Mercator Lines, the second largest private shipping company, is planning to buy six second-hand tankers this year.
Mercator Lines, the second largest private shipping company, is planning to buy six second-hand tankers this year as the company is looking to expand its fleet by taking advantage of the prevailing low prices globally. In today's market, these six ships would cost between Rs 400 crore and Rs 600 crore, depending on the age of the vessel ? from five years to one year, said a Mercator official.
When asked about the acquisition plan, Mr H. K.Mittal, Executive Chairman of Mercator Lines, declined to comment.
According to a company official, second-hand ships are available at attractive prices.
?We want to take advantage of this situation and don't want to miss this opportunity,? he said.
The Mercator Lines scrip closed at Rs 66.15 on the BSE on Friday.
Recently, Shipping Corporation of India too decided to buy six second-hand ships, including two tankers, two bulk carriers and two offshore vessels.
?From a long-term point of view, it is the best time to invest in assets as the rates have dropped drastically,? said Mr Rajeev Kashikar, Managing Director, Konig and Cie Asia Advisors Pvt. Ltd, a shipping finance firm
About half of India's shipping fleet by capacity is more than 20 years old and inanother five years, these vessels will have to be replaced.
Mercator will be scrapping three single-bottom tankers, in order to comply with the Marpol regulation to phase out such ships by the end of this year.
In order to maintain India's shipping fleet at its existing capacity, local ship owners have to invest some Rs 38,000 crore to buy new ships.
?The timing is just right for acquiring ships because you can buy ships today at 10-year average low prices,? said a shipping analyst.
Apart from the cost advantage, second-hand ships can join the fleet in within two-three months of order, in comparison to a new ship which would take at least 18-24 months for delivery.