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 that cash flow would be tight this year as funds would be tied up in the new buildings projects. Net profit rose almost 83 percent to 106 million rupees from 58 million rupees in the year ended March 31, 2008 while revenue increased 18.3 percent to 671 million rupees from 567 million rupees.
Mercantile Shipping Company 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 started 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 the 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 told shareholders in the firm's annual report.
The ships will be hired out on two-year time charter.
The charter market has "improved considerably' during the last two years because of worldwide demand for ships and the ever-increasing transport demand driven by rapidly growing economies like India and China, Jayawardena said.
Although the company had a successful year, its resources would have to be used in the expansion and new building programme in the coming year, Jayawardena warned.
"It is expected that the cash flow situation will become tight during the coming year and therefore a dividend of 2.50 rupees per share is recommended for the year 2007/2008."
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 to finance the construction of the ships from Germany's Bremer Landesbank.
Mercantile Shipping Company has been selling off its older second-hand ships, some of which once plied the coastal trade to serve the northern Jaffna peninsula, and plans to renew its fleet.
Jayawardena said Mercantile Shipping had abandoned plans to buy another second-hand vessel as no suitable and affordable ships were available
The prices of second-hand tonnage had increased during the last year owing to very high steel prices and heavy demand for such vessels.
Mercantile Shipping Company 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 started 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 the 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 told shareholders in the firm's annual report.
The ships will be hired out on two-year time charter.
The charter market has "improved considerably' during the last two years because of worldwide demand for ships and the ever-increasing transport demand driven by rapidly growing economies like India and China, Jayawardena said.
Although the company had a successful year, its resources would have to be used in the expansion and new building programme in the coming year, Jayawardena warned.
"It is expected that the cash flow situation will become tight during the coming year and therefore a dividend of 2.50 rupees per share is recommended for the year 2007/2008."
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 to finance the construction of the ships from Germany's Bremer Landesbank.
Mercantile Shipping Company has been selling off its older second-hand ships, some of which once plied the coastal trade to serve the northern Jaffna peninsula, and plans to renew its fleet.
Jayawardena said Mercantile Shipping had abandoned plans to buy another second-hand vessel as no suitable and affordable ships were available
The prices of second-hand tonnage had increased during the last year owing to very high steel prices and heavy demand for such vessels.