Essar Shipping mints profit by rechartering 4 VLCCs
Friday, 10 February 2012 | 00:00
Essar Shipping, as a part of $1 billion capital expenditure for expansion of fleet size, is taking deliveries of four mini capsize
vessels by June this year, while the remaining six supramax and 2 Jack-up rigs would be delivered by the end of next calendar year. Most of vessels’ tonnage are well hedged on long-term charter and the company hopes to cater to the requirement of coal and iron ore as demand for them improves from the power and steel companies.
The company has already taken deliveries of 2 mini cape size vessels this financial year even as the oversupply issues are crippling the freight rates globally. “We have taken care to control any impact on us and even secured our outlook for coming quarters by putting the majority of our tonnage on long term time charter. Essar Shipping’s third quarter profits improved compared with previous quarter as the company put its rig Essar Wild Cat on long-term charter at a rate of $285,000 per day, which has contributed to the total revenues this quarter,” AR Ramakrishnan, MD, Essar Shipping, said.
Ramakrishnan added that the company has also made profits from the re-chartering of its four very-large crude carriers (VLCCs) to time charter from the spot market.
The group cargo constitutes around 60-65 per cent while the remaining 35 per cent is third party cargo. “We hope to take the ratio to 55-45 per cent in next few years. We plan to put our new deliveries on time charter for coal from Australia and Indonesia and also to tie them up from Indian West Coast to China. Our dealing with group companies is at arms length based on tenure, quantum of cargo and availability of vessels. We do not have to compromise on pricing and timing, since we have to sustain our business too.” The firm expects shipping industry to be under pressure for the next couple of months due to oversupply of vessels globally, besides the Baltic dry index and freight rates have touched two-year lows.
On Wednesday, the company announced 43 per cent rise in quarterly net profit at Rs 48.6 crore as against Rs 33.9 crore for the corresponding quarter last year. The Ebitda of the company had increased by over 39 per cent to Rs. 242.3 crore for the corresponding quarter last year.
Revenues for the quarter rose 11 per cent to Rs 729.2 crore as against same quarter last year. The earnings from sea transportation business contributed around Rs 317 crore towards the total revenue, while oilfields services contributed around Rs 144 crore.
Source: My Digital Fc
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