MIRA
INFORM REPORT
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Report Date : |
03.07.2007 |
IDENTIFICATION DETAILS
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Name : |
ESSAR SHIPPING LIMITED |
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Registered Office : |
2494, 17th
Main, HAL II Stage, |
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Country : |
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Financials (as on) : |
31.03.2006 |
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Date of Incorporation : |
05.04.1975 |
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Com. Reg. No.: |
2771 |
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CIN No.: [Company
Identification No.] |
L85110KA1975PLC002771 |
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TAN No.: [Tax
Deduction & Collection Account No.] |
MUME00066D |
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Legal Form : |
Subject is a Public Limited Liability Company. The company’s shares are listed on the Stock Exchanges. |
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Line of Business : |
Operating of fleets. |
RATING & COMMENTS
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MIRA’s Rating : |
B |
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RATING |
STATUS |
PROPOSED CREDIT LINE |
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26-40 |
B |
Unfavourable & favourable factors carry similar weight in credit
consideration. Capability to overcome financial difficulties seems
comparatively below average/normal. |
Small |
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Maximum Credit Limit : |
USD 92000000 |
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Status : |
Moderate |
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Payment Behaviour : |
Slow and delayed |
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Litigation : |
Unknown |
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Comments : |
Subject is a part of Essar Group, a medium sized industrial house – managed by Ruias. Most of the group companies which are listed on the stock Exchanges are not performing well. Their payments are reported are slow and delayed by 90 – 120 days or more. The company can be considered for normal business dealings with some caution at usual trade terms and conditions. |
LOCATIONS
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Registered Office : |
2494, 17th
Main, HAL II Stage, |
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Tel. No.: |
91-80-25591650 / 25596986 – 90 / 25210158 |
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Mobile No.: |
91-80-25591382 / 25210158 |
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Fax No.: |
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E-Mail : |
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Corporate Office : |
Essar House, 11 Keshavrao Khadye Marg, Mahalaxmi, Mumbai –
400 034, |
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Tel. No.: |
91-22-24950606/ 66601100 |
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Fax No.: |
91-22-24954312/ 4330 |
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E-Mail : |
DIRECTORS
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Name : |
Mr. Sanjay Mehta |
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Designation : |
Managing Director |
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Qualification : |
MBA ( |
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Date of Appointment : |
18/09/2000 |
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Other Directorships : |
American Marine Advisers Inc |
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Name : |
Mr. A. R. Ramakrishnan |
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Designation : |
Whole time Director and CEO |
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Date of Birth/Age : |
07.02.1957 |
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Qualification : |
Mechanical Engineer, MBA from IIM- Kolkata |
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Experience : |
Mr. A. R. Ramakrishnan is graduated in Mechanical Engineering with an
Honours Degree and is a Post Graduate from the Indian Institute of
Management, Kolkata. He has been with the Essar Group since 1992. He spent
the first two and half years as a Business .Analyst, dealing with all the
Essar Group companies. He joined the management team of Essar Shipping at the
end of 1994 as General Manager (Commercial). In 1999, he took over as Chief
Operating Officer. Prior to joining the Essar Group, Mr. Ramakrishnan was
employed with Godrej for 12 years gaining experience in marketing, sales,
manufacturing, systems and finance. He has wide experience in dealing with
International companies and agencies, .including building joint ventures. |
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Date of Appointment : |
01/04/1997 |
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Other Directorships : |
Essar Sisco Ship Management Company Limited |
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Name : |
Mr. Ravi Ruia |
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Designation : |
Vice Chairman |
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Date of Birth : |
22.04.1949 |
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Qualification : |
Engineering Course |
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Address : |
Mr. Ravi Ruia, Vice Chairman, Essar Group, belongs to the generation
of industrialists who have played a significant role In strengthening association both a\ the national and bilateral level |
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Date of Appointment : |
01.09.1989 |
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Other Directorships : |
1. Essar Steel Limited 2. Essar Investments Limited 3. Essat Oit Limited 4. India Securities Limited 5. Hgtchison Essar Limited 6. Essar Power Limited 7. Hazira Plate Limited 8. Hazira Steel Limited 9. Essar Steel (Hazira) Limited |
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Date of Birth/Age : |
Mr. Shashi Ruia |
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Qualification : |
Vice Chairman |
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Experience : |
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Date of Appointment : |
Mr. Anshuman S Ruia |
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Director |
