Title: The Great Eastern Shipping Company Limited Corporate Presentation
1The Great Eastern Shipping Company
LimitedCorporate Presentation Financial
Announcement FY 2001
2Corporate mission
- To be a leading service provider of marine
logistics involving shipping and offshore
services with a focus on the energy sector.
3Corporate profile
Largest Indian private sector shipping co.
- Crude products transportation
- Dry bulk transportation
Largest Indian private sector offshore service
provider
- Oil field services
- Port services
Knowledge driven organisation
- Techno-commercial expertise
- Opportunities Risk assessment
Global customer base
- 50 years of experience
- Leveraged to enhance intl. trade
- Emphasis on safety quality
Strong financials
- Steady Cash Generator
- Increasing capital productivity
4Professional management structure
Board of Directors
Managing Director
Managing Director
Consensus on important decisions
Pooling experience resources
Overall mgt. responsibility
Core operating committees
Head - Offshore
Head - Shipping
PresidentCorp Co. Sec.
CFO
CIO Head-HR
5Corporate objectives
Preferred service provider
Stability visibility of earnings
Long-term growth
- Diversified portfolio
- of related
- businesses
- Exposure to
- multiple
- geographies, trades
- and customers
- Period covers
- revenue visibility
- Focus on customer
- and quality of
- service
- Constant
- modernisation /
- upgradation of
- assets
- Asset expansion
- supporting growth
- opportunities
- Stronger operating
- model
- Inorganic
- opportunities
Total organisational focus on enhancing human
capital contribution
6Business segments
G.E. Shipping
SHIPPING
OFFSHORE
Crude
Product
Dry bulk
Gas
Offshore services
Port support / Terminal services
- Medium range
- General
- purpose
Offshore support / logistics
Drilling services
- Anchor handling tugs (AHT)
- AHT supply vessels (AHTSV)
- Dive support/supply vessels
Marine const. Proj serv.
7Shipping Business
8Global overview
Earnings drivers
Demand drivers
Supply drivers
Trade growth
Trade patterns
Ordering
Scrapping
World GDP growth
Inventory levels
OPEC prodn
Steel prodn
New building prices
Shipyard capacity
Replacement demand
Wet
Dry
Wet/dry
Wet
Wet/dry
Wet/dry
Wet/dry
Crude sourcing areas
Refinery location
Regional grain prodn
Age
Market conditions
Regulatory parameters
Wet
Wet
Dry
Wet/dry
Wet/dry
Wet
9Techno-commercial Capabilities
- Ability to participate in premium international
trades - CAP rating initiative 4 product tankers
certified - All oil major approvals on 3 crude oil carriers
- All oil major approvals on 7 MR product tankers
10Redefining asset allocation
Details No. No. Aggr. DWT Aggr. DWT Avg age (yrs) Avg age (yrs)
2001 1997 2001 1997 2001 1997
Crude oil tankers 3 1 355,000 150,000 5 5
Product tankers-GP 6 9 173,000 259,000 15 14
Product tankers-MR 7 6 335,000 280,000 15 14
Gas carrier 1 1 28,400 28,400 23 19
Bulk carriers 15 17 410,000 610,000 19 17
Total 32 34 1,301,400 1,327,400
Includes 4 MBCs
Committed capex of US 136 million for 3 Aframax
tankers and one product tanker
Rs mln
11Global customer acceptability
FY01
FY97
12Risk Management optimising opportunities
RISK
MANAGEMENT
- Multiple sector exposure
- Cross geo asset deployment
- Period cover
- Favourable value asset acquisition
Market
- Quality assets intl. certifications
- Stringent safety practices
- Global oil pollution response
- contract
Environment
Technical
- Pre-purchase inspection process
- Ongoing maintenance inspection
Commercial
- Operational
- Credibility assessment
13Operating highlights
Q4 FY01 Q4 FY00 FY2001 FY2000
Crude tankers Suezmax Crude tankers Suezmax Crude tankers Suezmax Crude tankers Suezmax Crude tankers Suezmax
Operating days 90 58 380 335
Operating capacity 13.0 8.4 55.2 48.6
TCY / day 18,876 15,373 19,005 15,108
Crude tankers Aframax Crude tankers Aframax Crude tankers Aframax Crude tankers Aframax Crude tankers Aframax
Operating days 179 195 732 735
Operating capacity 18.8 20.5 76.9 77.2
TCY / day 41,041 13,686 30,355 12,029
Product tankers Medium range Product tankers Medium range Product tankers Medium range Product tankers Medium range Product tankers Medium range
Operating days 663 529 2164 1821
Operating capacity 31.8 25.9 104.8 89.3
