The Great Eastern Shipping Company Limited Corporate Presentation by getagrip

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									The Great Eastern Shipping Company Limited




            Corporate Presentation
                      &
       Financial Announcement FY 2001

                 8 May 2001
Corporate mission




              “To be a leading service provider of
                marine logistics involving shipping
               and offshore services with a focus on
                        the energy sector.”




                                                       2
 Corporate profile


Largest Indian private   • Crude & products transportation
 sector shipping co.     • Dry bulk transportation


Largest Indian private   • Oil field services
   sector offshore       • Port services
  service provider


  Knowledge driven       • Techno-commercial expertise
    organisation         • Opportunities & Risk assessment


                         • 50 years of experience
Global customer base     • Leveraged to enhance intl. trade
                         • Emphasis on safety & quality

                         • Steady Cash Generator
  Strong financials      • Increasing capital productivity3
Professional management structure

                     Board of Directors


 Managing Director                           Managing Director
                                                    Pooling
 Overall mgt.               Consensus
                                                   experience
 responsibilit             on important
                                                       &
      y                      decisions
                                                   resources

                   Core operating committees



         Head - Shipping                  Head - Offshore




        President–Corp
                               CFO         CIO & Head-HR         4
          & Co. Sec.
    Corporate objectives

 Preferred service          Stability & visibility
                                                       Long-term growth
     provider                   of earnings




• Focus on customer       • Diversified portfolio     • Asset expansion:
  and quality of            of related                  supporting growth
  service                   businesses                  opportunities

• Constant                • Exposure to               • Stronger operating
  modernisation /           multiple                    model
  upgradation of            geographies,
  assets                  trades                      • Inorganic
                            and customers               opportunities

                          • Period covers:
                            revenue visibility
                                                                        5
     Total organisational focus on enhancing human capital contribution
         Business segments

                                       G.E. Shipping



             SHIPPING                                                    OFFSHORE


 Crude       Product      Dry bulk     Gas                    Offshore            Port support /
                                                              services          Terminal services
• Suezmax                • Handymax
• Aframax                                                                              • Harbour /
                         • Handysize                                                     terminal
            • Medium range                                   Offshore support            tugs
                                              Drilling
            • General                                            / logistics
                                             services
              purpose
                                       • Drilling rigs     • Anchor handling tugs (AHT)
                                                           • AHT supply vessels (AHTSV)
                                                           • Dive support/supply vessels


                                                    Marine const.
                                                     Proj & serv.

                                                • Construction barge
                                                             •                             6
Shipping Business

                    7
           Global overview

                                        Earnings drivers



           Demand drivers                                           Supply drivers

  Trade growth                 Trade patterns                  Ordering             Scrapping


World GDP     OPEC        Inventory    Steel      Shipyard     Replacement    New building
 growth       prodn         levels     prodn      capacity       demand         prices

 Wet/dry          Wet         Wet        Dry      Wet/dry        Wet/dry       Wet/dry



     Crude          Refinery         Regional
 sourcing areas     location        grain prodn          Age       Market     Regulatory
                                                                 conditions   parameters
      Wet               Wet            Dry
                                                     Wet/dry
                                                           •        Wet/dry       Wet    8
    Techno-commercial Capabilities

                          Fleet age

                         25
                              19.3
                         20
           No.of years



                                     12.8    14.3 15
                         15                                     12.5
                         10                               4.9
                          5
                          0
                              Dry Bulk       Product      Crude

                                            GES   World

•   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
                                                                       9
         Redefining asset allocation

Details                      No.              Aggr. DWT            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

             Capital employed
                                              Committed capex of US$ 136 million for 3
             15000
                                              Aframax tankers and one product tanker
    Rs mln




                     10640
             10000           8159
                                                       4199
             5000                              2146

                0
                      Tankers                      Bulkers                         10
                                    2001     1997
   Global customer acceptability

FY97                         FY01




                                     Others   N America
       Intl.             India        3%         14%
       5%                (Pub)
                         27%                            Europe
                                                         20%


                                               Asia-
                             India
                                              Pacific
               India         (Pvt)
                                               18%
                             18%
               95%




                                                           11
Risk Management: optimising opportunities

   RISK                           MANAGEMENT

                       • Multiple sector exposure
    Market             • Cross geo asset deployment
                       • Period cover
                       • Favourable value asset acquisition

                       • Quality assets – intl. certifications
  Environment          • Stringent safety practices
                       • Global oil pollution response
                         contract



   Technical           • Pre-purchase inspection process
                       • Ongoing maintenance & inspection



  Commercial           • Operational
                       • Credibility assessment         12
       Operating highlights
                                    Q4 FY01   Q4 FY00   FY2001    FY2000
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
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
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
Operating days                         498       583      2314      2829
Operating capacity                    14.4      16.3      65.9       79.2
                                                                       13
TCY [$ / day]                        11,888    10,526    10,662     10,914
       Operating highlights


