Mumbai-based Mercator Ltd has not paid salaries to about 350 crew members on board its dredgers and tankers for March and April, the first sign of financial stress in what was once India’s second biggest private shipping company.
The firm owes Rs. 1,288 crore to lenders, according to a February 13 investor presentation on its website. It reported a loss of Rs. 529 crore for the first nine months of FY19.
Mercator, led by HK Mittal, admitted to delays in clearing salaries and attributed them to the downturn in the global shipping and dredging industries, particularly in India, where the market is dominated by state-run ports.
“We are addressing the delays in a phased manner,” said a Mercator executive. The firm, he said, would not shy away from selling ships to re-focus on cash flows, cut debt and reduce operating losses. “We will only keep ships which are cash-positive,” he added.
On April 30, Mercator sold its largest ship, an oil super tanker, for $27.5 million to Greek interests. “It wasn’t that she was not earning, but it was cash-negative. The debt on her was far in excess of what she was earning,” the executive said.
To address the larger situation, Mercator also said it is in talks with lenders to restructure long-term debt.
It owns three cargo ships and five dredgers. Of the latter, two are working while the balance three are either anchored or laid-up.
The crew have notified the ships’ protection and indemnity (P&I) insurer as well as the Prime Minister’s Office, the Shipping Ministry, the Directorate General of Shipping, the Mercantile Marine Department, the Maritime Union of India and the National Union of Seafarers of India about the non-payment of salaries, multiple sources said, asking not to be named.
Invoking insurance cover
“We have received intimation from three ships of Mercator on non-payment of salaries. As per the Maritime Labour Convention, 2006 of the International Maritime Organisation, the crew can ask the P&I insurer to invoke the cover for recovery of wages if the salaries are not paid for two months. The crew can now demand that,” said a spokesman for the DG Shipping.
Mercator’s share price has plummeted to Rs. 2.75 per share from Rs. 26.50 a few months ago. The company has also not deposited the PF contributions and tax deducted at source (TDS) with the relevant authorities, said a source.
The Sembmarine Kakinada yard stopped repair work on one of the firm’s dredgers, named Darshini Prem , and cut off its water supply and power for non-payment of dues.
“The dredger is extremely low on bunkers. Despite the dredger being in imminent danger of a blackout, Mercator has not supplied bunkers, jeopardising the safety of the vessel and its crew. So far, the crew has been scavenging bunkers from various tanks to keep the generator alive but that option will run out soon. From May 14, the vessel is running on generator for three hours each in the mornings and evenings to stretch the available bunkers,” the source said.
The crew of Darshini Prem are making their own arrangements for food after the provision provider stopped supplies over non-payment of dues.
Source: The Hindu Business LinePrevious Next