» Business » Logistics PSU biggies take JV route

Logistics PSU biggies take JV route

January 13, 2007 11:17 IST

Think twice before writing off public sector undertakings. Confronted with competition, state-run logistics companies are opting for joint ventures among themselves and with the private sector.

Companies such as Shipping Corporation of India, Container Corporation of India, Central Warehousing Corporation, Air-India, Indian Airlines, Mazagon Dock, Mumbai Port and Jawaharlal Nehru Port Trust are leading such alliances.

For instance, SCI is set to enter the lucrative Rs 80-crore (Rs 800 million) Indian dredging market by floating an alliance with Mumbai Port, JN Port and Mazagon Dock. Concor has tied up with Danish shipping major AP Moller-Maersk A/S to form a 26:74 venture to run the Rs 1,000-crore (Rs 10 billion) container terminal at JN Port.

"PSUs are sitting on huge cash reserves while resources are limited. With these JVs, PSUs can diversify into new areas by paying only a minimum percentage, coupled with risk sharing advantage," industry analysts said.

SCI Director Sudhir S Rangnekar said, "JVs and tie-ups with private players will allow PSUs to become nimble-footed, customer-oriented, and with pool expertise."

SCI, which sits on over Rs 3,000 crore (Rs 30 billion) of cash reserve, has also floated a JV company with ONGC for offshore marine services. It has floated a similar company with Forbes Gokak and Sterling Investment Corporation for acquiring and operating vessels.

Recently, CWC, SCI, Concor, MbPT and international shipping major MSC teamed up to bid for the Rs 5,000 crore (Rs 50 billion) container terminal at JN Port. Concor, which enjoyed a monopoly in container transportation via rail, has forged JVs with eight private players, which have got licence to run box trains, to share infrastructure.

"In one stroke, Concor has neutralised the competition and ensured business, at least for the short term," said industry analysts.

Concor has also tied up with Hindustan Aeronautics (HAL) for handling air cargo at Nasik. Earlier, it had joined hands with French shipping major CMA CGM Global India for an ICD at Dadri near Delhi. CWC is expected to team up with private as well as state-owned companies to develop Rail-side Warehousing Complexes (RWC).

In aviation, a special purpose vehicle (SPV) floated by PSU carriers Air-India and Indian Airlines is in talks with West Asian company Dnata and Singapore Airport Terminal Services (SATS) to bid for ground handling operations at the GMR Group-promoted new Hyderabad International Airport.

P R Sanjai in Mumbai
Source: source