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Mercator Lines
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grandmaster89
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18-Jan-2010 13:52
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Interview with the Founder and CEO of Mercator Lines Limited. He is also the Chairman of Mercator Lines (Singapore). 'India to become a driving factor in world shipping' Q&A: H K Mittal, CMD, Mercator Lines Abhineet Kumar / Mumbai January 18, 2010, 0:07 IST The economy is reviving, but Indian shipping companies still have reason to be cautious. In the dry bulk segment, demand is dependent on Chinese requirements. H K Mittal, chairman and managing director of Mercator Lines, India's second largest private shipping company, spoke to Abhineet Kumar on the outlook and how he feels India can become the next catalyst for growth of the segment. As ship prices drop, his company is also considering expanding its fleet of 15 dry bulk carriers and 11 tankers. Edited excerpts: Shipping freight rates have been a barometer for global trade. This time the uptake in global economies is not reflecting in these rates. Economies have not revived globally. If you talk about India, yes, it has recovered almost completely but the situation here was not so bad. The European, US and Japanese economies have not recovered fully. The shipping industry is an average for the global economy, so it is not getting the full impact of recovery. But, China has more or less recovered, so there has been some recovery in the demand for dry bulk carriers. How long is the shipping industry going to be dependent on Chinese demand? In India, if all power plants under implementation come up in the next four or five years, then there will be huge growth in the shipping requirement. Then, India will also become one of the driving factors, along with China. China is building up the whole nation, so the requirement from there will anyway continue for the next 15 to 20 years. But, India will also become a significant portion of the demand. The infrastructure is improving, power plants are coming up. All these need some kind of import, like power plants will need coal. The demand here may not be like China. It may be slow but it will definitely come up. Don’t we expect any revival in demand from Europe and the US in this year? No. This year, the demand is mostly going to be from China. Even in the future, European demand is not expected to be significant. In the dry bulk segment, as much as 24 per cent of the existing fleet is expected to be added this year, while in the crude tanker segment, it is about 11 per cent. Is that putting additional pressure on freight rates? Yes, it is. But, there are old vessels due for scrapping this year. Steel rates are fairly good now, lightweight ships are getting scrapped at $380 to $400 per lightweight (light displacement tonne or per tonne for ship without cargo). We hope some older tonnage will be phased out. What is your outlook for the freight rate for dry bulk carriers? Where do you see the Baltic Dry Index moving this year? The peak of the index was around 11,600 and bottom was about 600. I think the index should be at 3,500 this year. Any thing above 2,500 is good. How is that good? See the return on investment. Ship prices have come down. The Panamax price went up to $100 million for second-hand ships and even yard prices for new ships had reached about $60 million. Now it is available at $35 million for newly built ships. There is a huge fall. At a $35-million cost for Panamax, the index level of 2,500 is not bad. That means you would be looking at some buy out of ships at a low rate this year? Not immediately. But, we are definitely thinking of expanding. The requirement in terms of size of the vessel changes every time. The latest requirement is being assessed and we will definitely try to expand. What is your outlook on tanker rates, which has seen recovery on the strong winter in the western countries? The Baltic Dirty Tanker is at 1,100 against the 2008 peak of 2,347 and the Clean Tanker Index is at 900 against the peak of 1,509 in 2008. Do we expect a correction post winter? I think the strong winter has definitely added to the demand. But, single-haul tankers are to be phased out this year, under the deadline for their use posed by many countries. So, the rates are not expected to go down sharply post winter. I THINK MERCATOR LINES MIGHT BUY SOME VESSELS AT CHEAP PRICE SOON. 3Q RESULTS WILL BE OUT IN 3 DAYS. |
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grandmaster89
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15-Jan-2010 12:43
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Shippers seek buoys in drier lines
Abhineet Kumar / Mumbai January 15, 2010, 0:48 IST Mercator Lines, India’s second largest shipping company, best known for its largest fleet of dry bulk carriers, became the biggest exporter of coal from Indonesia to India in November 2009, from its own mines. Its subsidiary there, Oorza, exported 0.33 million tonnes (mt) of coal to India in the month. And, the company is now aiming for 10 mt of annual production in the next three years from Indonesia alone. “We are scouting for more mines for acquisitions in Indonesia,” said a company executive, who did not wish to be named. The company also has a mine in Mozambique, with recoverable reserve of 1 billion tonnes. “With that kind of reserve, anyone would like to have 30 million tonnes of annual capacity,” he said. Though, the production in Mozambique will take longer, as the rail and port infrastructure is yet to be created. Mercator Lines reported Rs 749 crore of revenue in the first half of the current financial year. Of this, 14 per cent, or Rs 104 crore, came from coal mining. The contribution of mining in the corresponding period of the previous year was zero: It started mining in Indonesia in the third quarter of the last financial year. This is a conscious plan of the company, for its non-shipping revenue to overtake shipping revenue by March 2011. The company is building dredging and offshore businesses to meet this target. Similarly, the largest private sector shipping company, Great Eastern Shipping, has put its focus on offshore drilling and exploration. “Exploration is a much more stable business in the long run,” said a company spokesperson. Its offshore subsidiary, Greatship, currently owns one 350 ft jack-up rig and has chartered another. Besides, it owns 14 offshore vessels and has chartered one more supply vessel. It will spend $423 million (Rs 1,928 crore at the current exchange rate) to buy 11 offshore vessels in the next two years. “Shipping is cyclical, so it is prudent to build a more stable revenue stream with a related business like offshore,” she said. In the first half