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Home > Businesses > Shipping > In focus

Essar Shipping to Invest $1 Billion in Ships, Rigs

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November 04, 2011 | The Economic Times Bookmark and Share  
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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_r_ramakrishnan.jpg"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.

 
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