Essar Shipping, carved out of the demerger of Essar Shipping Ports and Logistics Ltd, is investing about $1 billion in buying ships and rigs. The arm of the $17 billion Essar Group, which gets listed on the stock exchanges in three weeks, also owns the group's logistics and oilfield services businesses. At present, the logistics and shipping businesses contribute almost 80% to the company's revenue.
Earlier this year, Essar Shipping Ports and Logistics Ltd was demerged into Essar Ports, which is already listed and Essar Shipping. The shareholders of the erstwhile company received two shares of Essar Ports and one share of Essar Shipping for every three shares held. Essar Shipping has already placed orders worth $600 million for VI vessels. This will ramp up its fleet count to 38 and cargo-carrying capacity to 2.6 million dead-weight tonnage by 2013 from 1.6 million DWT. In the oilfield services business, it is investing about $450 million for procurement of two oilrigs.
"A policy framework needs to be designed to ensure that Indian ships should carry a percentage of cargo. Also, a long-term tonnage requirement needs to be specified," Essar Shipping Managing Director A R Ramakrishnan told ET.
Currently, foreign flagged ships carry 92% of the country's maritime trade. Ramakrishnan said long-term contracts for crude oil and coal imports have a substantial requirement and that lenders would not only be comfortable if regular streams of income are ensured but it would also help companies in getting lower rates of financing.
"With a large number of power and steel plants coming up, iron ore and coal imports are key areas where we see growth opportunities," he said.