The Hindu Business Line : GE Shipping to de-merge offshore business

THE Board of Directors of Great Eastern Shipping Co has decided to de-merge its offshore business into a new company that will be listed on both NSE and BSE.

The equity swap ratio will be decided after the valuation, which is expected to be wrapped up in two to three weeks.

A committee of directors will appoint two valuers and Kotak Investment Banking will be advising on their valuation report.

Mr Bharat Sheth, son of Mr K.M. Sheth, Executive Chairman, will head the shipping company, while his cousin, Mr Vijay Sheth, will be in-charge of the new entity. Promoters holding in the new company will be same as that in the existing company at 24 per cent.

However, the individual holding among the promoters may undergo a change. According to company officials these details are being worked out. It is likely that Mr Bharat Sheth may buy out Mr Vijay Sheth's stake in the shipping division and vice-versa.

The promoters have billed this development as a "re-structure" of the company, with the objective of unlocking the share value of the offshore division. The company posted a turnover of Rs 2,100 crore last fiscal, out of which the offshore division's share was Rs 350 crore. The offshore division is engaged in drilling, offshore support, marine construction and port terminal operations.

Mr Bharat Sheth told Business Line that the shareholding of the new company would mirror the shareholding in GE Shipping. "The promoters, who hold 24 per cent equity in GE Shipping will also hold the same equity in the offshore company," he said

When contacted, Mr Vijay Sheth said the offshore company would not look for new activities immediately, as the existing business itself had tremendous opportunities. Asked about changes in the ownership pattern, he said: "this is a family issue and would remain within the family. The relation between the family members continue to be cordial," he said.

In the existing structure of the company, the shipping division accounts for 61 per cent of the company's total capital employed of Rs 4,269 crore, while the offshore division accounts for over 15 per cent and the rest is in the form of cash equivalents of Rs 1,000 crore and miscellaneous assets not attached to any particular division.

The share value of GE Shipping has risen by about 16 per cent in the last one week - it increased from Rs 166.75 on August 24 to Rs 193 on Wednesday.

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