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Essar Shipping to raise $1.9 bn

Essar Shipping to raise $1.9 bn
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First Published: Sun, Sep 14 2008. 01 56 PM IST
Updated: Sun, Sep 14 2008. 01 56 PM IST
PTI
Mumbai: Essar Shipping Ports and Logistics has said it will raise $1.9 billion by the end of this year for its various expansion plans.
The company has laid out an expansion plan for $2.5 billion in the next three years. The amount would be invested with a mix of equity of $600 million and the rest through debt.
“We will raise the money by the end of this year. For the port business, we will borrow from Indian banks and for shipping and logistic businesses we will borrow from abroad,” Essar Shipping Ports and Logistics Director V Ashok told PTI.
At present shipping contributes 65% of revenues to the group. After 2010-11, Essar expects shipping revenue to come down to 50%.
“Over the last year, we have reorganised our businesses from a mere shipping company. As shipping is a cyclical business, it becomes too difficult to manage,” he said.
The company decided to enter the port sector, which would bring in revenues throughout the year and is looking at building terminals at ports. Simultaneously, it entered logistic business working for Essar Steel and Essar Oil.
“We have become an integrated player in India, which is unique. We have embarked upon to build a third-party logistic business. We want to expand logistics in a major way,” he said.
“We are looking at a variety of projects across ports and terminals,” Ashok said.
The company is looking at building terminals not only in India, but also in Brazil, Vietnam and Africa as Essar group is investing in projects across the world.
Drilling business
The company has reentered the drilling business. It has 25 rigs and has bagged a long-term contract with GSPCL for gas exploration in KG basin for a contract of $318,000 a day.
Last year, Essar Shipping entered dredging, but solely for its own purpose. “Dredging will be a serious focus as a business. It is a huge inter-related activity. Going forward, if there are lots of opportunities coming in port side, we will look at all options,” Ashok said.
The company has bought two Chinese dredgers for $40 million. They have been deployed in Hazira where the company is creating a new port.
The company was looking at entering shipbuilding, but as of now it has been dropped.
“There was a thought at one point of time because it is obviously linked to ships. But as our shipbuilding programme is in place, maybe it will come at a later stage,” Essar Shipping Ports and Logistics CEO A R Ramakrishnan said.
“We want to see what the government wants to do with its own plans. It has been talking about mega shipyards in East Coast and West Coast and nothing has come up,” he said.
“Unless, the government comes out with a master plan to address all the problems, no ship building will happen like it happens in Korea, Japan and China,” he noted.
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First Published: Sun, Sep 14 2008. 01 56 PM IST