Live Mint reported that for the first time in a decade, Great Eastern Shipping Co Limited does not have orders on its books for buying new cargo carrying ships as it opts to preserve cash in a difficult shipping market hit by oversupply and rising costs.
In effect, India's biggest privately owned ocean carrier by fleet size, does not have a capital expenditure plan for buying cargo ships for some time to come, though its offshore oilfields service unit Greatship (India) Limited has lined up a CAPEX of about USD 450 million for purchasing eight ships for use in the oil exploration industry. This includes seven offshore support vessels and a jack up rig.
A spokeswoman for Great Eastern Shipping said that "Yes, we are preserving cash in a way by not ordering new cargo carrying ships. We are waiting for the right timing to start our next phase of acquisition. We clearly feel that ship values in some asset classes could decline some more from the existing levels."
The spokeswoman said that "Clearly, the outlook for shipping in the short to medium term looks challenging. In tankers, crude demand is a bit sluggish but product demand is resilient. In dry bulk, demand is reasonably firm but it is the sheer pressure from the new addition in the supply that is putting pressure on the freight rates."
The firm promoted by the Sheth family was sitting on a cash reserve of close to INR 2,600 crore as on June 30th 2011. Its larger rival, state owned Shipping Corporation of India Limited has a cash reserve of INR 2,467 crore but has ordered 27 new ships at global yards worth a combined USD 1.4 billion. Shipping Corporation owns a fleet of 82 ships.
Great Eastern owns a fleet of 35 ships including 25 tankers and 10 dry bulk carriers. Greatship owns 19 offshore assets. In the April to June 2011 quarter, Great Eastern reported a profit of INR 101.9 crore (standalone) boosted mainly by a INR 46.13 crore gain on the sale of ships and other income of INR 51.77 crore.
Between January and September 2011, global fleet owners took possession of 805 new dry bulk cargo carrying ships, taking the total number of vessels in this category to 8,659, while another 441 new such ships are to be delivered to owners before the end of the year, according to Nick Collins, chief operating officer at the Dubai office of Clarkson Plc.
(Sourced from www.livemint.com)
