GE Shipping in pact for leasing helicopters
10 April 2002
Currently, both GESL and UB operate two and three helicopters, respectively, which have been leased from QGPC, a corporation owned by the Qatar government, and chartered out to various charterers, including oilfield operators.
The initial paid-up capital of JVC will be Rs 20 million, which will be subscribed by QGPC to the extent of 36 per cent, GESL and UB 26 per cent each, and key employees of JVC will hold the balance 12 per cent.
GESL is the largest private sector player in the domestic shipping industry, having progressed from a domestic bulk cargo carrier to energy transportation and offshore energy services as its key areas of focus. A young fleet of 32 vessels with an aggregate capacity of 1.3 mdwt allows it to compete in global markets and participate in premium trades in international shipping markets.
GESL is also India's largest private sector offshore services provider, offering oil-drilling equipment, marine construction, air logistics, port support and terminal services. A fast-growing business, it now contributes to 20 per cent of revenues. Despite the cyclical nature of the shipping business, GESL's earning profile demonstrates relatively less volatility.
Its fleet diversification across different segments of the market - tankers, bulk carriers and offshore supply vessels - reduces its vulnerability to movement in rates in a single segment. Its large size has led to higher operating efficiencies and cash flows to fund future growth conservatively. Tankers account for a high and consistently increasing proportion of earnings of the company, and this trend will improve the profitability of the company.
The company has also ensured earnings protection through a mix of voyage and time charters. While this may leave the company vulnerable to a sharp drop in earnings while coming out of favourable time charters, GESL has always supplemented cash flows through the sale of vessels. GESL's favourable financial profile also helps in deploying ships on-the-spot contracts when rates are low, and tying into favourable long-term contracts when the rates are better.
GESL has further diversified its income stream by taking the global perspective of its operations and has reduced its exposure to domestic markets, particularly in the tanker business. In the bulk and OSV businesses, the company remains linked with the domestic market, but a long track record and experience provides earnings stability. With a view to deploy vessels in international waters, GESL has reduced the number of smaller older vessels and replaced with larger newer vessels.
In the last four years, GESL has reduced the number of product carriers that have been serving in domestic markets, in favour of trading in international waters. The ability of GESL to anticipate shifts in trends has helped in mitigating risks arising out of characteristics of various industry segments.
GESL has exited its non-core lines of business to concentrate its energies on shipping. The wet-cargo segment is now its focus area. Times charter yields (TCY) from the wet-cargo business has risen 73 per cent of gross TCY in FY01 from 66 per cent in FY97. This is expected to improve to 78 per cent in the next two years. Supported by the wide gamut of services provided by the offshore division, GESL has transformed into an energy transportation and services company.