SCI to borrow $1.3 bn to buy 28 vessels

The funds will pay for 28 vessels to be delivered within the next three years, Chairman S Hajara said. Most of the loans will be raised overseas as it's cheaper, Hajara added.

Shipping Corporation and other carriers, including Nippon Yusen KK, are increasing borrowing as the price of ships rise to a record. The Indian company also plans to start building ships as South Korean yards are booked out for the next three years.

"The high growth rate in India means increased activities in exports and imports,'' said Dharmakirti Joshi, an economist at credit rating company Crisil, a unit of Standard & Poor's.

"The prospects for sea cargo are bullish in the long term.''

The Mumbai-based company needs money to expand as India's trade rises. India's exports in the financial year ended March 2008 rose 23 per cent to $155.5 billion, while imports rose 27 per cent to $236 billion, according to the government statistics. Almost 90 per cent of India's trade moves by the sea.

Nippon Yusen, Japan's largest shipping line, will this year increase borrowing from banks by 11 per cent to about $4 billion, the company said on May 15. Shipping Corporation prefers to borrow overseas because it's cheaper than borrowing from Indian banks, Hajara said.

An overseas loan could carry an interest rate of between 4 per cent and 6 per cent compared with at least 9 per cent in the local market, he said.

Shipping Corporation now has a capacity of about 5 million deadweight tonnes.