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Name : |
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Designation : |
Mr. R N Bansal |
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Address : |
Independent Director |
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Date of Birth : |
15.07.1930 |
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Qualification : |
B.Com., F.C.A., A.C.S. |
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Experience : |
Mr. R N Bansal is a Commerce Graduate and Chartered Accountant and Company
Secretary. He joined the Department of Company Affairs in December 1956. He
was the Registrar of Companies, Punjab, Tamilnadu and |
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Date of Appointment : |
19.06.1987 |
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Other Directorships : |
1. Chambal Fertilizers Chemicals Limited 2. Orient Ceramics and Industries Limited 3. The Hindoostan Spinning & Weaving Mills Limited 4. Gobind Sugar Mills Limited 5. Spice Limited 6. Jonas Woodhead & Sons ( 7. Pushpsons Industries Limited 8. Vadinar Oil Terminal Limited |
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Chairman/Member of
the Committees of the
Board of Directors of
other Companies In which he is a Director |
Chairman 1. Chambal Fertilizers and Chemicals Limited - Shareholders Grievance
Committee. 2. Spice Limited- Audit Committee 3. Pushpsons Industries Limited - Audit Committee 4. Orient Ceramics & Industries Limited - Audit Committee 5. Orient Ceramics & Industries Limited - Shareholders Grievance
Committee. Member 1. Chambai fertilizers and Chemicals Limited - Audit Committee 2. Gobind Sugar Mills Limited – Audit Committee |
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Name : |
Mr. N Srinivasan |
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Designation : |
Independent Director |
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Date of Appointment : |
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Name : |
Mr. S K Poddar |
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Designation : |
Independent Director |
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Designation : |
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Name : |
Mr. Rewant Ruia |
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Designation : |
Director |
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Qualification : |
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Name : |
Mr. V Ashok |
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Designation : |
Whole time Director |
KEY EXECUTIVES
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Name : |
Mr. Hemant K Thanvi |
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Designation : |
Company Secretary |
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AUDIT COMMITTEE : |
v
Anshuman S Ruia v
R N Bansal v
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COMPENSATION COMMITTEE : |
v
Shashi Ruia v
v
R N Bansal |
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Name : |
V Ashok |
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Designation : |
Chief Financial Officer |
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Name : |
Capt. S K Bhatia |
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Designation : |
Vice President (Marketing) |
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Name : |
Mr. K K Kohli |
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Designation : |
Head – Fleet Personnel |
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Name : |
Mr. S Krishnan |
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Designation : |
Head – Human Resources and Administration |
MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN
(As on 31.03.2007)
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Names of
Shareholders |
No. of Shares |
Percentage of
Holding |
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Shareholding of
Promoter and Promoter Group |
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Indian |
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Bodies Corporate |
89701891 |
21.05 |
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Financial Institutions/ Banks* |
1000500 |
0.23 |
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Foreign |
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Bodies Corporate |
110616743 |
36.67 |
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Public
shareholding |
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Mutual Funds/ UTI |
57335 |
0.01 |
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Financial Institutions/ Banks |
55791 |
0.01 |
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Insurance Companies |
2342938 |
0.55 |
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Foreign Institutional Investors |
26737091 |
6.28 |
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Any Other – Foreign Banks |
23359 |
0.01 |
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Non Institutions |
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Bodies Corporate |
30521056 |
7.16 |
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Individuals - |
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i. Individual shareholders holding nominal share capital up to Rs. 1
lakh |
20003448 |
7.25 |
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ii. Individual shareholders holding nominal share capital in excess of
Rs. 1 lakh. |
7791670 |
1.83 |
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Any Other
(specify) |
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i. Non Domestic Companies |
419619 |
0.10 |
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ii NRI's |
1466746 |
0.49 |
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Shares held by Custodians and against which Depository Receipts have
been issued |
124456000 |
29.21 |
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Grand Total |
426077207 |
100.00 |
BUSINESS DETAILS
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Line of Business : |
Operating of fleets. |
GENERAL INFORMATION
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No. of Employees : |
1000 |
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Bankers : |
v
State Bank of v IndusInd Bank Limited |
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Facilities : |
Secured Loans : (Rs.
