The company will soon add four new vessels to its fleet by acquiring two cape-sized ship and two very large crude carriers (VLCC) at an estimated cost of $150 million. The funds for the proposed acquisition will be raised through overseas borrowings.

"Small vessels are becoming irrelevant in the era of globalisation. Better returns are guaranteed through the use of large cape-sized vessles. Hence, the company has decided to phase out some of the bulk carriers and offshore supply vessels over a period of time," Essar Shipping managing director BS Kumar said. The company has a fleet of 33 vessels.

Essar shipping recently sold a bulk carrier, built in 1982, for $3.7 million and is negotiating for the sale of another one. This is not part of the proposed phasing out exercise but a component of the ongoing businessstrategy, Kumar said.

The company has not yet decided whether it should acquire second hand vessels or opt for fresh ones. It is now in the process of shortlisting the ships and a suitable purchase plan will be drawn up depending on market conditions, said Kumar.

The concept of cape-sized vessels is yet to catch up in the country though an Indian company has recently brought over one. If the deal comes through, Essar Shipping will be the first shipping major to do so, he said.

Essar Shipping has aligned itself with the global trade by using all its bulk carriers for international operatons two years back, after a five-year contract with Bhoppal Shipping ended, Kumar said.

With Asian economies on the recovery path, international freights rates have moved up. The company will, hence, be focusing on international operations to generate higher price realisations, he added.

Essar Shipping will deploy over 80 per cent of its total capacity of 1.38 million DWT for the international operations. The company,which earned 55 per cent of its total income in 1998-99 from its global operations, is planning to increase this to around 62 per cent in fiscal 1999-2000.

The company has emerged Y2K compliant in April 1999 and is the only Indian company operating tankers in the highly competive Atlantic region.