The Hindu Business Line : GE Shipping net grows 46% on higher freight earnings

Higher freight earnings from dry bulk segment, income from sale of ships and foreign exchange gains helped Great Eastern Shipping Company post a 46 per cent growth in net profit at Rs 342.7 crore for the second quarter ended September 30, 2007 as against Rs 235.4 crore in the same year-ago period.

The total income for the company rose 36 per cent to Rs 806 crore (Rs 593 crore). "Robust income has been led by a smart 15 per cent increase in freight earnings as our revenue days increased to 4,303 days in second quarter as compared to 3,744 days in the same quarter last year. Gain on sale of ships fetched Rs 115.8 crore (Rs 38.8 crore)," said Mr Balan Wasudeo, Chief Financial Officer of GE Shipping.

Despite a sharp correction in the tanker freight rates during the second quarter, the earnings on this front have remained unaffected. According to Mr Bharat Sheth, Deputy Chairman and Managing Director of GE Shipping, "The good performance on dry bulk rates have helped in minimising the impact of the sharp drop in tanker freight rates on our earnings."

The total income of the company also includes Rs 47.51 crore of foreign exchange gains, as per revised Accounting Standard AS11, which takes into account the changes in foreign exchange rates in respect of loan repayments and revaluation of outstanding foreign currency loans relating to ships acquired from a country outside India.

Earlier, the shipping companies used to adjust it against the carrying cost of ships, however now it is credited to the profit and loss account and included under `Other income'.

Mr Sheth also said that the company would be ramping up its offshore activities with a capex of $620 million which has already been committed till 2010. GE Shipping has also contracted for an offshore rig to be delivered between September and October 2009.

The company would be spending over $165 million on the same, however, as regards chartering it, Mr Sheth said, "We are in discussion with few operators but we are in no hurry to go out and fix them up as we need to see how we price the asset. Also the exploration and production activity looks robust in the coming years."

GE will also be putting in $375 million into shipping business till 2011, which would include acquisition of some tankers and dry bulk carriers. The company would be funding the above plans through a mix of internal accruals, loans and equity.

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