The consortium led by Sical Logistics was given a formal letter of intent for executing the Rs 550-crore iron ore terminal project. The LI was received by the companys Chairman, Mr A.C. Muthiah, from the Union Minister for Shipping and Surface Transport, Mr T.R. Baalu, even as there were doubts expressed over the continuance of one of the partners, L&T, in the consortium.
L&T is concerned over the `jointly and severally liable clause in the agreement, but it is learnt that the company has not taken a decision to get out of the consortium either. The consortium is to be converted into a special purpose vehicle - a three-way joint venture of Sical Logistics Ltd, MMTC and L&T. Sical Logistics and MMTC would together hold 89 per cent of the equity and L&T, the remaining 11 per cent. The equity component of the project is likely to be around Rs 150 crore.
It is, however, not clear whether the project would belong to the consortium even if a minor partner quits. Sources in Sical Logistics have said that even in the event of L&T quitting the consortium, the project would not be lost. On the other hand, some in the industry have said that awarding the project to the consortium could be challenged if the composition of the consortium is changed.
The project involves putting up an iron ore terminal and attendant handling systems (including a Rs 100-crore jetty) at the Ennore port. The project is expected to take 27 months to be completed. In the first year, the terminal is expected to handle 9 mt of iron ore, which should increase to 12 mt in the second year. Sical Logistics does not see any problem in getting the load considering that close to 60 mt of the 70 mt of iron ore mined from the Bellary area is being exported.
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| Posted : 7/10/2006 |
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