                               Q4 FY01   Q4 FY00   FY2001   FY2000
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
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




                                                                     14
              Freight rates: current perspective


              60,000
                       52,000

              45,000               40,000
US$ per day




              30,000    30,00                  25,000
                          0        25,00
                                                          20,000
                                     0
                                               19,00                 13,000
              15,000                                      14,00                  9,400
                                                 0
                                                            0          9,000
                          10,700      10,100                                                6,000
                                                  8,700      7,000       6,000      5,700
                  0
                         Suez        Afra         MR         GP       H-max      H-Size
                                                  10 year H / L

                                                   High     Low      Current

                                                                                          15
     Future outlook

TANKERS

      Freight rates off       • OPEC supply cut
         Q4 peaks             • Slowdown in U.S. economy


                              • IEA estimated oil demand increase
          Positive outlook      by 1.8%
              through         • Marginal fleet accretion – 4% of
              FY 2002           current fleet to be delivered in 2001

DRY BULK                      • Aggressive fleet additions: 12% of
                                existing fleet on order
       Supply overhang        • 30m DWT additions by 2002
    expected over next year   • Reduced scrapping trends: <6m
                                DWT in 2000 & YTD 2001

                              • Weakening global economic
     Weakness expected          prospects
        in FY 2002            • 6% demand growth required to  16
                                maintain existing freight rates
          Revenue visibility

   FY02 operating capacity covered

             Crude                          Product                           Dry Bulk

Covered
 39%                         Covered                       Covered
                              35%                            6%


                                                       Open                              Open
                     Open                              65%                               94%
                     61%
  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
                                                                                    17
 Future direction


                    Enhanced focus
                      on tankers
                                     Dry bulk expansion
                                         linked with
  Creation of a                       attractive market
sustainable brand                       opportunities




                                       Modernisation of
   Enhanced                              asset base:
 customer focus                          greater intl.
                                          exposure
                     De-risking
                     strategies
                                                     18
Offshore Business
                    19
Offshore business matrix


                     Drilling
                     service
                        s

 Marine
logistics                             Marine
                                    construction




                                Port services
     Air logistics



                                                20
 Global sector outlook


Trend of range-bound     • Brent crude: FY2001
      oil prices           US$ 22-28 / barrel




 Buoyant gas prices      • Indications of US exploring
                           gas production indigenously



Enhanced exploration     • Increased demand for offshore
      activity             services




 Offshore industry in    • Emergence of limited number of
 consolidation phase       strong players
                                                         21
Domestic sector outlook

Drilling activity at core   • Marine support services revolve
      of the sector         around drilling


  GoI policy allows         • 25 of identified 48 blocks awarded
  private & foreign          under NELP-I
  investment in oil         •23 bids under scrutiny for 25
     exploration             exploration blocks under NELP-2

   ONGC experience
leveraged for emerging      • Enron, Hardy Oil, Cairn Energy,
     opportunities            Niko Resources, Mosbacher



 Increasing capacity
                            • Composite services
utilisation and greater
                            • Attractive business
   demand visibility
                                                           22
Company position

                  Initial investment
                      focused on
                         ONGC
                      operations            Developed long
  Poised to                                  experience &
capitalise on                                 productive
  emerging                                   relationships
opportunities


                                                Leading
     Increasing                                  service
        E&P                                  provider within
     operations                                the sector

                             Improving
                            profitability
                                                        23
   Offshore fleet profile

Details                          No.           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




              Capital employed
                                            2817
             3000
                            2068
   Rs mln    2000
             1000
                    0
                                  Offshore

                                1997        2001
                                                               24
Offshore Support Vessels

                      Leading service
                      provider in the
                          sector

  Foray into                                    Servicing all
 specialised                                   E&P operators
services: deep                                    in India
 water drilling




Further demand from
   NELP and E&P                         Main competition
     expansion                            from foreign
    programmes                             contractors


                                                           25
Port services

                         Servicing public
                         & private sector
                            port trusts

Further demand                                         Focused on
from upcoming                                          market led
LNG / chemical                                           growth
   terminals




  Corporatisation of                          Competition from
  major ports / devlpt                      port authority-owned
    of minor open                              infrastructure &
 greater opportunities                       further acquisition

                                                                   26
Safety, quality and training

                  • Driven by high operational standards required
   System           in the sector

                  • Control systems to regulate Safety, Quality &
Implementation      Environmental Protection


                  • Safety & knowledge enhancement training
 Compliance
                    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 27
                    recognising efficient and safe practices
       Operating highlights

                            Q4 FY01     Q4 FY00    FY2001     FY2000
Drilling rigs
Operating days                 102         138       652         607
Operating rate [$ / day]      22,674     27,474     22,179      30,306
Support vessels
Operating days                 1072       1186       3,790      3,621
Operating rate [$ / day]       4,581      4,018      4,271      4,130
Harbour tugs
Operating days                 922         721       3,272      2,449
Operating rate [$ / day]      130,063    152,397    146,912    139,614
Construction barges
Project revenues [Rs mln]      N/A        N/A        263         758




