and 2010-11. We intend to use these vessels either in our existing contract of affreightment (CoA) or charter out on a long-term basis as we have done for the first vessel.
What will be the investment?
We cannot give any figure in the current economic scenario. It is difficult to find out how fast we can expand but if the market is financially sound, the company will expand in all segments or we will charter in some vessels on long-term basis at low rate without investing any money, just like we did for the three modern Post Panamax vessels, and then operate on the existing CoA or on high charter rates on spot basis.
What are the problems hindering the expansion of the Indian shipping industry?Shipping is a highly capital-intensive industry. The main problem arises when our balance sheet does not allow us to expand, keeping in view
the debt-equity ratio. Therefore, we can keep on restructuring our finances to maintain debt-equity as per the satisfaction of the lender. However, there are certain other bureaucratic problems. Our government should recognise shipping sector as part of infrastructure. All the rules, regulations, any registrations, surveys and other administrative jobs should be absolutely at par with other shipping nations like Singapore, Greece and Norway and only then, our shipping industry can expand.
What is your view on our port infrastructure compared with those in the West?
Our port infrastructure is very backward and we cannot even compare it with other developing nations like Brazil and China. The main problems arise between the Central and state governments, where shipping is under the Central government while port infrastructure, land acquisition etc., is with the states. Entrepreneurs are lost between the state and Central governments. Therefore, hardly 5-10 per cent projects are materialising. We suggest that the entire power of land acquisition, environment clearances etc., should be with the shipping ministry.
Tell us something about your offshore business.
Mercator has invested more than Rs 1,000 crore in an offshore jackup rig which is fixed for three years. During the next five years our intention is to expand this business four-five times, provided that world economy and oil prices are not under stress. We are also trying to expand our business by taking some oil blocks as a backward integration of drilling business.
What is your expertise in dredging projects?
Mercator has created a full-fledged dredging team comprising various experts from India and abroad, and we are executing projects ourselves, apart from chartering to Dredging Corporation of India Ltd.