In millions)
Unsecured Loans
:
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Banking
Relations : |
Unknown |
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Auditors : |
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Name : |
Deloitte Haskins & Sells Chartered Accountants |
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Sister Concerns : |
v Essar Information Technology Limited v Essar Agrotech Limited v Essar Constructions Limited v Essar House Limited v Essar Power Limited v Essar Properties Limited v Essar Steel Limited v Essar Teleholdings Limited v Future Travels Limited v India Securities Limited v Essar Investments Limited v India Securities Limited v Hy-Grade Pellets Limited v Arkay Holdings Limited v Essar Oil Limited v Bhander Power Limited v Essar Logistics Limited v Essar Steel Hazira Limited v Essar Projects Limited v Essar Teleholdings Limited |
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Associates/Subsidiaries : |
v Vadinar Oil Terminal Limited v Essar Sisco Ship Management Company Limited v
Essar International Limited, v
Essar Transportation International Limited, v
Energy I Limited, v
Energy I Limited, v
Energy II Limited, v Vilsat Investments Pi v ESL Worldwide Sea Logistics Limited v Prime Sea Logistics Limited |
CAPITAL STRUCTURE
Authorised Capital :
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No. of Shares |
Type |
Value |
Amount |
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1500000000 |
Equity Shares |
Rs.10/- each |
Rs.15000.0000 millions |
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1050000 |
Redeemable Cumulative Preference Shares |
Rs.100/- each |
Rs.105.000 |
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Total |
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Rs.15105.000
millions |
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Issued, Subscribed & Paid-up Capital :
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No. of Shares |
Type |
Value |
Amount |
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426077207 |
Equity Shares (Previous
year 301,621,207) of Rs.107-each fully paid-up. Of the above
68,224,660 Equity shares of Rs.107- each were allotted as fully paid-up
equity shares for consideration other than cash. During the year, 124,456,000
equity shares were alloted on conversion of Foreign Currency Convertible
Bonds (FCCBs). |
Rs.10/- each |
Rs.4260.800
millions |
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244648 |
Forfeited Shares |
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Rs.1.300 millions |
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Total |
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Rs.4262.100 millions |
FINANCIAL DATA
[all figures are
in Rupees Millions]
ABRIDGED BALANCE
SHEET
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SOURCES OF FUNDS |
31.03.2006 |
31.03.2005 |
31.03.2004 |
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SHAREHOLDERS FUNDS |
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1] Share Capital |
4262.100 |
3017.500 |
3017.500 |
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2] Share Application Money |
0.000 |
0.000 |
0.000 |
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3] Reserves & Surplus |
18788.900 |
16599.400 |
8773.500 |
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4] (Accumulated Losses) |
0.000 |
0.000 |
0.000 |
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NETWORTH |
23051.000 |
19616.900 |
11791.000 |
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LOAN FUNDS |
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1] Secured Loans |
6819.700 |
5437.400 |
7445.900 |
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2] Unsecured Loans |
5034.700 |
2067.100 |
726.600 |
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TOTAL BORROWING |
11854.400 |
7504.500 |
8172.500 |
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DEFERRED TAX LIABILITIES |
0.000 |
0.000 |
305.800 |
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TOTAL |
34905.400 |
27121.400 |
20269.300 |
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APPLICATION OF FUNDS |
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FIXED ASSETS [Net Block] |
12856.800 |
12243.700 |
10886.200 |
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Capital work-in-progress |
0.000 |
36.900 |
290.000 |
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INVESTMENT |
14992.100 |
12023.900 |
7139.300 |
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DEFERREX TAX ASSETS |
0.000 |
0.000 |
0.000 |
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CURRENT ASSETS, LOANS & ADVANCES |
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Inventories |
222.900
|
88.300 |
179.300 |
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Sundry Debtors |
1152.600
|
768.200 |
801.400 |
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Cash & Bank Balances |
4493.300
|
2344.500 |
408.800 |
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Other Current Assets |
01.600
|
0.300 |
0.000 |
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Loans & Advances |
1728.300
|
928.500 |
1480.400 |
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Total
Current Assets |
7598.700
|
4129.800 |
2869.900 |
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Less : CURRENT
LIABILITIES & PROVISIONS |
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Current Liabilities |
508.300
|
1290.200 |
890.900 |
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Provisions |
33.900
|
22.700 |
25.200 |
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Total
Current Liabilities |
542.200
|
1312.900 |
916.100 |
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Net Current Assets |
7056.500
|
2816.900 |
1953.800 |
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MISCELLANEOUS EXPENSES |
0.000 |
0.000 |
0.000 |
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TOTAL |
34905.400 |
27121.400 |
20269.300 |
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PROFIT & LOSS
ACCOUNT
|
PARTICULARS |
31.03.2006 |
31.03.2005 |
31.03.2004 |
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Sales Turnover |
7511.200 |
8581.000 |
6712.500 |
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Other Income |
91.700 |
44.700 |
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Total Income |
7602.900 |
8625.700 |
6712.500 |
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Profit/(Loss) Before Tax |
1946.200 |
2615.400 |
1515.300 |
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Provision for Taxation |
94.000 |
35.000 |
219.800 |
