Bharati Shipyard plans Rs 200-cr capex

Bharati Shipyard will go ahead with all its capital expenditure and expansion plans, and funds for these will be in place as and when required, Managing Director P C Kapoor told analysts today during a conference call to discuss the company's July-September earnings.

"We will spend around Rs 200 crore annually for the next two years on capital expenditure. There are no changes in that plan," said Kapoor. The debt component of its capital expenditure will have equal rupee and foreign currency loans. The company has tied up the foreign currency component at a fixed interest rate of 8 per cent.

The company is now focusing on Orissa to set up its joint venture greenfield shipyard project with Apeejay Liners at an investment of Rs 1,700-2,000 crore. "We are not considering West Bengal as of now. There are problems in the state and the government is moving slow on land acquisition. Orissa government has moved much faster," he said.

Earlier, the company said it had identified around 800 acres on the banks of Dhamra river, near Dhamra port in Orissa, for the shipyard project. "We are ready for the project, but government approval is pending," he said.

The company has delivered three vessels in the first two quarters of 2008-09 (April-March) and is likely to deliver two more in October-December. "Two vessels are almost ready for delivery and will be delivered during the quarter. We will deliver another one-two ships in January-March. For FY10, deliveries will be accelerated and may exceed 12," said Kapoor.

Bharati Shipyard is booked to capacity until 2010-11, but may still take a few more orders in 2011-12. The company's current order book stands at around Rs 4,830 crore, of which orders worth 34.6 bln rupees are yet to be executed. Kapoor said there have been no cancellation of orders because of the global financial crisis.

"We have booked only genuine orders from users (shipping companies). Those orders being cancelled are from speculative buyers who wanted to cash on the rising ship prices. Hefty advances have been paid by those who booked the orders, and they will have to forfeit the amount if the order is cancelled," said Kapoor.