GE Shipping plans Rs 3750 crore buys

India's largest private shipping company, Great Eastern Shipping, has earmarked Rs 3750 crore for acquiring shipping and offshore assets. The amount is more than the company's current market capitalisation of Rs 3270 crore.

GE Shipping Deputy Chairman and Managing Director Bharat Sheth said while the company will invest a little over half the amount, the balance will be spent by its offshore arm, Greatship India.

According to advisory firm Kejriwal Research and Investment Services (KRIS), this huge capital expenditure will enable GE Shipping to reap substantial earnings in the second quarter of the next financial year.

Arun Kejriwal, director, KRIS, said over 60 per cent of the amount would be spent in the dry bulk sector and the balance in the offshore sector. GE Shipping is investing when offshore asset prices are shooting up in the context of increased exploration activities.

The company is funding this capital expenditure through internal accruals and debt.

"This could be one of the very few instances of a capital expenditure that is bigger than market capitalisation. "GE Shipping was always cash rich company. It has about Rs 1200 crore cash on balance sheet," an analyst said.

The company's existing fleet of 41 vessels comprises 32 tankers (14 crude oil carriers, 16 product carriers, and two LPG carriers) and nine drybulk carriers (one panamax, five handymax and three handysize) with an average age of 13.1 years aggregating 2.96 million dead weight tonne (DWT).

GE Shipping's current order book comprises eight product tankers (four medium range and four LR1 product tankers aggregating around 0.47 million DWT.