Great Eastern Shipping Company: largest private shipping company in India

 

  • Great Eastern Shipping Company: largest private shipping company in India
  • GESCO is the largest private shipping company in India and is promoted by Sheth brothers and Bhiwandiwallas 
  • With almost 59% fleet (in terms dwt) deployed in the tanker segment, favourable charter rates are likely to further augment the cashflow position  
  • Following the European Union's ban on Russian oil, the import of Russian oil has shifted primarily to Asia, particularly China and India. 
  • This shift has resulted in higher demand for tankers. 
  • Resultant demand increased charter rates to historical highs in FY23. 
  • Strong rates in the tanker segment continued in FY24, with trade disruption caused due to Russian Ukraine war continuing. 
  • Events such as red sea attacks, which diverted the tanker to Cape of Good Hope has increased the overall tonne mile demand.  
  • GESCO has, over the past few years, moved from time charter (assured long-term agreements) to spot market operation, resulting in deployment of almost 80% vessels on spot rate and balance 20% on time charter basis (mostly LPG carriers). 
  •   It developed a strong clientele with major counterparties being reputed charterers in oil & gas industry and major commodity traders  
  • The company’s strategy regarding the fleet mix is to keep majority of its capacity open to take advantage of strong markets. 
  • While it has gained in the last few years considering this high operating leverage and low financial leverage, the company is exposed to the inherent risk associated with adverse movement in charter rates and crude oil prices 
  • GESCO has a well-defined liquidity policy, where it maintains cash and cash equivalents to meet the next three years’ debt servicing, capital commitments, dry-docking expenses, and dividend payments, plus $ 100 million cash minus the next three years’ EBIDTA, which is calculated based on 20 years’ lowest freight rates. 
  • A stress test is conducted quarterly to ensure adherence to the policy framework. 
  • Apart from liquidity in the form of cash/bank balances, ships are liquid assets, with GESCOs fleet valued at around ₹10,000 crore, providing 4x cover against outstanding debt (on standalone basis).  
  • GESCO has a strong market presence with well-diversified and large fleet of vessels comprising tankers, product/ gas carriers and dry bulk carriers. As on May 31, 2024, the company owns and operates 44 vessels with deadweight tonnage (DWT) of 3.46 million and average age of fleet at 14 years  

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