MUMBAI, June 24: The boards of directors of Essar Shipping and South India Shipping Corporation (Sisco) have approved the proposal to merge Sisco with Essar Shipping.The board which met in Chennai on Tuesday has taken this decision in view of the synergy between the two companies which will help to achieve further economies of scale. The merged entity's balance sheet will have a substantial networth of over Rs 1,000 crore with a low-debt equity gearing.The board has appointed a panel of valuers and advisors comprising chartered accountants NM Raiji & CO Mumbai, Fraser & Ross, Chennai and the Mumbai-based merchant banker JM Financial & Investment Consultancy Services. The Ruias control around 50 per cent of the equity capital of both the companies.The panel will study the proposal and submit recommendations to the board on the effective date of merger and exchange ratio after carrying the required due diligence to ensure the interest of all shareholders. The scheme of the merger will be implemented after obtaining institutional, legal and statutory requirements.The merged entity will have a turnover of over Rs 600 crore and a net profit of Rs 100 crore. The merger of the two companies was in the offing after Essar took over the management control of Sisco from J H Tarapore and A J Gotkal.After the merger, the new company will be the second largest private sector shipping company after Great Eastern Shipping. While Essar has a fleet of 14 ships, Sisco manages a fleet of 10 ships. Sisco owned bulkers and crude carriers with a total capacity of 5,96,013 DWT, while Essar Shipping had a fleet of 8,94,486 DWT capacity, Essar group chairman Shashi Ruia said in Chennai after the board meeting.The stock market price of the Essar Shipping was around Rs.13.65 and that of Sisco was around Rs 32, Ruia said indicating that the exchange ratio could be one Sisco share per two Essar shares.However, he declined to elaborate on the swap but only said the `Essar' name had a better brand equity than Sisco, which required the name of the new company to be retained as Essar Shipping.