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Profit/(Loss) After Tax |
1852.200 |
2580.400 |
1295.500 |
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Expenditures : |
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Interest |
260.300 |
1270.400 |
602.900 |
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Depreciation |
374.800 |
800.100 |
661.700 |
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Fleet Operating Expenses |
4274.400 |
3423.900 |
3540.000 |
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Other Expenditure |
747.200 |
515.900 |
392.600 |
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Total Expenditure |
5656.700 |
6010.300 |
5197.200 |
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SUMMARISED RESULTS
|
PARTICULARS |
|
|
31.03.2007 (Full year) |
|
Sales Turnover |
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|
10243.000 |
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Other Income |
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|
149.100 |
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Total Income |
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|
10392.100 |
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Total Expenditure |
|
|
7184.900 |
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Operating Profit |
|
|
3207.200 |
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Interest |
|
|
890.700 |
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Gross Profit |
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|
2316.500 |
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Depreciation |
|
|
905.100 |
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Tax |
|
|
71.000 |
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Reported PAT |
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|
1340.400 |
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Dividend (%) |
|
|
0.000 |
KEY
RATIOS
|
PARTICULARS |
31.03.2006 |
31.03.2005 |
31.03.2004 |
|
Debt-Equity Ratio |
0.53 |
0.59 |
0.62 |
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Long Term Debt-Equity Ratio |
0.44 |
0.56 |
0.58 |
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Current Ratio |
2.28 |
1.86 |
1.43 |
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TURNOVER RATIOS |
|
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Fixed Assets |
0.42 |
0.53 |
0.43 |
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Inventory |
43.63 |
63.22 |
46.61 |
|
Debtors |
7.07 |
10.78 |
7.11 |
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Interest Cover Ratio |
5.76 |
2.72 |
3.18 |
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Operating Profit Margin(%) |
27.61 |
50.34 |
44.28 |
|
Profit Before Interest And Tax Margin(%) |
22.09 |
40.89 |
34.07 |
|
Cash Profit Margin(%) |
22.79 |
38.55 |
30.19 |
|
Adjusted Net Profit Margin(%) |
17.27 |
29.09 |
19.98 |
|
Return On Capital Employed(%) |
5.39 |
16.41 |
12.23 |
|
Return On Net Worth(%) |
6.47 |
18.58 |
11.63 |
STOCK PRICES
|
Face Value |
Rs.10.00/- |
|
High |
Rs.37.50 |
|
Low |
Rs.37.00 |
Consolidated
Segment Results
|
Particulars |
Rs. In millions Year ended
31.03.2007 |
|
Segment Revenue |
|
|
Sea Transport |
13969.200 |
|
Surface Transport * |
3032.500 |
|
Others |
32.300 |
|
Total |
1 ,7034.000 |
|
Less : Inter Segment Revenue |
(290.700) |
|
Net Income from Operations |
17034.000 |
|
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Segment Results |
|
|
Sea Transport |
2419.800 |
|
Surface Transport * |
195.900 |
|
Others |
5.500 |
|
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|
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Total |
2 621.200 |
|
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Less: |
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Interest & Finance Cost |
976.700 |
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Add: Other Unallocable Income net of Unallocable Expenditure |
5.600 |
|
|
|
|
Profit Before Tax |
1650.100 |
|
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|
|
Capital Employed |
6037.800 |
|
Sea Transport |
(715.400) |
|
Surface Transport * |
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* Note: As this reportable segment became applicable from this year only, comparative details of previous year are not provided. |
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LOCAL AGENCY FURTHER INFORMATION
HISTORY
Subject was incorporated on 4th April, 1984 at
Incorporated as Essar Bulk Carriers in 1969, Essar Shipping (ESL) was
amalgamated with the Karnataka Shipping Corporation in April, 1983 and acquired
its present name. The company is a part of
the Essar group promoted by Essar investments.
At present, it is managed by Chairman Mr. Shashi N Ruia. The company has a modern, sophisticated and
fuel-efficient fleet with the capability to handle specialised functions. Subject owns one of the youngest fleets in
the Indian shipping industry, the average being about 5 years against the
global average of 14 years. Subject is
one of the leading players in the shipping field.
The company has a modern, sophisticated and fuel-efficient fleet with
the capability to handle specialised functions. The company owns one of the
youngest fleets in the Indian Shipping Industry, the average being about 5
years (in terms on dwt) against the global average of 14 years.
The company’s fleet 27 Vessels had been subdivided into 3 categories viz
Product Carrier Division, Bulk Carrier Division and Offshore Supply Vessels and
Tugs Division. The growth in offshore Supply business will be there only if
there large presence in this segment. Since the company’s marginal fleetof 3
vessels in the offshore supply business doesn’t found to be satisfactory, it is
planning to exist from this segment and also plans to sell the vessels at FMV
in 2003-04.
In October, 1994 it came out with a rights issue to part-finance the
promoters’ contribution in the Essar Oil project. Apart from this, it has also diversifed into
sponge iron, offshore oil drilling, natural gas exploration and dredging
operations. In 1995-96 the company
formed a joint venture – Essar Chennai Shipping, jointly with Poompuhar
Shipping Corporation, to acquire three shallow draft bulk carriers of 43-45,000
DWT each by way of new building. SISCO was merged with company in 1996-97.
During the year 1996-97, South India Shipping Corporation Limited
(SISCO) was merged with the company.
The company started work on a
The company is planning to re-positioning itself as
The project was reappraised by ICICI Limited and due to some increase in
scope of the project and the time overrun, the project is expected to cost Rs.
