Essar Shipping lines up expansion plans

Mumbai: Essar Shipping Ports and Logistics, a very well diversified Mumbai based company, has drawn up a capital expenditure programme worth Rs. 100,000-mn. The investment will be made in next three years time.

This is expected to result in annual contracted revenues of Rs 3,600 crore for the company.

The expansion projects include acquisition of 14 ships to increase its capacity from the present 1.30 million DWT to 2.69 million DWT by 2011, setting up of a 30 million tonne all-weather deep draft port at Hazira and procurement of two jack-up rigs.

Mr Sanjay Mehta, Managing Director, told an analysts meeting that the investment would be raised through a debt-equity package.

He said the company was taking up the port expansion projects, as port traffic in India was expected to increase to over 1,000 million tonnes by 2011-12 from the existing throughput of 649 million tonnes.

Similarly, demand for shipping is also increasing, with the demand being 11.9 million tonne miles for crude and oil products and 12.7 million tonne miles for dry bulk commodities last year, as against 11.5 million tonne miles for crude and dry products in 2006.

The company will also be increasing its Vadinar oil terminal capacity from 10.50 million tonnes to 34 million tonnes by July 2010 at a cost of Rs 2,816 crore.

Mr Mehta said with demand for rigs surging in the wake of increased offshore oil exploration and production activities, the company was acquiring two more rigs at a cost of $440 million to increase its fleet of rigs to 15.

The hire rates for jack-up rigs increased from $50,000 a day to about $3 lakh a day.

Mr V. Ashok, Chief Financial Officer, said the company’s net profit increased from Rs 157.75 crore in 2006-07 to Rs 277.43 crore in 2007-08. It also reported a 33 per cent rise in income to touch Rs 2,237 crore during the year.