The Hindu Business Line : Essar Shipping lines up $800 m to buy 14 ships

Mumbai, May 3 Essar Shipping Ltd (ESL), which is going through an elaborate reorganisation programme to become an integrated shipping and logistics company, has lined up a capital expenditure programme of about $800 million to acquire 14 ships between 2008 and 2011.

ESL has been renamed as Essar Shipping, Ports and Logistics Ltd as part of the ongoing reorganisation drive.

At present the company has a fleet of 25 vessels, including two very large crude carriers (VLCCs), five cape-size vessels, 11 mini bulk carriers and one product tanker that is due for scrapping.

The proposed acquisitions include two Supramax vessels worth $145 million which are scheduled to join the company’s fleet in June and July this year.

The remaining 12 new building orders are for six supramax carriers and six mini cape size vessels.

Mr V. Ashok, whole-time Director, told Business Line that the fund for the planned investment would be raised through a mix of debt and equity, with the debt component being about 75 to 80 per cent.

Cardinal objective

On the reorganisation programme, he said the cardinal objective was to make the new entity a complete shipping and logistics company by bringing together the shipping, logistics and oil terminal arms of the Essar Group under one company. “The reorganisation programme has already been launched and we expect to complete the process by September this year,” he said.

After the reorganisation, the Cayman Island-based Essar Global will be the main holding company, under which Cyprus-based Essar Shipping and Logistics will be operating.

This company will be holding about 83 per cent stake in Essar Shipping Ltd, which in turn will hold 100 per cent equity in Essar Ports and Terminals Ltd (EPTL), Mauritius-based Essar Oilfields Services Ltd and Essar Logistics Ltd (India).

At the bottom-end, EPTL will be holding 74 per cent equity in Essar Bulk Terminal Ltd (EBTL) and 100 per cent stake in Vadinar Oil Terminal Ltd and EBTL (Salaya Ltd).

Recast process

Mr Ashok said only two steps in the reorganisation process were left to be completed, with the targeted deadline being September this year.

Out of these, the step involving the acquisition of Vadinar Oil Terminal by EPTL is expected to be completed by next week.

The final step that involves India Shipping, the holding company of Essar’s Oilfields Services Ltd, to be merged with Essar Shipping Ltd is expected to be wrapped up within three to four months.

“Under the share swap ratio for this merger, for every 100 shares of India Shipping held by ESLL, the latter gets 32 shares of Essar Shipping Ltd — ESL shares have been valued at Rs 220 per share,” according to Mr Ashok.

Port plans

The company has also drawn up investment plans in the port sector. This includes setting up of a Rs 750-crore, all-weather deep draft port at Hazira for import of iron ore, pellets, coal and limestone, apart from export of finished steel products.

Also in the pipeline is an integrated terminal facility at Salaya, near Jamnagar in Gujarat, for handling coal and pet coke at a cost of about Rs 550 crore.

“There is a significant demand for additional port capacity, as the Indian port traffic demand is expected to go up to 763 million tones by 2011-12,” Mr Ashok said.

More Stories on : Shipping | Restructuring

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Panel moots study on private airlines to improve Air India

Financial bids to be invited for 13 infrastructure projects

GE Shipping earmarks Rs 2,385 cr capex

Essar Shipping lines up $800 m to buy 14 ships

West Asia Maritime signs Rs 440-cr deal with Mitsubishi

FACT, Central Warehousing in pact for container freight station