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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.”. Corporate profile.

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The great eastern shipping company limited corporate presentation financial announcement fy 2001

The Great Eastern Shipping Company LimitedCorporate Presentation &Financial Announcement FY 2001

8 May 2001


Corporate mission
Corporate mission

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


Corporate profile
Corporate 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


Professional management structure
Professional 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

President–Corp & Co. Sec.

CFO

CIO & Head-HR


Corporate objectives
Corporate 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


Business segments
Business segments

G.E. Shipping

SHIPPING

OFFSHORE

Crude

Product

Dry bulk

Gas

Offshore services

Port support / Terminal services

Suezmax

Aframax

Handymax

Handysize

  • Harbour /

    terminal

    tugs

  • Medium range

  • General

    purpose

Offshore support / logistics

Drilling services

Anchor handling tugs (AHT)

AHT supply vessels (AHTSV)

Dive support/supply vessels

Drilling rigs

Marine const. Proj & serv.

Construction barge



Global overview
Global overview

Earnings drivers

Demand drivers

Supply drivers

Trade growth

Trade patterns

Ordering

Scrapping

World GDP growth

Inventory levels

OPEC prodn

Steel prodn

Shipyard capacity

Replacement demand

New building prices

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


Techno commercial capabilities
Techno-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


Redefining asset allocation
Redefining asset allocation

* Includes 4 MBCs

Committed capex of US$ 136 million for 3 Aframax tankers and one product tanker

Rs mln



Risk management optimising opportunities
Risk 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



Operating highlights1
Operating highlights

Operating capacity in million DWT-days


Freight rates current perspective
Freight rates: current perspective

30,000

25,000

19,000

14,000

9,000

6,000

Current


Future outlook
Future 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: <6m

    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


Revenue visibility
Revenue visibility

FY02 operating capacity 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

Rs 674 million covered

Rs 1057 million covered

Rs 93 million covered


Future direction
Future 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



Offshore business matrix
Offshore business matrix

Drilling services

Marine logistics

Marine construction

Port services

Air logistics


Global sector outlook
Global 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


Domestic sector outlook
Domestic 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


Company position
Company 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 E&P operations

Improving profitability



Offshore support vessels
Offshore Support Vessels

Leading service provider in the sector

Servicing all E&P operators in India

Foray into specialised services: deep water drilling

Further demand from NELP and E&P expansion programmes

Main competition from foreign contractors


Port services
Port 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


Safety quality and training
Safety, 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



Revenue visibility1
Revenue visibility

FY02 operating capacity covered

  • 57% of FY2001 revenues covered

Rs.500 million covered

Rs.198 million covered

Rs.543 million covered

Rs.10 million covered


Revenue visibility2
Revenue visibility

OSVs / Tugs

Rig / Construction


The future
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



Financial overview
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



Capital employed
Capital employed

21,335

21,457

20,307

20,124

19,944



Business distribution
Business 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



Value initiatives
Value 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


Buyback objectives

Strong cash generation expected

Positive operating outlook

Sale of non-core assets

Buyback objectives

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


Concerns pro active redressal
Concerns: 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


Sector position
Sector position

Sector leadership: global focus

Global acceptability

Enhancing stakeholder value

De-risking business

Modernising infrastructure

Focusing on Returns

Creation of brand identity



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