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Home > Businesses > Shipping > In focus

Essar Shipping to invest $1 billion in new vessels

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Company sees tremendous growth opportunities in India as the exim trade is increasing rapidly

September 12, 2011 Bookmark and Share  
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Essar Shipping Ltd plans to spend $1 billion over the next two years to acquire new vessels as it sees tremendous growth opportunities in India.

According to Mr AR Ramakrishnan, Managing Director, Essar Shipping Ltd, the company has ordered 12 new vessels and two jack-up rigs to gear up for additional business from outside the group companies. At present, 50 per cent of its business comes from outside the group and this is expected to increase to 55 per cent. The company currently has 27 ships and 13 oil rigs.

“Close to $600 million has already been arranged for and paid to shipbuilders for supply of ships,” Mr Ramakrishnan said. “We are receiving two ships in October and one ship every month thereafter. Over the next 12 to 18 months, all the ships will be delivered.” Delivery of rigs would take a year.

The company is acquiring the new vessels from ABG Shipyard and South Korea’s STX (Dalian) Shipbuilding. The new acquisitions would be funded mostly through debt.

“There is a tremendous growth opportunity in the country as the exim trade is increasing rapidly,” said Mr Ramakrishnan. “There is good demand for Indonesian and Australian coal from domestic power firms. Our own group companies will also bring us substantial business.”

Indian exports soared by 54 per cent during the April-July period as compared to the same period in 2010. Imports were up by 40 per cent. The country aims to more than triple its exports to $750 billion by 2017, ensuring huge opportunities for shipping companies.

Essar Shipping demerged from the erstwhile Essar Shipping Ports and Logistics in May 2011 and is in the process of relisting on the bourses. “We have got clearances from the Bombay Stock Exchange and the National Stock Exchange and are expecting approval from the Securities and Exchange Board of India in the next few weeks,” added Mr Ramakrishnan.

The company made a net profit of Rs18.83 crore in the first quarter of the current financial year and reported total operating income of Rs661.2 crore.

(Sourced from a report in Financial Express)

 
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