of the current financial year the company reported Rs 334 crore of revenue from the offshore business, up from Rs 127 crore in the corresponding period of the previous year. In the same period, shipping revenue fell to Rs 1,352 crore from Rs 2,300 crore and so, the contribution of the offshore business grew to 20 per cent of total revenue in the first half of the current financial up, from 5 per cent a year ago. These companies would be announcing their October to December quarter results this month. “Offshore contracts are usually of three to four years, giving longer earning visibility,” said Jehangir Adi Master, an analyst with ICICI Securities. “It has become necessary for shipping companies to get into these segments for stable growth.” Since its parent company Mercator Lines has its own coal mines, I believe it can add in this component to the overall Mercator Strategy - > Mine - Port - Shipping - Port - Logistics - Client. Since Mercator Lines (Singapore) deals with the shipping aspects, perhaps in the near future we can expect more coal related COAs from Indian power plant companies 
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grandmaster89
Veteran |
12-Jan-2010 17:47
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The Board of Directors (the “Board”) of Mercator Lines (Singapore) Limited (the “Company”) wishes to announce that- The Company has entered into an agreement for the time charter-out (the “charter”) of its gearless Post Panamax vessel Chanchal Prem. The Charter shall be at time charter equivalent rate of USD 26, 500 per day for a period of 11 months to 13 months. The Charter will commence between April and May 2010. The Charterers are unrelated to the Directors and controlling shareholder of the Company. None of the Directors and controlling shareholders of the Company has any interest, direct or indirect, in the Charter. The Charter is in the ordinary course of the Company's business. For and on behalf of Mercator Lines (Singapore) Limited Shalabh Mittal Managing Director & CEO January 12, 2010 Things to take note of - 1) Chancal Prem is chartered in to Mercator at a daily rate of US$25.3K from Oct 09 - Oct 14. 2) The time charter of US$26.5K will cover the charter-in cost for the next year thereby preventing any operating loss. 3) This will help Mercator Lines reduce any potential losses until the BDI recovers. The other post-panamax was chartered out to Cosco Group at a daily rate of US$39.5K in Sept 09 - Sept 12 thereby grossing at least US$14K/day of profits. The other post-panamax was delievered one month prior Chancal Prem and has the same daily chartered-in rate of US$25.3K. |
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grandmaster89
Veteran |
11-Jan-2010 15:54
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Article
About Mercator Lines (Singapore) parent company - Mercator Lines
Limited - which owns 72% of Mercator Lines (Singapore).
The art of management Pramoud Rao Posted: Sunday, Jan 10, 2010 at 1907 hrs IST “That some achieve great success, is proof to all that others can achieve it as well.”—Abraham Lincoln Being in the business of protecting lives and other precious objects, keen observation is to me as spots to a leopard. I have been observing the growth of Mercator Lines for quite some time now. Lincoln’s quote above truly embodies what I feel whenever I see or read about Mercator’s achievements. Incorporated in 1983, Mercator Lines is the second largest private sector shipping company in India in terms of tonnage. Since its inception, the company has overcome conventional barriers of the shipping industry and has succeeded in providing the most optimal shipping solutions. From a traditional tanker company Mercator has diversified interests in transportation, dredging, oil and gas, ship management services, marine logistics and offshore services. It has also made its presence global by setting subsidiaries in Singapore, Mozambique and Indonesia. All this is due to one man’s vision and keen insight—HK Mittal. Aged 60 years, Mittal, Executive Chairman of the company, acquired Mercator in 1988. An enterprising individual, Mittal has been able to bring transparency and professionalism in a traditional industry like shipping. Living up to opportunities around him and making the most of his resources, he has been able to create the fastest-growing shipping company of today (From Rs 65 lakh in 1988, the firm’s revenue increased to Rs 2,200 crore in the year ended March 31, 2009). Close observations indicate that the company has been able to transform barriers into opportunities for further growth. Considering the cyclical nature of the global shipping industry, the company steered its way by diversifying into various businesses, oil and natural gas exploration being one of them. Thus today, with Western economies emerging from recession, Mercator is expected to benefit from a possible upturn in the global demand for exploring and transporting crude oil and other products. The business model of Mercator Lines is simple—aggressively grab every opportunity, thereby derisking the business, while locking in its vessels for long-term contracts to mitigate the volatility of freight rates. A strategy that Mittal led his team to believe in and execute successfully, setting a proud example for India Inc as a whole. One of Mercators core value is “honouring commitment towards stakeholders”. Truly, living up to this, the company has grown from strength to strength over the last 25 years, expanding both horizontally and vertically, thereby building immense shareholder value. A perfect example of rags to riches, Mercator has grown from a moderate barge operator to India’s second largest private sector company with six solid verticals. Mercator’s success story can also be attributed to it mastering the art of managing people. It has laid great emphasis on human capital development, talent management and retention. It has successfully inculcated within each employee the ‘Mercatorian’ spirit of innovation. Testimony to this is the gamut awards one not only individually by Mittal, but also by the company both in India and abroad. My conclusion lies in HK Mittal’s humble words, “And this is just the beginning.”. - The Financial Express |
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grandmaster89
Veteran |
09-Jan-2010 23:07
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The question is whether will there be an increase in revenue and profit level compared to Q2. I would be happy with the usual US$10 million net profit though. |
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dealer0168
Elite |
09-Jan-2010 23:03
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Spot another error. Allow me to make amendment: But will still be lesser compare to previous year qtr result.
