Essar expected to take delivery of rig by year-end

Mumbai: Essar Shipping Ltd, a part of the $17 billion Essar Group, is expected to take delivery of its first jack-up rig from ABG Shipyard Ltd by December and the second one six months after that, according to a top company official.

ABG Shipyard got the $440 million order in mid-2008 and the company was supposed to take delivery of the first rig by October 2010 and the next by January 2011.

There had been a delay in the delivery schedules as the company wanted “certain changes in the technical specifications” for better deployability, said Essar Shipping managing director A.R. Ramakrishnan. “These rigs can be deployed in Mexico, the Middle East or on the east coast of India with more flexibility,” Ramakrishnan said while announcing March quarter earnings.

Essar Shipping swung to a profit of Rs54.98 crore for the quarter ended 31 March from a loss of Rs0.67crore in the year earlier. Revenue rose 24% to Rs845.20 crore.

The quarter’s strong performance is based on “our strategy of deploying the vessels on long-term charters together with the drilling business contributing significantly to the financial performance of the company,” Ramakrishnan said. “The spread into three business including sea transportation, oilfield services and logistics has also helped us.”

The company earns 60% of its revenue from Essar group business and the rest from third-party contracts.

With more crude and coal coming into India, the company wants to increase third-party business to 45% CHECK, he said.

Ramkrishnan said the $220 million semi-submersible rig, Essar Wildcat, helped the company boost profitability even as the economy slows.

Revenue from oilfield services, which include drilling, rose 60% to Rs147 crore in the quarter, while that from the sea transportation business, including shipping services, rose 64% to Rs391 crore.

Revenue from the logistics business fell to Rs308 crore from Rs353 crore.

Essar Shipping operates a fleet of 27 vessels and owns one semi-submersible rig and 12 land rigs. It manages a fleet of more than 5,000 trucks for inland transportation of steel and petroleum products.