SEAMECLTD - Seamec Ltd Share Price

Management's outlook for Seamec Limited indicates cautious optimism for the fiscal year 2025-26. The demand for oil is projected to grow, increasing from 5.55 million barrels to approximately 5.74 million barrels in 2025, reflecting a 4% annual increase, which is significantly higher than China's growth. Global energy consumption is anticipated to rise by 1.8% to 2% in 2025 compared to 2024, driven by India's economic and industrial growth.

Key highlights from management include the approval for the acquisition of the MSV NPP Nusantara at a cost of $23 million, funded through a mix of debt and internal resources. Management also announced a new long-term charter for the vessel Swordfish, which began on May 21, providing a fixed rate of $78,000 per day for 730 days.

For fiscal year 2025, consolidated revenue was reported at INR 682 crores, a decline from INR 758 crores in FY24, while stand-alone revenue was INR 660 crores versus INR 707 crores in the previous year. The consolidated EBITDA for Q4 FY25 stood at INR 91 crores, slightly up from INR 90 crores year-over-year. Management also noted profit after tax dropped to INR 41 crores from INR 53 crores year-over-year for the quarter, leading to a full-year consolidated PAT of INR 88 crores down from INR 121 crores the previous year.

The management expressed confidence in improving operational and financial performance for FY26, highlighting that all vessels are now deployed under long-term contracts and indicating expectations for positive cash flow from overseas operations in the near future. The incorporation of Searete India IFSC Private Limited aims to support vessel leasing, which management believes will further enhance revenue streams moving forward.

Question: Given the increase in long-term debt, what strategies are in place to manage debt levels and ensure financial stability going forward?
Answer: We have not taken any additional long-term debt in the past financial year, and instead, we have been repaying our debts. Currently, our long-term debt is around INR 170 crores, which has actually decreased. We plan to utilize our cash surplus for repayment and any capital expenditures, aiming to minimize our debt position in the coming fiscal year.

Question: What is our current order pipeline and how do we see that reflecting in our revenues in the coming quarters?
Answer: As of now, all vessels are deployed except for Seamec Barge, which has completed its long-term contract. It will be off-hire during the off-season from May to October. The remaining vessels are on long-term contracts, and we anticipate steady revenue from them moving forward.

Question: Where do most of our revenues come in from and how do we plan to reduce revenue concentration?
Answer: Our revenues primarily stem from charter hire of specialized vessels. While most of our current contracts are with ONGC, we are also exploring opportunities in the Middle East, including Aramco. We aim to secure more long-term contracts to diversify our revenue sources.

Question: What was the reason for the significant losses in the consolidated business, and when do we expect to be profitable?
Answer: The losses are mainly due to depreciation in our U.K. operations, which is a non-cash item, and interest provisions on capex incurred. Our Dubai subsidiary is profitable, and we expect the U.K. operations to achieve cash flow positivity within the next 12-15 months.

Question: Can we expect any new favorable contracts in the Gulf region in the near future?
Answer: Our vessel, Swordfish, is already on a long-term charter for two years. Currently, all other vessels are contracted for multiple years. Though we see plenty of upcoming work in the Gulf region, our capacity is limited by the number of available vessels we can offer.

Question: Are we exploring diversification into other marine services to stabilize revenue streams?
Answer: I believe our current model is stable as all vessels are engaged with long-term contracts. We do not plan to diversify into other marine services as we are well-positioned in our existing operations.

Question: What steps are being taken to nullify the investment losses in the UK?
Answer: We're actively working on making our operations more efficient, aiming to close the gap between standalone and consolidated results over the next two years. Selling loss-making assets and increasing operational efficiency are key strategies.

Question: What is the current utilization rate of our fleet and how do we compare to industry benchmarks?
Answer: Our fleet is engaged with most vessels under long-term contracts, leading to a near 100% utilization rate, except during the monsoon season. As the only operator of multi-support vessels in India, we don't have direct industry benchmarks but we maintain high operational efficiency.

Question: Can you explain the remaining life and operational efficiency of our older vessels?
Answer: Older vessels do incur higher maintenance costs, but as long as they remain profitable, we will continue to operate them. We plan to gradually replace older vessels with newer ones, ensuring long-term fleet efficiency.

Question: What timeframe during the year is our fleet typically non-operational due to monsoons?
Answer: Long-term contracts generally allow vessels to operate throughout the year, assuming no breakdowns. However, vessels on spot contracts typically operate for about 7 months per year, with a complete halt during the monsoon season.

Question: How has the Swordfish contract with Mermaid Subsea evolved, and how much revenue was recognized?
Answer: Initially contracted for $3.46 million, technical issues led to a lower recognition rate based on days worked. We only billed for services actually rendered, thus recognizing less revenue than originally anticipated.