TCY / day 23,456 11,615 16,006 10,402
Product tankers General Purpose Product tankers General Purpose Product tankers General Purpose Product tankers General Purpose Product tankers General Purpose
Operating days 498 583 2314 2829
Operating capacity 14.4 16.3 65.9 79.2
TCY / day 11,888 10,526 10,662 10,914
14Operating highlights
Q4 FY01 Q4 FY00 FY2001 FY2000
Bulk carriers Handymax Bulk carriers Handymax Bulk carriers Handymax Bulk carriers Handymax Bulk carriers Handymax
Operating days 827 940 3485 3398
Operating capacity 32.2 36.2 137.9 130.8
TCY / day 7,678 6,596 8,095 6,569
Bulk carriers Handysize Bulk carriers Handysize Bulk carriers Handysize Bulk carriers Handysize Bulk carriers Handysize
Operating days 258 245 1044 1221
Operating capacity 7.0 6.6 28.4 33.0
TCY / day 5,512 5,832 6,715 5,095
Operating capacity in million DWT-days
15Freight rates current perspective
30,000
25,000
19,000
14,000
9,000
6,000
Current
16Future outlook
TANKERS
Freight rates off Q4 peaks
- OPEC supply cut
- Slowdown in U.S. economy
- IEA estimated oil demand increase
- by 1.8
- Marginal fleet accretion 4 of
- current fleet to be delivered in 2001
Positive outlook through FY 2002
- Aggressive fleet additions 12 of
- existing fleet on order
- 30m DWT additions by 2002
- Reduced scrapping trends lt6m
- DWT in 2000 YTD 2001
DRY BULK
Supply overhang expected over next year
- Weakening global economic
- prospects
- 6 demand growth required to
- maintain existing freight rates
Weakness expected in FY 2002
17Revenue visibility
FY02 operating capacity covered
Rs 674 million covered
Rs 1057 million covered
Rs 93 million covered
- 35 of FY 2001 revenues already covered
- Targeting enhanced crude coverage
- Limited risk management in dry bulk
- Monthly trend assessment cover reviewed by mgt
18Future direction
Enhanced focus on tankers
Dry bulk expansion linked with attractive market
opportunities
Creation of a sustainable brand
Modernisation of asset base greater intl.
exposure
Enhanced customer focus
De-risking strategies
19Offshore Business
20Offshore business matrix
Drilling services
Marine logistics
Marine construction
Port services
Air logistics
21Global sector outlook
Trend of range-bound oil prices
- Brent crude FY2001
- US 22-28 / barrel
Buoyant gas prices
- Indications of US exploring
- gas production indigenously
Enhanced exploration activity
- Increased demand for offshore
- services
Offshore industry in consolidation phase
- Emergence of limited number of
- strong players
22Domestic sector outlook
Drilling activity at core of the sector
- Marine support services revolve around drilling
- 25 of identified 48 blocks awarded
- under NELP-I
- 23 bids under scrutiny for 25
- exploration blocks under NELP-2
GoI policy allows private foreign investment in
oil exploration
ONGC experience leveraged for emerging
opportunities
- Enron, Hardy Oil, Cairn Energy,
- Niko Resources, Mosbacher
Increasing capacity utilisation and greater
demand visibility
- Composite services
- Attractive business
23Company position
Initial investment focused on ONGC operations
Developed long experience productive
relationships
Poised to capitalise on emerging opportunities
Leading service provider within the sector
Increasing EP operations
Improving profitability
24Offshore fleet profile
Details No. No. Avg age (yrs) Avg age (yrs)
2001 1997 2001 1997
Oil drilling rigs 2 2 27 23
Offshore support vessels 14 10 16 15
Harbour tugs 10 2 6 11
Construction barge 1 1 23 19
Rs mln
25Offshore Support Vessels
Leading service provider in the sector
Servicing all EP operators in India
Foray into specialised services deep water
drilling
Further demand from NELP and EP expansion
programmes
Main competition from foreign contractors
26Port services
Servicing public private sector port trusts
Focused on market led growth
Further demand from upcoming LNG / chemical
terminals
Corporatisation of major ports / devlpt of minor
open greater opportunities
Competition from port authority-owned
infrastructure further acquisition
27Safety, quality and training
System
- Driven by high operational standards required
- in the sector
Implementation
- Control systems to regulate Safety, Quality
- Environmental Protection