                                                                   28
      Revenue visibility

 FY02 operating capacity covered
                     OSV                                  Harbour Tugs


Covered                                   Covered
 56%                                       41%

                                   Open                                      Open
                                   44%                                       59%
          Rs.500 million covered                    Rs.198 million covered

                   Rigs                                 Construction barges
                       Open
                       39%

                                             Covered
                                              10%


     Covered                                                                        Open
      61%                                                                           90%
           Rs.543 million covered                        Rs.10 million covered



  • 57% of FY2001 revenues covered                                                    29
         Revenue visibility

                                            OSVs / Tugs
FY97-98                                                                                  FY00-01
                 Others                                         Others           ONGC
  Ports           17%                                            9%              18%
  16%                                ONGC
                                     30%
                                                       Ports                          Enron
 Cairn                                                 33%
                                                                                 Hardy 18%
  8%
         Hardy            Enron                                          Cairn    6%
          14%              15%                                           16%




                                            Rig / Construction
FY97-98                                                                                   FY00-01

                              ONGC
                              45%
Others
                                                       Others
 11%
                                                        17%
                                                                                        ONGC
                                                          L&T                           79%
Mosbach                                                   4%
  or             L&T              Hardy
 20%             5%                19%
                                                                                               30
  The Future


• Commitment to deepwater drilling services - enhanced
  business prospects
   – Acquisition of Malaviya Ten (US$20 m)
   – 2 PSVs ordered - US$26 m - delivery 2002
• Future expansion linked to E&P activity in India
   –   Mumbai High redevelopment programme
   –   Ravva Phase II - KG basin
   –   Lakshmi Field
   –   Enron’s Panna-Mukta field programme
• Potential opportunities from NELP


                                                     31
Financial performance




                        32
    Financial 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 - Debt:Equity 0.84:1
•    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




                                                                33
         Financial performance


         12000                                                                          10
                                                                         10813
                               9641          9808          9945
         10000                                                                   8
                 8781
                                                                                        7.5
          8000                                                                                     Total income
Rs mln




                                      5.71
                                                                                                   EBITDA




                                                                                              Rs
          6000          4.74                                                            5
                                                    4.39                    4740                   PAT
                                  4206                            4.1
                                                3836          3685                                 EPS
          4000      3530
                                                                                        2.5
                                      1642                                       1774
          2000          1364                        1264          1068

             0                                                                          0
                  1996-97       1997-98       1998-99       1999-00       2000-01




                                                                                                             34
         Capital employed



         25000
                                     21,457    21,335
                 19,944    20,307                        20,124
         20000

                            8317      9348      10054
                   8358                                   9214
         15000
Rs mln




                                                                   Debt
                                                                   Equity
         10000

                  11586    11990      12109     11281     10910
          5000


             0
                 1996-97   1997-98   1998-99   1999-00   2000-01


                                                                      35
            Operating 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


          3000                                                         2783

          2500                                    2228
                 2155
                              2002
          2000
 Rs mln




                                                                                           TCE Income
          1500
                                                                                           PAT
          1000
                        485                                                   546
                                     328                  415
           500

             0                                                                                          36
                 Q1 FY2001    Q2 FY2001           Q3 FY2001            Q4 FY2001
    Business distribution


                          2000-01


                                                   Composition of
 Composition of
                                                   Operating Profit
capital employed
                          Shipping   76%              (PBDIT)
                    64%




                   14%    Offshore   20%


 Rs.20,124 mn                                     Rs.4,740 mn*


                   22%    Others     4%
                                           * - incl.profit on sale

                                                               37
      Financial 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




                                         38
 Value initiatives

                     • Buyback of equity shares
Optimisation of      • Prepayment of high cost debt
Capital structure


                     • Appointed Accenture to advise
 Cost Reduction      • Cost savings in FY 2001: Rs.195 million
   initiatives       • Expected savings in FY 2002: Rs.250
                       million



 Reduced non-        • Aggressive divestment of properties
operating assets     • Reduced portfolio of equities /
                       commodities

   Enhancing
decision support     • Accenture implementation of integrated
    systems            IT package in shipping division
                                                        39
   Buyback 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
                                                       40
 Concerns: pro-active redressal


 Equities trading   • No investments, liquidating existing portfolio
                    • Current exposure: Rs. 20 million

  Commodities       • Reduced substantially over last 3 years
    trading         • Close positions by FY 2002

                    • Demerged property division
Property exposure
                    • 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         • Current shareholding 20%               41
  participation     • Creeping acquisition
Sector position
Sector leadership: global focus


                      Global
                   acceptability


  Enhancing
                                     De-risking
 stakeholder
                                     business
    value




                                     Modernising
  Focusing on
                                    infrastructure
    Returns

                    Creation of
                   brand identity
                                                  42
Visit us at www.greatship.com




                                43

								
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