MUMBAI, Nov 7: Larsen & Toubro (L&T) has appointed US-based consultants, American Marine Advisors, to evaluate and negotiate the bids for its shipping division which is being divested.

The bidding process has generated considerable interest with the Shipping Corporation of India (SCI), Varun Shipping and Great Eastern Shipping Company (Gesco) throwing their hat in the ring. Speculation has been rife that Reliance has also bid for L&T's shipping division though there has been no confirmation on this.

The list of the `uninterested suitors' include Essar Shipping, Chowgule Steamship and Century Shipping. L&T's fleet of six ships has an average 30,000 dead weight tonnage (DWT) per ship which is inadequate for Essar Shipping whose requirement is around 60,000 DWT. Chowgule has just acquired three bulk ships and is, hence, not interested in increasing its fleet immediately.

L&T, sources say, has offered its vessels as one block. "The company wants to sell the entire fleet to a single party", sources said adding that the bidders will be shortlisted by this weekend.

However, the company is not likely to award the final contract before the first week of December as it has sought shareholder approval at the extra- ordinary general meeting (EGM) scheduled for December 3.

SCI is among the more serious contenders. "The corporation has already sought approval of the ministry for surface transport for acquiring the vessels and is making the necessary arrangements", said an SCI official.

As per its annual plan, SCI plans to acquire 11 vessels at a cost of over $275 million. The company has already placed orders for six new ones. These include two product tankers, two handymax and two Aframax vessels.

The company has initiated talks to buy second-hand vessels including product tankers, cargo liners and feeder ships.

It is also in the process of placing orders for two new 45,000 DWT product tankers at around $30 million each.

L&T Shipping has a fleet of six handy size and handy max geared bulk carriers with an aggregate capacity of 1,76,000 DWT. The fleet, valued at Rs 95.6 crore, is operated on time and voyage charters in the Far East, Europe and America.

The age of the fleet, which has been built at Japanese shipyards, ranges from 12 to 15 years.

According to Larsen & Toubro, the proposal to hive-off the shipping business follows the restructuring of the company's business operations. According to the extraordinary general meeting notice, the board considered that the shipping business is not a focus area as it lacks synergy with other major business segments while in the recent past growth potential in other business segments of the company has increased significantly. According to the company, several areas like power and infrastructure hold greater potential after liberalisation as compared to shipping which fetches relatively lower returns. This, according to L&T, has forced the company to divest its shipping business before the year-end.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.