Essar Shipping today reported an over 63 per cent decline in consolidated net profit at Rs 17.85 crore for the third quarter ended December 31, 2012, largely due to marginal sales growth, higher expenses as well as interest outgo.

The Ruias-promoted firm had reported a net profit of Rs 48.65 crore during the corresponding quarter of the last fiscal.

Total income from operations of the company was up by 9.53 per cent to Rs 781.86 crore during the quarter vis-a-vis Rs 713.78 crore in the October-December quarter of FY’12, it said in a filing to the BSE.

During the quarter, company’s total expenditure increased by over 14 per cent to Rs 671.32 crore, while the finance cost rose by over 10 per cent to Rs 91.45 crore.

Talking to reporters through a conference call, Essar Shipping’s Managing Director A R Ramakrishnan said the company is looking to refinance part of its Rs 5,500 crore debt soon.

According to him, the company is looking to convert rupee loans worth Rs 700 crore into dollar loans and extension of tenure for dollar loans equivalent to Rs 500 crore by 2 to 5 years.

“We expect to see some definitive progress in 30 to 45 days in terms of the couple of options which we are working,” he said.

In a separate statement, the company said that the fall in profit was “on account of subdued freight rates in the crude oil transportation segment of the sea transportation business.”

The sea transportation business registered revenue of Rs 377.27 crore in the third quarter as compared to Rs 298.30 crore for the corresponding period of FY’12.

“The freight markets were challenging, the Baltic index has fallen by more than 60 per cent when compared with the same period previous year,” the company said.

Giving his short to medium term outlook, he said the shipping industry currently has over supply of tonnage and only by 2013-end, it is expected to get tilted in favour of the ship owners besides pricing pressure continues to remain on shipping freight rates.

Ramakrishnan also said that Essar Shipping is looking to consolidate its oil services business in the coming times and the company is banking on success of its offshore oil rig, wild cat, and launch of two new inland oil rigs.

Essar had won $121 million contract from oil super-major ConocoPhillips in October, 2011 to drill eleven offshore wells on the Indonesian coast.

The Essar Shipping MD said ConocoPhillips is likely to extend the contract as the oil super-major is looking to drill some more wells at the site.

Shares of the company closed today at Rs 27.45 apiece on the BSE, down 1.26 per cent from their previous close.

(This article was published on January 30, 2013)
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