The Hindu Business Line : GE Shipping lines up $500-m capex

Great Eastern Shipping Co Ltd has lined up a capital expenditure programme of $500 million for the acquisition of the newly built nine product tankers, apart from offshore assets, such as rigs, for its offshore subsidiary.

The nine tankers, which involve a total investment of $380 million, will be delivered before 2009-10 — three are scheduled for delivery in the current fiscal, two in the next fiscal and the remaining in 2009-10.

Mr K.M. Sheth, the company's Chairman, told newspersons on the sidelines of the company's AGM here on Monday, that by the end of the current fiscal, its fleet strength would go up to 43 vessels.

The nine tankers together will add to the company's fleet by 0.5 million DWT.

Offshore presence

This was the first AGM of the company after it recently de-merged its offshore business into a separate company, Great Offshore Ltd. The company, however, will also be present in the offshore space through its wholly owned subsidiary, Greatship (India) Ltd (GIL).

In response to a question, Mr Sheth said the company's offshore subsidiary, GIL, would compete in the offshore segment with other players, including Great Offshore Ltd.

He said the subsidiary would participate in the ONGC tender for offshore vessels.

GIL has so far invested up to $380 billion to acquire offshore support vessels and drilling rigs. Mr Ravi K. Sheth, Executive Director of the company, is holding additional responsibilities of the GIL business.

Freight market outlook

On the outlook of the freight market in the coming months, Mr Sheth said the company was optimistic on the dry bulk segment in the light of the strong market demand for commodities.

"However, we are a little circumspect on the tanker market, due to uncertain oil demand emanating from a cooling world economy and the possible overhang of ships due to excessive deliveries over the next 12 months," he said.

Many oil consuming nations had stocked up their inventories fearing a further rise in oil prices and these countries were at present drawing from their inventories, which have brought down the demand for oil movement, he pointed out.

With a total of 27.5 million DWT of tankers to be delivered in 2006, the net fleet growth would be about 6 per cent, with fleet utilisation likely to drop from last year's levels.

Net profit at Rs 843.5 cr

During 2005-06, the company notched up a total net profit of Rs 843.50 crore, on an income of Rs 2,342.08 crore.

With the average earnings in both the tanker and bulk segments being lower than the previous fiscal, the company monetised on the high asset values and recorded profit on sale of ships to the tune of Rs 331 crore.