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Thursday, 05 November 09
MERCATOR LINES AIMS TO BECOME A $5 BILLION COMPANY
 Mercator Lines, India’s second largest private sector shipping line, plans to invest and expand, riding India’s next wave of growth, the theme of the World Economic Forum’s India Economic Summit, to be held in New Delhi on 8-10 November
It all started with an idea floated by a co-passenger in a flight.
Harish K. Mittal, owner of India’s second largest private shipping line, does not remember the passenger’s name, but his suggestion on starting a shipping firm way back in the early 1980s stuck in his mind.
Mittal, then running a chemical factory in Muzaffarnagar in Uttar Pradesh, mentioned this idea to Atul Agarwal, who is married to his wife’s sister. Agarwal was at the time auditing some companies that included a few shipping firms.
In 1988, Agarwal mentioned that Mumbai-based Mercator Lines Ltd was on the block. Mittal, then also into the business of buying ship scrap, did not hesitate. He bought the firm for Rs1.2 crore from the Ramchandani family.
From Rs65 lakh in 1988, the firm’s revenue increased to Rs2,200 crore in the year ended 31 March. Mercator Lines today runs a fleet of 28 vessels, up from three barges in the year Mittal bought the firm.
The shipping line, riding high on the wave of India’s economic liberalization since the 1990s, listed on the Bombay Stock Exchange in 1993 and has never missed paying a a yearly dividend to shareholders, Mittal says.
The 59-year-old entrepreneur now wants to make his firm a $5 billion (around Rs23,550 crore) company, an “ambitious dream,” but not impossible for a shipping line that reported a revenue of just Rs60 crore just five years ago.
From a traditional tanker company, Mercator today has a presence in bulk shipping, tanker shipping, dredging, offshore oil exploration and coal mines.
“We have already acquired four coal mines in Indonesia and one in Mozambique. We are now looking for acquiring one more in Indonesia. This will enable us to offer a complete logistics package including coal, ship and local logistics,” says Mittal, who holds a 1973 postgraduate degree in technology from the Indian Institute of Technology, Roorkee, then known as the University of Roorkee.
A majority of new Indian power projects are eyeing imported coal, mainly from Indonesia, to run their plants.
Mittal attributes his success to his management team.
An analyst agrees. “Mercator Lines management was always aggressive to grab every opportunity that came before them, be it dredging, coal mines, offshore or dry bulk ships,” says Kapil Yadav, an analyst with domestic brokerage Dolat Capital Market Pvt. Ltd. Yadav tracks the firm’s scrip.
“The business model of Mercator Lines is to diversify to several segments to derisk, while locking in its vessels for long-term contracts to mitigate the volatility of freight rates,” he says.
Mercator Lines has acquired four dredgers and plans to add six more to its portfolio. Indian ports continuously require dredging to keep their shipping channels deep. State-run Dredging Corp. of India Ltd is unable to meet the entire requirements of the country’s ports. Some international dredging companies have set up shop in India to tap the market potential.
“We are very serious about dredging,” says Mittal. “Apart from dredging, we are also upbeat about the offshore sector.”
Mercator Lines, as part of a strategy to derisk the cyclical nature of its core shipping business, entered the offshore drilling business with the delivery of a Rs1,000 crore jack-up rig. The rig was immediately deployed on a three-year contract with state-owned Oil and Natural Gas Corp. Ltd through Great Eastern Shipping Co. Ltd.
“We are constantly looking for other areas of offshore business, exclusive offshore support vessels. This could be anything, high specification rigs or other areas,” Mittal says. “Mercator was contracted two oil blocks under the seventh round of the new exploration licensing policy,” Mittal said.
In December 2007, Mercator Lines listed its Singapore-based subsidiary on the Singapore Stock Exchange and raised over Rs500 crore.
Last year, shipping firms were hit by the global economic downturn that led to a steep decline in world trade and caused freight rates to fall. “Though there are some signs of revival, I think the next two years are going to be tough for the shipping sector,” Mittal says. “Our diversification model is going to save us during this crisis.”
“Though Mercator has done everything to de-risk by diversifying, as a shipping company it will be exposed to volatility since it is a cyclical industry,” Dolat’s Yadav says.
Mittal, however, remains optimistic. He says all the business segments of his firm are growing and he would continue to invest in these. “Nothing stops us from aiming at being a $5 billion company.”
Source: Live Mint
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Thursday, 22 October 09
2ND UNITED INDONESIA CABINET UNVEILED
The Jakarta Post reported that, President Susilo Bambang Yudhoyono announced his second United Indonesia Cabinet on Wednesday night, comprising 34 m ...
Thursday, 22 October 09
PEABODY SET TO TAP ASIAN DEMAND FOR COAL
The Australian reported that, US coal giant Peabody Energy plans to double its Queensland and NSW coal exports in the next five years, as it looks t ...
Wednesday, 21 October 09
INDONESIA POWER FIRM SEEKS TO DEFER COAL SUPPLIES
Reuters reported that, Indonesia's state power firm is negotiating with two coal producers, including a unit of PT Bumi Resources Tbk, to defer a c ...