18740 millions. Recently the Company
hived off the terminal business to a subsidiary called Vadinar Oil Terminal.
The company, is planning to re-position itself as
Currently, it is planning to hive off energy transportation and coastal
services into separate divisions. The
whole idea is to provide the entire logistics services to the clients. The company also has the support of an
e-logistics company, shippingstop.com.
The company's fixed assets of important value include land, buildings,
fleet, plant & machinery, furniture, fixture, air conditioners,
refrigerators, office equipments and vehicles.
Subject employs around 1000 persons in its' set up.
MANAGEMENT DISCUSSION, ANALYSIS AND REVIEW:
A. Energy Transportation Group (ETG):
This Division contributed Rs. 1029.900 Millions to the total income
during the financial year. The vessels in this divisioh were prudently employed
with a combination of spot, timecharter and voyage charter in order to optimize
the earnings per day and also to take advantage of the buoyant freight markets.
In order to increase its market share in the Crude Oil Transportation
and Crude Oil Transportation Management Services, the Company has acquired 2
Very Large Crude Carriers (VLCC) - during the year, MTAshna and MT
Smiti. Both the vessels are modern and built in 1999 and 2005 respectively. MT
Ashna has been acquired on a Bareboat Cum Demise charter basis with a purchase
option at the end of a pre-agreed period. With these two acquisitions, the
total Deadweight Tonnage of this division is 737,938 tons and comprises of two
VLCCs and one Suezmax tanker.
During the year under review, the Company sold four of its Suezmax
tankers. This transaction was undertaken, taking into view the Company's
requirement of investing into modern VLCC fleet. The sale of the Suezmax
tankers has enabled the Company to take advantage of high asset valuation
prevailing in the shipping market and dispose these tankers at attractive
value. All the four vessels were delivered to the buyers in April 2005.
B. Integrated Bulk and Petroleum Product
Transportation Group (IBPPT):
The group provides Integrated Bulk Transportation and Petroleum Products
Transportation services to various refineries, steel mills, and traders along
the Asian and South East Asian coast through various employment contracts
including Contracts of Affreightment (COA's). It contributed Rs. 5758.200
million to the Total Income during
the year under review, the group consists of the following divisions:
a. Product Carrier D/ws/on;This
division consists of three product tankers which were primarily employed with
Indian oil majors servicing their requirements along the
b, Bulk Carrier Division: This
division consists of 3 Capesizes, 3 Handymax/Handysize vessels, 11 Mini bulk
carriers and 4 Tugs. The vessels were employed on COA's with major steel mills
in
C. Termlnalllng Group:
The members are aware of the investments made by the Company in Vadinar
Oil Terminal Limited. They are glad to mention that the construction activity
at the Terminal is nearing completion and the project is expected to be
commissioned by September 2006.
Once completed, the project will provide end - to - end sea logistics
solutions to the crude oil refiners and other traders, through its crude oil
and petroleum products terminalling and storage facilities at
Financial Analysis:
During the year under review, the Company has achieved a Total Income of
Rs 7603.000 Millions and a Net profit of Rs 1852.200 Millions. This has been
achieved through its focus on providing value added services to its clients and
the strong freight markets.
The Company has also focussed on its endeavour to lower costs and reduce
technical and commercial downtime on the vessels thereby ensuring better
utilization of its assets. Further rationalization of operating costs is contemplated
through supplier negotiations, cash payments, reduced borrowing cost, etc.
Vessel operating margins:
The focus on providing value added logistics and supply chain management
services and constant initiatives towards reduction of operating costs has
enabled the Company to improve operating margins. However, the Operating Margin
on TCE basis was lower at 57.43% for the year under review as compared to
71.16% last year. The reduction in the operating margin was largely on account
of .the weakened markets as compared to the previous year.
Dry docking expenses were Rs. 302.000 Millions during the year as
against Rs 393.500 Millions during last year. The Direct Voyage Expenses during
the year under review were Rs. 3108.400 Millions as compared Rs. 2041.000
Millions during the previous year. The increase in the Direct Voyage Expenses
is due to inchartereing of vessels for providing logistics services to the
steel mills.
RE-ORGANISATION OF BUSINESSES:
As a part of its strategy to enhance shareholders value and to
consolidate its positions as an integrated sea logistics services * provider,
the Board of Directors of the Company has approved the reorganization of the
Company's investments in Terminalling and Logistics businesses.
In order to achieve the above, the Company will shortly enter into an
agreement with Essar Shipping & Logistics Limited,
The sale proceeds will provide the Company liquidity for investments in
targeted fleet acquisitions allowing it to increase its market share in Energy
Transportation and Integrated Bulk Transportation businesses.
INDUSTRY REVIEW AND PROSPECTS:
The Markets
During the year under review, the
After two consecutive years with extraordinary high growth rates of 9
percent in the demand for world merchant tonnage, the growth rate fell to 6 per
cent during the year under review. This 6 percent growth is in line with the
average for the first six years of this decade.
