Mumbai: Greatship Ltd, the offshore subsidiary of India’s largest private sector shipowner Great Eastern Shipping, has started active marketing for the placement of its 22 offshore support vessels, the contracts for many of which are expiring this December.
The offshore business has been the mainstay of Great Eastern for the past four to five years, and has helped the company remain in the black even when its core shipping business was doing poorly. For the financial year 2013-14, the offshore business accounted for 45% of the company’s revenue and 60% of profits.
In the past year, though, the tanker arm of the company has yielded good returns, even as the offshore business has taken a hit and its profitability shrunk, and the dry bulk business has remained terrible due to rock-bottom freight rates. The company runs a 29-strong ocean-going fleet, including 21 tankers and eight bulk carriers.
“Low crude oil prices have impacted the performance of our offshore business in the January to March quarter of the last fiscal year, and they continue to affect the ongoing quarter,” said Greatship’s managing director Ravi Sheth. “If oil prices continue to be this low, we may witness a bloodbath in the offshore sector.”
For the full fiscal year ended March 2015, the contribution of Great Eastern’s offshore business was INR6.67bn ($105m), down from INR6.81bn in the previous year. The shipping sector contributed INR4.32bn, up 24% from the previous year.
Greatship is likely to look closely at the domestic offshore market, which has not been as adversely affected as globally. Contracts are likely to be sought with Oil & Natural Gas Corporation (ONGC), the government-owned explorer-producer, which is stepping up its activities in the acreages it owns.