Wednesday, 21 October 09
MINING REGULATION GENERATES CONFUSION IN INDONESIA
The Jakarta Globe reported that, Mining industry representatives said on Friday they were confused by a recently issued regulation restricting the w ...
Wednesday, 21 October 09
LAW ACCOMMODATES NATIONAL AND INVESTOR INTERESTS
COALspot.com (Indonesia): According to ESDM, the government has issued five Lawson the energy and mineral resources sector. These laws will prioriti ...
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- IHS Mccloskey Coal Group - USA
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- Bulk Trading Sa - Switzerland
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- SMC Global Power, Philippines
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- The University of Queensland
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- GMR Energy Limited - India
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- Mercator Lines Limited - India
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- Dong Bac Coal Mineral Investment Coporation - Vietnam
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- Parliament of New Zealand
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- Commonwealth Bank - Australia
- OPG Power Generation Pvt Ltd - India
- Siam City Cement - Thailand
- Pipit Mutiara Jaya. PT, Indonesia
- PTC India Limited - India
- Ministry of Transport, Egypt
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- Toyota Tsusho Corporation, Japan
- Ambuja Cements Ltd - India
- Metalloyd Limited - United Kingdom
- Directorate Of Revenue Intelligence - India
- VISA Power Limited - India
- Videocon Industries ltd - India
- Merrill Lynch Commodities Europe
- Vijayanagar Sugar Pvt Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
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- Marubeni Corporation - India
- Meenaskhi Energy Private Limited - India
- CNBM International Corporation - China
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- Singapore Mercantile Exchange
- Renaissance Capital - South Africa
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- Georgia Ports Authority, United States
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- Bayan Resources Tbk. - Indonesia
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- Power Finance Corporation Ltd., India
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- Kumho Petrochemical, South Korea
- Eastern Coal Council - USA
- Latin American Coal - Colombia
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- Therma Luzon, Inc, Philippines
- SN Aboitiz Power Inc, Philippines
- Xindia Steels Limited - India
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- Aboitiz Power Corporation - Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Tamil Nadu electricity Board
- Vedanta Resources Plc - India
- CIMB Investment Bank - Malaysia
- Interocean Group of Companies - India
- McConnell Dowell - Australia
- Electricity Authority, New Zealand
- Essar Steel Hazira Ltd - India
- ICICI Bank Limited - India
- Manunggal Multi Energi - Indonesia
- Goldman Sachs - Singapore
- Aditya Birla Group - India
- Bukit Baiduri Energy - Indonesia
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- Kapuas Tunggal Persada - Indonesia
- Simpson Spence & Young - Indonesia
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- Maharashtra Electricity Regulatory Commission - India
- Central Electricity Authority - India
- Wood Mackenzie - Singapore
- Planning Commission, India
- Jindal Steel & Power Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- White Energy Company Limited
- IEA Clean Coal Centre - UK
- Trasteel International SA, Italy
- Chettinad Cement Corporation Ltd - India
- Chamber of Mines of South Africa
- India Bulls Power Limited - India
- Medco Energi Mining Internasional
- Oldendorff Carriers - Singapore
- Petrochimia International Co. Ltd.- Taiwan
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- AsiaOL BioFuels Corp., Philippines
- Ind-Barath Power Infra Limited - India
- Globalindo Alam Lestari - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Agrawal Coal Company - India
- Price Waterhouse Coopers - Russia
- Mjunction Services Limited - India
- Eastern Energy - Thailand
- Leighton Contractors Pty Ltd - Australia
- Indian Energy Exchange, India
- Sical Logistics Limited - India
- Australian Coal Association
- Wilmar Investment Holdings
- Orica Australia Pty. Ltd.
- Standard Chartered Bank - UAE
- Billiton Holdings Pty Ltd - Australia
- ASAPP Information Group - India
- Lanco Infratech Ltd - India
- Indian Oil Corporation Limited
- Anglo American - United Kingdom
- Bahari Cakrawala Sebuku - Indonesia
- Coal and Oil Company - UAE
- PowerSource Philippines DevCo
- Vizag Seaport Private Limited - India
- Alfred C Toepfer International GmbH - Germany
- Bhatia International Limited - India
- London Commodity Brokers - England
- Indogreen Group - Indonesia
- Samtan Co., Ltd - South Korea
- SMG Consultants - Indonesia
- Sindya Power Generating Company Private Ltd
- New Zealand Coal & Carbon
- GAC Shipping (India) Pvt Ltd
- Pendopo Energi Batubara - Indonesia
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- Altura Mining Limited, Indonesia
- Petron Corporation, Philippines
- Holcim Trading Pte Ltd - Singapore
- Gujarat Mineral Development Corp Ltd - India
- Mintek Dendrill Indonesia
- Ministry of Finance - Indonesia
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- Larsen & Toubro Limited - India
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- Australian Commodity Traders Exchange
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- Minerals Council of Australia
- Baramulti Group, Indonesia
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