Compliance
- Safety knowledge enhancement training
- programmes increase awareness, efficiency
Monitoring
- Regular internal external safety audits
Benefits
- Loss prevention by monitoring fleet safety
- performance
Accolades
- Recent awards from Enron and Hardy
- recognising efficient and safe practices
28Operating highlights
Q4 FY01 Q4 FY00 FY2001 FY2000
Drilling rigs Drilling rigs Drilling rigs Drilling rigs Drilling rigs
Operating days 102 138 652 607
Operating rate / day 22,674 27,474 22,179 30,306
Support vessels Support vessels Support vessels Support vessels Support vessels
Operating days 1072 1186 3,790 3,621
Operating rate / day 4,581 4,018 4,271 4,130
Harbour tugs Harbour tugs Harbour tugs Harbour tugs Harbour tugs
Operating days 922 721 3,272 2,449
Operating rate / day 130,063 152,397 146,912 139,614
Construction barges Construction barges Construction barges Construction barges Construction barges
Project revenues Rs mln N/A N/A 263 758
29Revenue visibility
FY02 operating capacity covered
Rs.500 million covered
Rs.198 million covered
Rs.543 million covered
Rs.10 million covered
- 57 of FY2001 revenues covered
30Revenue visibility
OSVs / Tugs
Rig / Construction
31The Future
- Commitment to deepwater drilling services -
enhanced business prospects - Acquisition of Malaviya Ten (US20 m)
- 2 PSVs ordered - US26 m - delivery 2002
- Future expansion linked to EP activity in India
- Mumbai High redevelopment programme
- Ravva Phase II - KG basin
- Lakshmi Field
- Enrons Panna-Mukta field programme
- Potential opportunities from NELP
-
32Financial performance
33Financial overview
- Market capitalisation Rs. 7,178 million
- Cash generation of Rs. 3,782 million in FY2001
- Net Worth Rs. 10,910 million
- Capital employed Rs. 20,124 million - DebtEquity
0.841 - Book Value per share Rs. 50 per share
- NAV of Assets Rs.67 per share
- AAA rating by CRISIL since 1995
- Uninterrupted 15-year dividend record
- As on 7 May 2001
34Financial performance
35Capital employed
21,335
21,457
19,944
20,307
20,124
36Operating highlights
Q4 FY01 Q4 FY00 FY2001 FY2000
TCE Income 2783 2040 9167 8115
Operating profit 1335 1035 4740 3684
Cash profit 1037 818 3782 2916
PAT 546 323 1774 1067
EPS (Rs.) 2.3 1.2 8.0 4.1
37Business distribution
2000-01
Composition of Operating Profit (PBDIT)
Composition of capital employed
76
Shipping
64
20
14
Offshore
Rs.20,124 mn
Rs.4,740 mn
22
4
Others
- incl.profit on sale
38Financial analysis
FY01 FY00
OPM 42 32
NPM 16 11
RONW 16 9.5
EPS 8.00 4.10
CEPS 17.2 11.3
Debt/Equity 0.84 0.89
Interest cover 6.6 6.1
39Value initiatives
- Buyback of equity shares
- Prepayment of high cost debt
Optimisation of Capital structure
- Appointed Accenture to advise
- Cost savings in FY 2001 Rs.195 million
- Expected savings in FY 2002 Rs.250
- million
Cost Reduction initiatives
Reduced non-operating assets
- Aggressive divestment of properties
- Reduced portfolio of equities /
- commodities
Enhancing decision support systems
- Accenture implementation of integrated
- IT package in shipping division
40Buyback objectives
- Strong cash generation expected
- Positive operating outlook
- Sale of non-core assets
- Adequate fund availability for near-term capital
expenditure - To be funded from internal accruals and
- higher leveraging
- Value enhancement
- Book Value per share Rs.50
- NAV per share Rs.67
- Optimal Debt / Equity balance
- Buy back II Rs 1,000 million maximum Rs 42
per share
41Concerns pro-active redressal
Equities trading
- No investments, liquidating existing portfolio
- Current exposure Rs. 20 million
Commodities trading
- Reduced substantially over last 3 years
- Close positions by FY 2002
Property exposure
- Demerged property division
- Pro-active liquidation of assets
Forex exposure
- Cautious approach
- Exposure on operations driven forward cover
High Equity base
- Buyback I Rs. 1.5 billion Equity base ?16
- Second tranche to be cleared at AGM
Promoter participation
- Current shareholding 20
- Creeping acquisition
42Sector position
Sector leadership global focus
Global acceptability
De-risking business
Enhancing stakeholder value
Modernising infrastructure
Focusing on Returns
Creation of brand identity
43 - Visit us at www.greatship.com