Great Eastern eyes newbuilds

Mumbai: Great Eastern (GE) Shipping, India's largest private sector shipping company, once again plans to acquire ships. This, after selling no less than 15 ships, as well as cancelling orders for three new ships in the last 18 months.

Prices for very large crude carriers (VLCCs) and capesize bulk carriers have already dropped by 30 per cent to $100 million (about Rs 460 crore) and by 40 per cent to $56 million (about Rs 250 crore) respectively, in the last two years. The correction in prices for five-year-old ships have been much sharper at 40 per cent to $80 million (about Rs 370 crore) and by 63 per cent $55 million (about Rs 250 crore), respectively, in the same period.

"With the overhang of new deliveries from yards this year, we expect one more round of correction in asset prices," a company executive told local media on condition of anonymity.

"We would be opportunistic to buy out more ships as the price further corrects," the source added. The company has a cash reserve of Rs 3,000 crore, which it plans to use for the acquisition of assets. It expects the first second-hand ship - a product tanker - to join its fleet in the present quarter. The last time a second-hand ship had been added to the company's fleet was 24 months ago.

GE Shipping has a fleet of 37 vessels at present, down from a peak of 49 about 18 months ago. These 37 vessels include four new long-range product tankers that joined the fleet between October 2008, and May 2009. The company's present order book consists of seven vessels - five dry bulk carriers and two Suezmax tankers -to be delivered in 2011 and 2012.  [13/01/10]