Our Bureau

Mumbai, Sept. 15

THE board of directors of Great Eastern Shipping Ltd, which met on Thursday, has approved the details of the scheme for demerger of its offshore services business into a separate company, Great Offshore Ltd.

As per the details, shareholders of GE Shipping will be issued, at no cost, one fully paid share of Rs 10 each in Great Offshore for every five shares of GE Shipping. Consequently, the shares held in GE Shipping will stand reorganised to four shares of Rs 10 each for every five shares now held.

The demerger share entitlement ratio approved by the board is on the basis of the recommendations of chartered accountants and independent valuers, Deloitte Haskins & Sells and Kalyaniwalla & Mistry.

In other words, every 100 shares owned in GE Shipping will be reorganised to 80 shares of GE Shipping and 20 of Great Offshore.

Mr Vijay Sheth, who will be heading the new company, told newspersons that since all shareholders will be issued shares in Great Offshore Ltd on a proportionate basis, there will be no change in the overall shareholders pattern on the date that demerger becomes effective. He felt that the new company would be listed within the next four to six months.

New entity's operations: The new company will be operating drilling services, marine logistics, marine construction and port/terminal services. After the demerger, the paid-up share capital of Great Offshore will be Rs 38.07 crore and that of GE Shipping will be Rs 152.27 crore, against the existing Rs 190.34 crore.

The net worth of Great Offshore as on April 1, 2005, would stand at Rs 446.12 crore, and that of GE Shipping will stand reorganised at Rs 1,741 crore.

Mr Sheth said the new company would continue to implement its capital expenditure scheme of $75 million involving purchase of six vessels.

The 80-odd employees and a fleet of 32 vessels, including 18 offshore support vessels and 11 harbour tugs in the offshore division will be transferred to the new company.

In response to a question, Mr Sheth said he would be exiting from GE Shipping.

"The modalities are being worked out within the family. The family stake of 24 per cent will, however, remain unchanged," he said, adding that the boards of the two companies would be independent.

Great Offshore will have a debt of Rs 227 crore, while GE Shipping will have Rs 1,850 crore debt.

"The idea behind the demerger is to unlock shareholders value. Besides, it will result in sharper focus on the two businesses," Mr Sheth said.

(This article was published in the Business Line print edition dated September 16, 2005)
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