Sri Lanka's Mercantile Shipping Company said it expects delivery of the first of two new cargo ships on order by the middle of next year as construction is slightly ahead of schedule.
The company said it made good profits in the last financial year but added that cash flow would be tight this year as funds would be tied up in the new buildings projects. Net profit rose almost 83 per cent to 106 million rupees (US$997,672) from 58 million rupees in the year ended March 31, 2008 while revenue increased 18.3 per cent to 671 million rupees from 567 million rupees. Mercantile Shipping is acquiring the two new cargo ships as part of efforts to renew its fleet. Construction of the two multi-purpose vessels, each of 7,800 tonnes deadweight, has begun with the hulls being built by a ship yard in the Ukraine. The completed hulls will be towed to the Bodewes Shipyard in The Netherlands where final installation will take place. "The construction process is a little bit ahead of schedule and the first vessel is expected to be delivered by the middle of next year, the second by end of 2009," chairman A. N. U. Jayawardena said in the company's annual report. The ships will be hired out on a two-year charter. The charter market has "improved considerably" during the last two years with global demand for ships and transport being driven by rapidly growing economies like India and China, Jayawardena said. The vessels will be financed by a package comprising of the company's own funds, a non-repayable grant from the Dutch government and a bank loan from a German commercial bank. It has set up a fully-owned subsidiary called Mercantile Emerald Shipping to build two multipurpose cargo vessels. Mercantile Emerald Shipping will borrow a total of 16 million euros (US$23.79 million) to finance the construction of the ships from Germany's Bremer Landesbank.
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