GESHIP - Great Eastern Shipping Co. Ltd. Share Price

Major Questions and Answers from the Q&A Section

Question 1: "Can you share more about the OSV charter rate cycle that we are in right now?"

Answer 1: The offshore vessel sector has around 3,000 ships, with about 500-700 in cold layup. The marketed utilization is currently at 65%-66%. This may seem low, but it is relatively good for our industry, where vessels typically operate on long-term contracts. A few vessels have been ordered recently, but overall, the fleet is aging. With demand stable, we see healthy utilization, which is reflected in positive earnings.

Question 2: "Have charter rates that doubled post-2021 continued to grow or slowed down?"

Answer 2: After reaching low levels, charter rates did double, but that growth is no longer exponential. Over the last year, rates have held steady without any significant dips, although some market segments fluctuate slightly. Overall, rates remain relatively healthy.

Question 3: "What sort of offshore vessels demand are we seeing from ONGC, Reliance, and Cairn?"

Answer 3: The offshore projects take time to develop, and we can't predict specific vessel demand. While the market remains balanced and positive, actual figures for additional vessels needed by these companies aren't typically disclosed. Companies will assess oil fields gradually before determining vessel requirements.

Question 4: "How does the company plan to manage its current net cash position for dividends and investments?"

Answer 4: We've increased our dividends to around 20%-25% this year. While our net cash stands at INR 7,000 crores, we assess cash thresholds and plan to deploy it wisely during market downturns. In lieu of profitable investment opportunities, we're also paying decent dividends to shareholders.

Question 5: "With increased geopolitical uncertainties, do you plan to diversify your fleet flags?"

Answer 5: Our core fleet will remain under the Indian flag for operational reasons. We may opt for other flags for specific operational needs, but our focus will center on the quality of ships irrespective of their build country. Our objective remains to secure good quality vessels at favorable prices.

Question 6: "What are the expectations for the offshore support vessel market with recent project developments?"

Answer 6: The MPSSVs are currently contracted on 6-9 month short-term agreements. Overall, while rates for these vessels have improved significantly, profitability stems from specific job requirements. We remain well-positioned in this market and are continuously engaging with high-quality customers for possible future projects.

Question 7: "Will you expand the offshore segment considering the supply-demand gap?"

Answer 7: Expanding in offshore vessels requires careful consideration of the age, specifications, and pricing of potential acquisitions. We are open to acquiring vessels if suitable opportunities arise, but many factors must align, given the complexities of the offshore market.

Question 8: "What caused the market drop post-2015, and how is the current cycle different?"

Answer 8: The increase in U.S. shale oil production led to a significant drop in offshore demand. Currently, the market shows signs of recovery, with limited new builds and an aging fleet raising demand for older vessels. Although we remain cautious, the dynamics appear more favorable now.

Each response reflects the strategic outlook and situational awareness of Great Eastern Shipping, maintaining a perspective focused on operational stability amid market volatility.