London-based Foresight Group eyes Shipping Corp for LNG biz

To help strengthen the country’s gas infrastructure, London-based shipping firm Foresight Group is eyeing Shipping Corporation of India (SCI) to make it a leading liquefied natural gas (LNG) carrier in the world.

“With India having set a target to increase its gas contribution in the energy basket, we see SCI playing a major role due to its strong presence in the tanker segment. It is this segment where we see strong business potential,” said Ravi Kumar Mehrotra, founder, promoter, and executive chairman at Foresight Group International.

Foresight Group, in a consortium with Antwerp-based Exmar NV and Dubai-based GMS, is one of the preliminary bidders for the national carrier, as the government is looking to privatise SCI by selling 63.75 per cent stake in the latter.

Natural gas currently makes up for 6.2 per cent of all energy consumed in the country. To cut dependence on polluting coal and liquid fuels, the government is targeting its share to rise to 15 per cent by 202030. “To go to 15 per cent share of gas in the energy basket, SCI will need another 100 LNG carriers, in addition to the tanker fleet it already has. We will be moving in this direction to reach the target set by the country,” said Mehrotra.

With a fleet size of 60 vessels, SCI has presence in container vessels, crude oil tankers, dry bulk carriers, liquefied petroleum gas/ammonia carrier, multipurpose vessels, offshore supply vessels, and product tankers. Of all the segments, the tanker business contributes the highest to the SCI’S top line. In 2019-20 (FY20), revenue from the company’s tanker business stood at ~2,958.19 crore (66 per cent of total ~4,479.33 crore).

The company has 20 tankers and 13 product vessels with one gas carrier in its fleet, according to the March 31, 2020, annual report. “We want to transition SCI from a conventional shipping company to specifically energy tonnage. India energy demand is expected to grow in double digits and we are located between India and Dubai (which is between energy producer and consumer region). We would like to map this trajectory and bridge this logistics. This is where SCI comes handy as the right platform,” said Manjari Mehrotra Seth, director at RK Mehrotra Holdings.

While the company’s energy segment is strong, its bleeding bulk business cannot be ignored. Higher operating costs, weaker import demand in China, and a supply-side influx adversely affected the dry cargo market, said the company’s FY20 annual report.

According to the FY20 annual report of SCI, bulk revenue was 13 per cent of the total standalone revenue of ~4479.33 crore for 15 bulk carriers.

With regard to the funding of acquisition, Seth informed that the kitty is ready and will largely comprise family trust, funding from consortium partners, and institutions. SCI is the only Indian shipping company engaged in transportation of LNG, a vital fuel for India’s power plant and chemical/petrochemical industry, says the company website.