The country's premier private sector shipping company Great Eastern Shipping Company (GE Shipping) has posted a record net profit of Rs 61.7 crore for the quarter ended June 30, 2001.
Net profit rose by 27.2 per cent over the Rs 48.52 crore clocked for the quarter ended June 30, 2000. The profit before tax too rose by 35.8 per cent to record levels of Rs 71.81.
Speaking at the company's 53rd annual general meeting on Thursday, K M Sheth, executive chairman of GE Shipping said, "The growth in net profit is even more significant as in the previous year there was a profit on sale of ships of about Rs 18.8 crore as against nil this year."
More From This Section
The shipping unit contributed over 80 per cent to the operating profit for the quarter. The division benefited from business secured in firmer markets in the early part of calendar 2001 whose positive impact was felt this year. The spot market has weakened considerably for both tankers and dry bulk this year.
The tanker markets have been impacted by a cut in OPEC production, while the dry-bulk markets were weakened by the global economic slowdown.
The operating profit of the shipping division for this quarter increased by 16 per cent.
"In addition to the spillover of earnings from the previous quarter, employment of vessels in less volatile niche trades and optimal fleet deployment has helped in limiting the drop in your company's revenues for this quarter," Sheth said.
The offshore division accounted for about 17 per cent of the operating profit. The division's operating profit for the quarter was up 4 per cent.
The quarter saw the addition of two modern product tankers to the fleet and a modern Panamax bulk carrier earlier this month.
The shipping major has also embarked upon a Rs 1,700 crore expansion plan and more additions are in the pipeline, said Sheth.
Shareholders at the AGM approved the company's second buyback for which the company has earmarked Rs 100 crore and has capped the buyback at Rs 42 a share.
Sheth also said that the revenue outlook for the second quarter for both tankers and dry bulk was weak and this was expected to continue till 2002 and then improve.
A longer term outlook however indicates that tanker earnings should stay healthy over the next four to five years as oil demand will grow.
The International Maritime Organisation's insistence on quality will lead to scrapping of single hull tankers from September, 2002 till end-2006 will in turn boost demand.