The Hindu Business Line : Bharat Sheth picks up 11.5 lakh shares in GE Shipping

Mr Bharat Sheth, Managing Director, Great Eastern Shipping, along with other members of the promoter Sheth family that owns 27 per cent equity in the company, has been on a different shopping spree this Christmas.

Unlike the usual Christmas shopping, he was busy buying shares of the company from the secondary market this month.

Between December 4 and 22, Mr Bharat Sheth alone had picked up over 11.5 lakh shares, constituting 0.76 per cent of the total equity. He now holds about 7.59 per cent of the company's equity.

In fact, Mr K.M. Sheth, Executive Chairman of the company, and his two sons Mr Bharat Sheth and Mr Ravi Sheth, had picked up about 16 lakh shares in the last four months, constituting about 1.05 per cent of the equity, at an estimated cost of about Rs 40 crore.

Sources close to the Sheth family say that they are betting big on the company's wholly owned subsidiary, Greatship India Ltd (GIL), which is in the offshore business. GIL will be competing with Great Offshore Ltd (GOL), the de-merged entity of the parent company, which is controlled by Mr Vijay Sheth, cousin of Mr Bharat Sheth, as the two entities are not bound by any no-compete clause.

With GOL recording unexpected valuation after it got listed on December 21 (its share price opened at Rs 702, touched a peak of Rs 906 and closed at Rs 807.40 on Friday), the Sheths expect GIL to cash in on the offshore wave in the coming years.

In fact, the Sheths had started picking up shares of the company from the first week of September 2005, a few days after the company first came out with the proposal to de-merge its offshore business into a separate entity.

Between September 2005 and August 2006, the Sheths had picked up 44 lakh shares at an estimated cost of about Rs 100 crore to take their holding to 26 per cent.

During this period, Mr K.M. Sheth had picked up 8.31 lakh shares at an estimated average price of Rs 230 per share, while his son Mr Bharat Sheth amassed 21.95 lakh shares at an average price of about Rs 220, while his other son Mr Ravi Sheth accumulated 14.10 lakh shares.

"The Sheths apparently feel GIL has a hidden intrinsic value built in Great Eastern Shipping, as the offshore business holds out significant business potential, in the wake of the increased activity in the offshore oil exploration and production sector," the sources said.

GIL has lined up a capital expenditure programme of $380 million to acquire 10 offshore support vessels and a drilling rig to cash in on the demand for such assets.

Demand for rigs up

Worldwide, there has been a surge in demand for rigs and supply vessels. The global fleet of rigs is around 588, with an order book of 79. In the last three to four years, the day rates for jack-up rigs in the North Sea have gone up by 125 per cent and in the Gulf of Mexico by 415 per cent.

Similarly, the global fleet of supply vessels is about 1,725. "Although 650 vessels from about 68 owners are on order, which will be delivered between mid-2007 and 2008, most of these will be only replacing the existing fleet of vessels above 25 years of age. Hence, the market will remain firm for a continued period of time," an industry analyst said.

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