It is definitely worth considering when they compare it with the average
tonnage demand of barely 3 percent in the 1990s. The two fold increase in
demand is on account of following a lift in the underlying long-term growth in
the world economy, up from 3.3 percent per year on average in the 1990s to 3.9
percent so far in this decade and favorable shift in the relation between
economic growth and seaborne trade.
Crude Transportation:
The most important trend in the global oil market during the year under
review was the stagnation in oil production outside OPEC. At the beginning of
the year International Energy Association (IEA) expected an increase in
non-OPEC production of more than 1 mbd.
Hurricane-related supply disruptions in the US Gulf, higher
Oil Import statistics for most of the year under review for countries
covering 75percent of global seaborne oil trade in volume terms showed a modest
2 percent growth for crude, while imports of refined oil products was up by as
much as 10 percent. This was a continuation from the year before in the strong
shift in seaborne trade from crude to refined products. This process was mainly
driven by the
The freight rates for VLCCs reached an average of $55,000 per day during
the year under review, down from the extraordinary high $89,000 per day the
year before. The lowest level of $18,000 per day was recorded in June 2006, the
highest of $125,000 in November 2005. The freight rates for Suezmax tankers
averaged $48,000 per day during the year under review, versus $65,000 per day
during the previous year.
Outlook
The current tanker order book shows 24 million deadweight of new
buildings to be delivered in calendar year 2006. According to IMO regulation
only 3 million deadweight of tankers would be phased out. In addition to the
mandatory scrapping there will be removals of an extra 4 million deadweight of
tanker tonnage. This should lead to a fleet growth of 6.5 percent as an annual
average, 5 percent for the VLCC segment arid 6 to 7 percent for Suezmax and
Aframax segment. This could lead to another year of declining utilization rates
for tankers. The trend in oil consumption will be the most decisive factor.
Consensus forecasts for the world economy says that the
coming year will be another year of high economic growth, "in
combination with a possible moderate fall in oil prices, oil consumption is
expected to show some strength and which should lead to a comfortable return on
capital for shipowners.
Bulk Carriers:
Due to a slight decrease in the average transport distances combined
with a modest reduction in port congestion, tonnage demand rose slightly less
than 4 percent during the year under review. The active dry bulk fleet
increased by nearly 7 percent leading to capacity utilization rate falling from
97 per cent during the previous year to 94 percent during the year under
review.
Average freight rates during the year under review dropped significantly
from the all time high levels of the previous year. About 25 percent lower
freight rates were noted for Handymax and Capesize tonnage, while Panamax ships
experienced nearly 30 percent lower rates than the year before.
Iron ore transports rose 11 percent, mainly driven by
Outlook
Steel production is believed to increase further, new coal-fired power
utilities planned to commence operations in the coming year, and taking into
account that alternative energy sources are expensive compared to coal, it is
believed that the international coal trade is in for a recovery in the coming
year.
There are 26 million deadweight of new ships scheduled to enter
operation in the coming year whereas scrapping is expected to be 3-3.5 million
deadweight. On this basis, provided that the share of combined ships in the dry
trade remains stable, the active dry bulk fleet is expected to increase by 6-7
percent. Based on the above, the active dry bulk fleet will experience a further
drop in capacity utilization. Freight rates are therefore expected to average
out lower . than in the year under review. The most critical factor will be the
consequences of a continuation of the recent over-production in steel.
A more negative development in Chinese steel production and consequently
in iron ore imports, will naturally cause a more severe setback in freight
rates.
SUBSIDIARIES:
The Company has the following Subsidiaries as on March 31,2006:
1. Vadinar Oil Terminal Limited
2. Essar -Sisco Ship Management Company Limited
3. Essar International Limited, Guernsey,
4. Energy Transportation international Limited,
owned subsidiary of Essar International Limited).
5. Energy II Limited,
During the year the Company has voluntarily liquidated one of its wholly
owned subsidiary Energy I Limited,
The Company has obtained exemption from the Central Government' under
Section 212(8) of the Companies Act, 1956 from attaching the Balance Sheets,
Profits Loss Account, report of the Board of Directors and the report of the
Auditors of the subsidiary companies with the Annual Report, as required under
section 211/212 of the Companies .Act, 1956, vide Order no. 47/70/2006-CL-lll
dated March 8, 2006.
The Company will make available the annual accounts of the subsidiary
companies and the related detailed information to the holding and subsidiary
companies investors seeking such information at any point of time. The annual
accounts of the subsidiary companies will be kept for inspection for the
investors at the Registered Offices
of .the Company and its subsidiary companies.
In accordance with Accounting Standard AS-21 on Consolidated Financial
Statements read with Accounting Standard AS-23 on Accounting for Investments in
Associates, the Directors have pleasure in attaching the Consolidated Financial
Statements, which form part of the Annual Report and Accounts.
