Essar Shipping Q4 net falls on low charter rates

Essar Shipping Q4 net falls on low charter rates

Mumbai: Essar Shipping Ports and Logistics on Tuesday reported a 78% fall in fourth quarter consolidated net profit as low charter rates in its oilfield services division hit sales and margins.

For the quarter ended March 31, its net profit fell to 13.95 crore from 63.52 crore. Revenue dropped to 857 crore against 909 crore.

For FY11, its net profit dipped to 92.1 crore compared with 93.8 crore the previous year.

Annual revenue rose to 3,397 crore in FY11 from 3,092 crore, it said.

“Charter rates have come down in the case of oilfield services compared with the previous period," said Rajiv Agarwal, chief executive and managing director of Essar Shipping.

The oilfield services segment posted a quarterly loss of 166.6 million rupees from a profit of 4.9 crore a year ago.

But the firm expects charter rates to improve in this segment as one of its vessels is the lowest bidder for a $150 million contract with ONGC for an 18-month period, Agarwal said.

“We are hoping to get ONGC (contract) where we are presently L1 in one of their tenders. That charter rate is substantially higher than the one which is being presently earned," he said.

The firm has earmarked a capex of 2,400 crore in this segment to acquire two jack up rigs by the end of 2012.

Essar, India’s second largest private sector port company, has seen robust growth in sales and profits for its ports and terminal services business.

This segment posted a quarterly profit of 80.42 crore from 49.9 crore a year ago. The firm said cargo handled by its ports rose to 39.5 MMT in FY11 from 29.4 MMT the year earlier.

Essar Shipping is demerging its shipping, logistics and oilfields businesses from its ports business.

Post the demerger, which will simplify Essar Shipping’s business structure and unlock value, the company will be renamed Essar Ports and will continue to be listed.

The demerged entity will be called Essar Shipping which is also expected to be listed on the stock exchanges by end of June, Agarwal said.

Essar Shipping shares closed down 4.97% at 92.65 in a Mumbai market that closed down 2.44%.