G E Shipping mulls $1.2 bn capex plan till 2012

Shipping firm, the Great Eastern Shipping Co, has taken up a $1.2-billion capex plan over the next three years, a top company official said.

"We have made the commitment of $1.2-billion till 2012 for our expansion programme. We will acquire 8 ships, which include 6 bulk carriers and 2 oil tankers, along with 13 offshore supply boats and an oil drilling rig," G E Shipping Executive Chairman K M Sheth told shareholders at the company's annual general meeting (AGM) here today.

The project will be financed partly through internal accruals and partly through borrowings, Sheth said.

However, he cautioned that borrowings from banks have become very difficult.

"We negotiated for our last loan at 0.65 per cent over Libor. Now the banks are asking 4.5 to 5 per cent over Libor, which means borrowing costs come to almost 7-7.5 per cent along with the dollar-rupee exchange risk," Sheth said.

Replying to a query on why the company is not bidding for Great Offshore, Sheth said, "We know the fleet profile of Great Offshore. Most of the ships are due for renewal and if we take over, we have to spend a lot of money. Therefore, it does not make any sense to takeover Great Offshore,"

Further, the company requires to conserve resources to meet its own expansion commitment, he said.

Amid downturn, the company is treading cautiously and gearing itself up to face the tough times, Sheth said.