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dealer0168
Elite |
09-Jan-2010 22:34
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Sorry allow me to change a word from below sentence: The coming qtr results
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dealer0168
Elite |
09-Jan-2010 22:31
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The coming qtr results will show improvement. But will still be lesser compare to previous qtr. How much lesser we will know when the result announce. In actual Mercator is one of the stock that help me earn $$ previously (i remember i earn 100% when cash it out). When below 0.30, i should have go for it. Hope your babe move UP as u expected. Cheers.
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grandmaster89
Veteran |
09-Jan-2010 21:53
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I expect to see some BB play later next week due to the release of Q3 results on 21 Jan. | ||||||||||
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grandmaster89
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06-Jan-2010 17:36
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The Board of Directors of Mercator Lines (Singapore) Limited (the “Company”) wishes to announce that the Company will be releasing its unaudited financial results for the third quarter ended 31 December 2009 on Thursday, 21st January 2010. The results will also be available on the Company's website at www.mllsg.com | ||||||||||
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grandmaster89
Veteran |
05-Jan-2010 15:17
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Thanks for the compliment. Lets hope Mercator does well! They don't have much capex since they are no vessel acquisition plans so lets hope dividend levels can be maintained :)
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paul1688
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05-Jan-2010 15:06
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Thank you for sharing. Good luck to you on your investments. For a young man, you are independently thinking and analytical - not a common trait nowadays. You should have a very bright (and rich) future.
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grandmaster89
Veteran |
05-Jan-2010 13:58
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I am confident that they will manage to renew their contract with the Mittal. The million dollar question would be at what rate? Its current rate of US$60K/day is twice higher than the current spot rate so any extension will definitely take into account the depressed freight rate. If the BDI remains below 4000, it makes sense to continue with spot charter since it is not profitable to tie any ship up with a contract that yields low margins. Co-incidentally, the third post-panamax with a capacity of 91 000 DWT will be delivered at around that period so perhaps they might use it for the new Mittal contract. Mittal Contract Finances Revenue: 60K X 180 days = 10.8 mil Revenue for 1H 10: 70.5 mil This implies it makes up 15% of its revenues.
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paul1688
Senior |
05-Jan-2010 13:12
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Grandmaster89, you seem to have researched on Mercator extensively. You are confident it can renew its Mittal contract this August successfully? How much of its total business is dependent on Mittal? Longer term, I see shipping economics and BDI improving as the world comes out of recession (we know shipping business is very predictably cyclic). So for Mercator to have a third of its business tied to spot rates is actually not a bad thing - in fact, I think its good for coming few years. Agree Mercator should trade at a much higher PE. Target of 45 cents seem quite possible under current facts and info. |
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grandmaster89
Veteran |
05-Jan-2010 11:00
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I am bullish about emerging economies demand for raw materials for both domestic consumption and industrialization. Lets see how it pans out :)
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grandmaster89
Veteran |
05-Jan-2010 10:55
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They are two different companies. Mercator Lines Limited is the parent company which deals with oil tankers, dredging, coal mining and dry bulk shipping through its SGX listed subsidiary Mercator Lines (Singapore). Mercator Lines Lts owns 72% of MLS.
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smilingchuan
Member |
05-Jan-2010 10:05
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victorian2
Senior |
05-Jan-2010 09:33
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Mercator is also on my list of recovery stocks. Looks like massive accumlation in the last few months too. | ||||||||||
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sureesh40
Senior |
05-Jan-2010 08:37
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So does this signal a turn around for mercator. Any chance BDI will fall. Is it a volatile index
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grandmaster89
Veteran |
04-Jan-2010 21:46
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BDI IS UP STRONGLY BY 135 POINTS
BPI IS UP BY 256 POINTS WITH AVERAGE SPOT RATE INCREASING BY 2K TO $30680 |
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