The Hindu Business Line : GE Shipping posts 6 pc rise in Q2 net

DESPITE a fall in the global spot freight rates, Great Eastern Shipping reported a six per cent increase in net profit in the second quarter of the current fiscal to touch Rs 177.45 crore against Rs 167.18 crore in the corresponding quarter of last fiscal.

During the quarter under review, the income was Rs 550.64 crore (Rs 497.78 crore). The board of directors has declared an interim equity dividend of Rs 4 per share, which would result in an outflow of Rs 86.82 crore.

While the shipping division accounted for about 80 per cent of its total revenue, the offshore division's contribution was 14 per cent during the quarter. On September 15,the board approved the scheme of arrangement for the demerger of the offshore services business into a separate new company, Great Offshore Ltd.

Subsequently, on October 7, the Bombay High Court passed an order to convene separate meetings of equity shareholders and secured creditors.

Mr Bharat Sheth, Vice-Chairman and Managing Director, told presspersons that the meetings are scheduled to be held on November 16.

He indicated that the de-merger process would be completed by February or April 2007.

According to Mr Sheth, the last quarter saw a dip in the spot freight rates by an average of 30-40 per cent compared to the corresponding quarter of last fiscal. However, there was an increase in the long-term charter rates, which muted the fall in the spot earnings. The company has 60 per cent of its crude carriers under long-term charter and 40 per cent in the spot market, while in the product tanker category 86 per cent is under charter and 14 per cent on spot.

Mr Sheth said crude carriers earned an average time charter yield (TCY) of $19,847 per day compared to $26,539 per day in the corresponding quarter, while the product tankers earned an average TCY of $20,293 per day ($14,466).

The company's 12 dry bulk carriers earned an average TCY of $15,545 per day ($17,914).

Mr Sheth said towards the end of the quarter, there were signs of the spot market rates firming up.

"Current estimates that oil production facilities and refineries in the Gulf of Mexico would take time to be fully operational indicate that product freight rates may stay strong in the near term. And with winter setting in, even the crude oil carrier freight markets are expected to remain firm in the coming months," he said.

The company had a capital expenditure programme of $266 million up to 2007 end, involving five ships and six offshore vessels, he said.

In the offshore division, the company recorded a reduction in revenue contribution from the rigs, primarily because of low asset utilisation.

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