Date:18/02/2005 URL: http://www.thehindubusinessline.com/2005/02/18/stories/2005021801360700.htm

Back Mercator Lines plans Singapore subsidiary

P. Manoj

New Delhi , Feb. 17

MERCATOR Lines Ltd, the country's third largest shipping company in the private sector, is pursuing a plan to float an international subsidiary based in the shipping hub of Singapore, a top company official has said.

"The proposal to set up an international subsidiary in Singapore was cleared by the board of Mercator during a meeting held on February 15," the company's Joint Managing Director, Mr Atul J. Agarwal, told Business Line.

"By setting up a Singapore-listed subsidiary, Mercator intends to tap the immense funding opportunities available in that country," he noted.

The management of Mercator Lines is also toying with the idea of listing the parent company on the Singapore Stock Exchange. "This will help us tap further opportunities for funding besides imparting greater visibility to the company in the international market," Mr Agarwal disclosed.

Though, India has become shipping industry friendly with the recent introduction of the tonnage tax, Mr Agarwal said that the tax regime prevailing in Singapore was "much better" than in India.

"The tax regime for the shipping industry in Singapore is much more friendlier than India," he opined.

While the twin proposals are in the nascent stages, he said that merchant bankers have made presentations to the company on ways to proceed with the plans.

Mercator is expected to hold a majority stake of 51 per cent in the Singapore subsidiary while the remaining shares would be offered to financial institutions and strategic investors.

Mr Agarwal said the company does not require shareholders' approval for setting up the subsidiary since the Mittal family (the promoters) hold more than 60 per cent of the shares. The company has, however, convened an EGM on March 14 to discuss the plan with the shareholders.

The Bombay and Ahmedabad stock exchange-listed Mercator, which primarily focusses on transportation of crude oil with a fleet of tankers and very large crude carriers, has unveiled plans to acquire more tonnage with an investment of close to $300 million (around Rs 1,320 crore).

Mr Agarwal said that the board has also cleared the management's proposal to raise $60 million through a foreign currency convertible bond issue for funding expansion plans.