India Steamship to replace fleet

KOLKATA, JULY 15. Spurred by one time settlement of its debts, which was made possible by infusion of Rs. 21 crores by preferential allotment of shares, India Steamship Company Limited, a K. K. Birla group firm, is planning to replace its ageing cargo ships with a younger bulk carriers.

"Pressure on dry bulk cargo freight rates is expected to be followed by a fall in second hand bulk carrier prices and the second half of the current year may provide a good opportunity to invest in a suitable bulk carrier," India Steamship officials said.

The company at present owns three ships aggregating 1.58 lakh dead weight tons (DWT) of which Indian Goodwill Combi (general cargo plus container), with a capacity of 20,571 DWT, is the oldest with 22.8 years of age at the end of 2000-01 and its insured value is Rs. 14.80 crores.

The other two ships, 76,440 DWT Ratna Deep Panamax bulk carrier and 60,725 Ratna Abha tanker are 17.4 and 18.4 years of age respectively, officials said. Their insured values as on March, 2001 were Rs. 56 crores and Rs. 68 crores respectively.

"The company could not replace its ageing ships because of a combination of several years of functioning under very difficult cash flow constraints," company officials said, adding to facilitate acquisitions the company had decided to transfer its entire net profit of Rs. 1.53 crores for the year 2000-01 to a ship acquisition reserve. Incidentally, the company had managed a net profit during the past fiscal as it repaid all its debts to the Government of India and banks after realising Rs. 21 crores by issuing non-cumulative preference shares to another group company, Zuari Agro.

The officials said that the world tanker fleet was expected to expand by about two per cent this year and as such the supply and demand ratio might deteriorate marginally for the tanker fleet to a moderate decline in freight levels.

However, the outlook for dry bulk sector was different and due to substantial bulk carrier tonnage to be delivered by shipyards during the rest of the year, the fleet was expected to grow by around four per cent even as demand for bulk tonnage was estimated to increase by about one to two per cent only, company officials said.

"The age profile of the fleet and efficiency have suffered due to company's inability to replace its fleet with newer ships. We plan to sell the general cargo ship Indian goodwill during the current year and to replace here with a young bulk carrier," the officials said.

- PTI

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