GE Shipping net dips 36% to Rs 185.21 cr

BS 200 SCORECARD

Great Eastern Shipping has reported 35.57 per cent decline in net profit at Rs 185.21 crore during the third quarter ended December 2005 as compared with Rs 287.50 crore recorded during the corresponding period of the last year.

Total income from operations grew 12 per cent to Rs 708.60 crore against Rs 633.24 crore in the year-ago period.

The board of directors declared an interim dividend of Rs 2.50 per share, which would result in an outflow of Rs 54.26 crore including tax thereon.

This, along with the first interim dividend of Rs 4 per share, declared in October 2005, has resulted in a total outflow of Rs 141.08 crore.

During the quarter, the company undertook six dry docking, mainly of older vessels, resulting in an increase in lay-up expenses as compared with the last comparable quarter. "The dry docking expenses have also gone up by 85 per cent," he pointed out.

For the quarter, shipping division contributed around 85 per cent to the operating income and around 81 per cent to the profits before interest and tax.

Offshore division contributed around 12 per cent to the operating income and 11 per cent to the profits before interest and tax.

According to company executives, the quarter witnessed a sharp increase in tanker rates compared to the previous quarter but well off the "highs" seen in during the third quarter of FY05.

This, more subdued increase, could be a direct outcome of net additional fleet supply. Net average tanker earnings during the quarter were 35-45 per cent lower than Q3 FY05.

The dry bulk spot rates, in contrast, continued to remain weak despite strong fundamental demand. The company's older dry bulk fleet was the worst hit and average earnings were "half" of that achieved last year.

On a more positive note, the company was quick to monetise on strong values for modern tankers and firm values for older dry bulk vessels by selling four ships.

The full impact of the profit on sale of ships has however been subdued due to impairment in the value of certain assets to the extent of Rs 87.55 crore.

This "impairment" is being provided in lines with accounting standard 28 (AS 28) and reflects the management's commitment to highest governance standards.

Meanwhile, the Bombay High Court has approved the scheme of arrangement for demerger of the offshore services business of the company into a separate entity, Great Offshore Ltd.

In accordance with the scheme, the company has to comply with the conditions precedent, and upon fulfilment of those conditions the board of directors shall announce the effective date of demerger.