Page 15 - Banking Finance November 2020

ROUNDUP

SEBI has said that trading in companies vessels made in India from 2021 and built, Indianflagged and Indian-owned
that have undergone restructuring of provide long-term cargo visibility (6- ships will get first priority, followed by
business or debt or any other activity 9months) for all vessels. foreign-built, Indianflagged and owned
under the scheme of arrangement Foreign-built and foreign flagged ves- vessels and Indian-built, foreign-
should start in 60 days from the court flagged and owned ships.
sels will be suitably disincentivised to
order.
provide a level-playing field to
Companies mainly use the scheme of Indiabuilt and Indian-flagged ships, it Securitisation activity
arrangement for debt restructuring, said. Ship repair work valued below Rs. doubles to Rs. 15000 crore
takeovers and for return of capital. A 200 crore will be carried out at local Domestic securitisation volumes,
scheme of arrangement is a court ap- shipyards only under the Atmanirbhar which had seen a sharp drop in the first
proved agreement between a com- Bharat provisions. quarter of the financial year 2020-21
pany and its shareholders or creditors. The right of first refusal (ROFR) rules (Q1FY21) at Rs 7,500 crore, more than
It can impact company mergers and
framed in 2016 would be strictly fol- doubled in Q2 at Rs 15,200 crore. The
amalgamations or even alter share- lowed in the case of shipbuilding and improvement in volumes was sup-
holder or creditor rights. Scheme of
ship repair works of over Rs. 200 crore. ported by both reduced investor wari-
arrangement is initiated to bring ness and an increase in disbursements
Entities functioning under the Shipping
changes in the business structure or Ministry will ensure that all vessels by financial sector firms leading to
when there are no other options for re- owned and operated by them are re- higher financing needs, according to
origination. paired at Indian shipyards only. rating agency ICRA.
"A registered valuer shall be a person,
GST for ship repair and its inputs will Securitisation volumes in H2FY21 are
registered as a valuer, having such be at 5 per cent while the free trade expected to be more than double the
qualifications and experience and be-
warehousing zone (FTWZ) require- volumes seen in H1FY21. "We estimate
ing a member of an organization securitisation volumes to be about Rs
ments for minimumsizeandinvestment
recognised as a valuation agency un- 0.8-0.9 trillion for FY21, though still sig-
outlay would be waived off for ship
der the companies act," SEBI said. repair-specific free trade 'depots/ nificantly lower than the Rs 2 trillion
units'. seen in FY20," ICRA said in a state-
Customs duty, cargo sup- ment.
Vessels availing cargo ROFR through
port to be used to boost PSUs and government entities shall be The increase in the share of gold loans

local shipbuilding, repairs mandatorily repaired in Indian ship- in securitisation, a trend witnessed in
yards. Besides, vessels (including for- FY20, continued in H1FY21 wherein 16
industry eign vessels) taken on long term time- per cent of the value of loans
The government plans to use a mix of charter contracts by PSUs and govern- securitised were gold loans.
duty restrictions on small vessel imports ment entities, should undertake Commercial vehicle (CV) loans as well
and the prevailing cargo support policy planned repairs only in Indian ship- as mortgage-backed securities
in a multi-pronged strategy to grow the yards. emerged as the leading asset classes,
local shipping, ship building and repairs These measures are expected to help each accounting for one-third of over-
industry. local yards built 5,00,000 gross ton- all volumes in H1FY21. In Q2FY21, the

The Customs duty paid on the import nage (GT) ships by 2030 from the cur- CV sector continued its momentum
of vessels will be fully refunded if the rent 27,000 GT ships. and its share in quarterly volumes re-
vessel is replaced by a new 'Made in In the case of shipping, the priority for mained at similar level of around 30-
India' vessel in four years, according to availing the ROFR granted to Indian 35 per cent.
the Maritime India Vision 2030 docu- flagged ships for carrying government- Investors in securitisation papers are
ment prepared by the Shipping Minis- owned or controlled cargo will be drawing confidence from the healthy
try. amended to boost the capacity of In- increase seen in collection efficiency

State-owned firms will provide long- dian registered ships and make them across all asset classes. The proportion
term charters of over seven years for more competitive. Accordingly, Indian- of assets under management (AUM)

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