Essar Shipping makes dramatic recovery, nets $ 6.5 mi profit
Essar Shipping Ltd (ESL) one of India’s largest shipping companies made a dramatic recovery reporting a net profit of $ 6.5 million in 9 months ended Dec 2012 as against a loss of $ 3.3 million in the corresponding period in the previous year. Revenue shot up by 25.21% to $ 457.4 million in 9 months ended Dec 2012 as against $ 365.3 million in the corresponding period in the previous year.
An integrated logistics solution provider, offering shipping, logistics and oilfield services to customers around the world, ESL operates a diversified fleet of 26 vessels, including VLCCs, Capesizes, Mini Capes, Supramaxes, mini bulk carriers and tugs on the shipping side. The Company has inducted two more Mini Capes Vessels into its growing Fleet increasing the tonnage to 2 million DWT. A sizeable part of the capacity is deployed on long-term contracts and COAs, insulating the company from the volatility of spot markets.
The Oilfields Services business provides contract drilling services to oil and gas companies across the globe. This business owns one semi-submersible rig and 12 land rigs. The semi-submersible rig Essar Wildcat continues to perform with ConocoPhillips in Indonesia. The company has two new jack-up rigs on order.
The Logistics business provides end-to-end logistics services, including intermodal transportation. The logistics services includes ships to ports, lighterage services to plants, intra-plant logistics and dispatching finished products to the final customer. ESL owns transshipment assets and provides lighterage support services, besides onshore and offshore logistics services. It manages a fleet of over 4,200 trucks.
Speaking on the results, Mr. A R Ramakrishnan, Managing Director, Essar Shipping Limited, said: “The shipping freight markets continue to face challenges and the company is focused on operational efficiencies and optimization of voyage parameters and costs. The Oil-fields service business is maintaining its strong performance and is gearing for higher growth in the days to come”.
The company experienced reduction in the profitability during the last quarter on account of subdued freight rates in the crude oil transportation segment of the sea transportation business. The freight markets were challenging, the Baltic index has fallen by more than 60% when compared with the same period previous year. Despite tough market conditions such strong performance is primarily because of the company’s strategy to enter into long term charter of the vessels which provides a natural hedge against the cyclical nature of the industry and ensures long-term visibility of revenues and profitability.
Until May 2011, the three entities now operating under ESL and the ports business (all part of the Essar Group) were under one umbrella known as Essar Shipping Ports & Logistics Limited (ESPLL). On 19 May 2011 this company was split into two entities – Essar Ports Ltd and Essar Shipping Ltd. As mentioned the company ESL is into shipping, logistics and oilfield businesses, whilst the other is into ports.