>GE SHPPING (KR Choksey)

Investment Rationale: GE Shipping is India's largest private sector shipping service provider enjoying a formidable presence in the international maritime industry. The company has two main businesses: shipping and offshore. The shipping business is involved in transportation of crude oil, petroleum products, gas and dry bulk commodities. The offshore business services to the oil companies in carrying out offshore exploration and production activities, through its wholly owned subsidiary Greatship (India) Limited. Backed by an enviable clientele comprising industry leaders, international oil companies and governments who vouch for its services, the division has earned the status of being the most preferred shipping service provider. With a pulse on the global market and a thorough understanding of the ever-evolving market needs, the division is well-equipped to anticipate the demands of its clients and to deliver on its commitments, successfully and satisfactorily.

Key Developments: Great Eastern shipping to trim its $600-mn order book Great Eastern (GE) Shipping, India’s largest private sector shipping company is negotiating with shipyards to cut a part of its order book of 10 ships worth about $600 million (Rs 3,000 crore) to overcome the downturn in the freight rate for dry bulk carriers and tankers. It has sold five bulk carriers and one tanker since November. Besides, it has cancelled the order of two dry bulk carriers worth $76 million (Rs380 crore) with the Chinese shipyards. The company is negotiating with more shipyards to cancel some of their existing orders. Of the remaining order for 10 ships, most of the orders are with European yards where the contract clauses are stringent.

Financial Performance: Fall in dry bulk time charter hit sales Despite a decrease in revenue operating days by 12.8% to 3,627, net sales of the company increased 16.1% y-o-y and decreased 18.8% q-o-q to Rs 701.7 crore in Q3FY09. The sales were driven by 60% and 19% y-o-y increase in average time charter yield (TCY) of tankers and product carriers respectively. Further, increase in the proportion of spot vessels to 58% from 38% y-o-y aided the company’s sales.

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