Secretarial Audit
A qualified practicing Company Secretary carried out a secretarial audit
to reconcile the total admitted capital with National Securities Depository
Limited (NSDL) and Central Depository Services (
Website Details :
The Company
Subject is one of the world’s leading integrated sea logistics
companies, with a special focus on transportation solutions for the global
energy business. A strong management team of experienced marine professionals
steers the company, maintaining customer focus, world-class operations, an
impressive safety record and a consistent financial performance. Their fleet
accounts for almost 14% of India’s shipping fleet and they own the country’s
largest VLCC (Very Large Crude Carrier), which is also India’s first double
hull, double bottom VLCC.
Rig to refinery - and beyond
As an end-to-end sea logistics provider, ESL serves customers across the
value chain- from ‘rig to refinery-and beyond’; offering services in the areas of
bulk transport, supply chain management and storage and distribution. They are
global experts in the energy business, with over 20 years of oil-handling
experience. Their fleet handles a daily average of eight million barrels of
crude oil, 320,000 barrels of petroleum products and 355,000 tonnes of dry
cargo.
Subject operates in three main business areas: First, their energy
transportation group provides sea transportation management services to the
global energy industry, including US, European and Indian oil companies. A key
advantage is that they are one of the world's largest independent
owners/operators of Suezmax tankers. In March 2004 they acquired
Second, subject's integrated bulk/petroleum product transportation services
group offers supply chain management services for the sea transportation of
bulk cargo and refined products. This group services steel, power, cement,
fertiliser and petroleum companies in South East Asia and
Third, to complete the integrated solutions chain, their crude oil and refined
products handling and storage group provides storage and distribution services
in
A complete sea-logistics provider
Subject is a truly global company, deriving nearly three-quarters of
revenues from international business. Their fleet of 30 vessels – made up of
one VLCC, six Suezmaxes, three product tankers, five dry cargo bulk carriers,
11 mini-bulk carriers and four tugs – is valued at about US$ 415 m (Rs. 1.9
billion). The fleet is modern, sophisticated, and fuel-efficient and one of
World -class standards
Subject is one of the world's lowest-cost operators, with an exemplary
safety record. They handle their technical management entirely in-house,
maintaining their fleet to the highest quality, safety and operational
standards. They were the first Indian shipping company to obtain the
International Safety Management (ISM) code for their fleet of bulkers and
tankers in July 1995, three years ahead of the International Maritime
Organization's (IMO) deadline. They were also the first Indian shipping company
to voluntarily comply with ISO 9002:1994 standards and have now upgraded to ISO
9001:2000 standards. Their vessels received the US Coast Guard's AMVER award
for high maritime safety standards. They were the first Indian company to
operate oil tankers in the highly competitive Atlantic region, especially to
the
Customer-led, flexible and profitable
The needs of their customers drive their business and their core
competencies are closely aligned to their requirements. They carefully study
the geographical and product mix of their clients to provide the best
solutions, optimising their businesses and saving them time and money. Their
customers know they can count on us for scheduling flexibility, reliability,
availability and management accessibility. They also support clients with a
comprehensive shipbroker network and a sophisticated e-backbone, which allows
them to track their cargo status on a real-time basis.
Their lean organisation and management give us the flexibility to respond
quickly to customer needs and to market conditions. Their astute mix of
long-term and spot contracts gives us a vessel utilisation rate of around 95%.
Since trading assets wisely is crucial in the shipping business, ESL has
invested consistently during recessions to be able to profitably encash assets
during revivals. ESL is publicly listed and has remained financially strong
even during periods of industry volatility, with consistently strong revenues
and profits.
Press
Releases
Essar Shipping net
up by 22% at Rs. 382.000 million for
quarter ended March 31, 2007
June 29, 2007
Performance Highlights
Fourth Quarter
Essar Shipping registered a total income of Rs.2097.300 million for the
quarter ended March 31, 2007 compared to Rs.2106.400 million for the
corresponding period of the previous year. EBIDTA for the quarter stood at Rs.814.000
million (Rs. 526.600 million), registering a growth of 54.58%. Net profit was
Rs.382.000 million (Rs.312.900 million) after providing for Interest at
Rs.231.700 million (Rs.95.400 million),
Depreciation of Rs.197.100 (Rs. 108.500 million) and Provision for tax at 3.200
millions (Rs. 9.800 million).
Full Year
Essar Shipping reported a total income of Rs. 10392.100 million for the year
ended March 31, 2007 as compared to Rs. 7558.600 million last year, an increase
of 37.47%. EBIDTA stood at Rs. 3207.200 million (Rs.2536.900 million in the
previous year), registering a growth of 26.42%.
After providing for i) Interest of Rs. 890.700 million (Rs.215.800
million), ii) Depreciation of Rs. 905.100 million (Rs. 374.800 million) and
iii) Provision for Tax at Rs. 71.600 million (Rs. 94.000 million) the Company's
Net Profit was at Rs. 1339.800 cr (Rs. 1852.300 million). The Net Profit is not
strictly comparable since the Profit of Previous year included Profit on Sale
of Fleet of Rs. 707.000 millions as against Rs. 124.700 million during the
current year.
About Essar Shipping
Essar Shipping, part of Essar Group, provides sea transportation management
services to the global energy industry, including US, European and Indian oil
companies. The company owns 26 vessels with a diverse fleet comprising Very
large Crude Carriers, Suezmax tankers, product tankers, Bulk Carriers, Mini
Bulk Carriers, Handymax, tugs and Barges.
About Essar Group
Essar Group is one of
CMT REPORT (Corruption, Money Laundering & Terrorism]
The Public Notice information has been collected from various sources
including but not limited to: The Courts,
1] INFORMATION ON DESIGNATED
PARTY
No exist designating subject or any of its beneficial owners,
controlling shareholders or senior officers as terrorist or terrorist
organization or whom notice had been received that all financial transactions
involving their assets have been blocked or convicted, found guilty or against
whom a judgement or order had been entered in a proceedings for violating
money-laundering, anti-corruption or bribery or international economic or
anti-terrorism sanction laws or whose assets were seized, blocked, frozen or
ordered forfeited for violation of money laundering or international
anti-terrorism laws.
2] Court Declaration :
No records exist to suggest that subject is
or was the subject of any formal or informal allegations, prosecutions or other
official proceeding for making any prohibited payments or other improper
payments to government officials for engaging in prohibited transactions or
with designated parties.
3] Asset Declaration :
No records exist to suggest that the property or assets of the subject
are derived from criminal conduct or a prohibited transaction.
4] Record on Financial
Crime :
Charges or conviction
registered against subject: None
5] Records on Violation of
Anti-Corruption Laws :
Charges or
investigation registered against subject: None
6] Records on Int’l
Anti-Money Laundering Laws/Standards :
Charges or
investigation registered against subject: None
7] Criminal Records
No
available information exist that suggest that subject or any of its principals
have been formally charged or convicted by a competent governmental authority
for any financial crime or under any formal investigation by a competent
government authority for any violation of anti-corruption laws or international
anti-money laundering laws or standard.
8] Affiliation with
Government :
No record
exists to suggest that any director or indirect owners, controlling
shareholders, director, officer or employee of the company is a government
official or a family member or close business associate of a Government
official.
9] Compensation Package :
Our market
survey revealed that the amount of compensation sought by the subject is fair
and reasonable and comparable to compensation paid to others for similar
services.
10] Press Report :
No press reports / filings exists on
the subject.
CORPORATE GOVERNANCE
MIRA INFORM as part of its Due Diligence do provide comments on
Corporate Governance to identify management and governance. These factors often
have been predictive and in some cases have created vulnerabilities to credit
deterioration.
Our Governance Assessment focuses principally on the interactions
between a company’s management, its Board of Directors, Shareholders and other
financial stakeholders.
CONTRAVENTION
Subject is not known to have contravened any existing local laws,
regulations or policies that prohibit, restrict or otherwise affect the terms
and conditions that could be included in the agreement with the subject.
FOREIGN EXCHANGE RATES
|
Currency |
Unit
|
Indian Rupees |
|
US Dollar |
1 |
Rs.40.58 |
|
|
1 |
Rs.81.89 |
|
Euro |
1 |
Rs.55.29 |
RATING EXPLANATIONS
|
RATING |
STATUS |
PROPOSED CREDIT LINE |
|
|
>86 |
Aaa |
Possesses an extremely sound financial base with the strongest
capability for timely payment of interest and principal sums |
Unlimited |
|
71-85 |
Aa |
Possesses adequate working capital. No caution needed for credit
transaction. It has above average (strong) capability for payment of interest
and principal sums |
Large |
|
56-70 |
A |
Financial & operational base are regarded healthy. General
unfavourable factors will not cause fatal effect. Satisfactory capability for
payment of interest and principal sums |
Fairly Large |
|
41-55 |
Ba |
Overall operation is considered normal. Capable to meet normal
commitments. |
Satisfactory |
|
26-40 |
B |
Unfavourable & favourable factors carry similar weight in credit consideration.
Capability to overcome financial difficulties seems comparatively below
average/normal. |
Small |
|
11-25 |
Ca |
Adverse factors are apparent. Repayment of interest and principal sums
in default or expected to be in default upon maturity |
Limited with
full security |
|
<10 |
C |
Absolute credit risk exists. Caution needed to be exercised |
Credit not
recommended |
|
NR |
In view of the lack of information, we have no basis upon which to
recommend credit dealings |
No Rating |
|