The Great Eastern Shipping Company Limited — Q3 FY26

Great Eastern Shipping Company Ltd Q3 FY2025-26 Earnings Conference Call https://www.youtube.com/watch?v=YwOpN8D9aLs Published: 3 months ago

0:00 Ladies and gentlemen, good day and welcome to the Great Eastern Shipping Company Limited Q3 FY26 earnings conference call. As a reminder, all 0:09 9 seconds participant lines will be in the listenon mode and there will be an opportunity for you to ask questions after the presentation concludes. Please 0:16 16 seconds note that this conference is being recorded. I now hand the conference over to Mr. Shiva Kumar, executive director and CFO. Thank you and over to you sir. 0:26 26 seconds Thank you Yoshi. Good afternoon everyone and welcome to the conference call uh to go through Kraturn shipping's uh results 0:34 34 seconds for the third quarter and for the nine months of FY26. 0:39 39 seconds Uh I have with me Rahul Shet. Uh we will go through a presentation quickly first uh and then we'll be happy to take 0:48 48 seconds questions. Uh I will run through the quest uh presentation quickly. Uh I'm sure you all would have seen it. It was uploaded yesterday. 0:57 57 seconds uh so that we can have a maximum time for Q&A. 1:02 1 minute, 2 seconds Uh you would have seen the financial highlights. Uh we had a net profit of 813 crores on a consolidated basis 1:09 1 minute, 9 seconds standalone 650 crores. Uh the net asset value has gone up again and this has mainly gone up because of the operating 1:17 1 minute, 17 seconds earnings. There's been no significant change in uh values of ships between se between September end and December end. 1:26 1 minute, 26 seconds So this is all operating cash flows which have helped to improve the net asset value and uh we have yet again 1:32 1 minute, 32 seconds declared a dividend. This is the 16th consecutive quarterly dividend that we are declaring. 1:39 1 minute, 39 seconds Uh I won't go too much into the uh P&L. 1:42 1 minute, 42 seconds You would have seen this. We can go through it later if you have any questions. On a normalized basis uh we have it's not too different uh from uh 1:52 1 minute, 52 seconds the reported numbers. uh the just to remind you this is to take out the effect of the uh exchange rates and the 2:00 2 minutes derivatives that we do and the derivatives are basically for converting our rupee debt into dollar debt so that we match our debt uh and our assets. 2:11 2 minutes, 11 seconds Uh return ratios continue to be good as I mentioned uh NAV has gone up uh in the quarter and it has gone up in the 9 and 12 months as well. 2:23 2 minutes, 23 seconds Uh this is the industry format. 2:25 2 minutes, 25 seconds Basically uh for shipping analysts it helps to know what were the voyage expenses and therefore what is a time charter equivalent rate because voyage 2:34 2 minutes, 34 seconds expenses or what are called direct operating expenses are a pass through part of executing the voyage. We start 2:41 2 minutes, 41 seconds our discussions from what is here uh marked as a which is time charter equivalent. When we talk of dollars per 2:49 2 minutes, 49 seconds day that is at this level that is the time charter equivalent level. 2:55 2 minutes, 55 seconds Uh business overview uh there are a lot of details here. Basically the headline news is OPEC opened the tabs again which 3:04 3 minutes, 4 seconds meant that there was more cargo to be carried around more crude cargos to be carried around and this was known before 3:11 3 minutes, 11 seconds because they had a schedule which was laid out uh on the uh uh apart from OPEC 3:18 3 minutes, 18 seconds which was uh a move which was known since the middle of last year there was also uh South America which uh produced 3:27 3 minutes, 27 seconds a lot of oil. Guyana and Brazil uh uh produced about a million barrels a day more than in the same period last year. 3:36 3 minutes, 36 seconds I'm talking of Q3 FI26 versus Q3 FI25. 3:40 3 minutes, 40 seconds Uh this oil is not necessarily getting consumed. It's going into inventory. 3:45 3 minutes, 45 seconds Some of it is in floating uh storage as well while it buys uh while it looks for a buyer. Uh but the net effect is that 3:54 3 minutes, 54 seconds markets were strong. Crude tanker markets were strong. Product anchor markets also recovered uh in the quarter 4:00 4 minutes from where they were the previous uh couple of quarters. Uh asset prices were 4:08 4 minutes, 8 seconds about 5% uh up uh but when you adjust for age etc that uh it's not too different. Uh the order book is 4:17 4 minutes, 17 seconds currently as has been creeping up uh as the markets continue to be strong and ship prices have been strong as well. So 4:25 4 minutes, 25 seconds the order book for crude tankers is uh currently at about 17% for crude and 19% for product tankers. 4:32 4 minutes, 32 seconds Coming to dry bulk uh again this is a sector which saw some strength uh in uh 4:39 4 minutes, 39 seconds uh in especially in the cape size sector. Uh this sector has also continued to be strong in January. We 4:47 4 minutes, 47 seconds had a small dip and then it's picked up uh uh steam again. uh which is unusual because seasonally this is the worst 4:56 4 minutes, 56 seconds quarter of the year. Uh but markets have been reasonably strong for the last week or two. Uh again trade did see 5:06 5 minutes, 6 seconds substantial growth in Q3. Uh about 40 million more of imports into China. 5:12 5 minutes, 12 seconds Again uh there is uh a lot of it is going into inventory at ports in China. 5:18 5 minutes, 18 seconds So there seems to be some stocking up. 5:21 5 minutes, 21 seconds Uh also grain trade grew uh in Q3. Uh and uh so bul carrier asset prices were 5:28 5 minutes, 28 seconds marginally higher during the quarter and uh the order book is at around 12 a.5%. 5:34 5 minutes, 34 seconds LPG spot earnings were strong. Uh trade volumes were down. However, ton miles helped a little bit because US exports 5:42 5 minutes, 42 seconds were going to Southeast Asia instead of going to China through the Panama Canal, which means more uh more miles. So, as 5:50 5 minutes, 50 seconds uh earnings were pretty strong, asset prices were flat but at very high levels. The order book continues to be very high at 29%. 5:59 5 minutes, 59 seconds Uh I've already spoken about the asset price movement. The order book also I've mentioned again it's creeping up. It was 6:06 6 minutes, 6 seconds very low in 2023 24 for the crude and product tanker sectors. Uh it is now 6:13 6 minutes, 13 seconds gone up significantly since then. Still at pretty low levels compared to what it has been uh in previous highs. And just 6:22 6 minutes, 22 seconds to compare the order book with the old fleet, uh you can see the orange bar is the what we would define as the old 6:31 6 minutes, 31 seconds fleet which is 20 plus for all categories except LPG. In FPG it's 25 plus. So in LPG only 11% of the fleet is 6:41 6 minutes, 41 seconds uh old but there is the order book is 29%. In uh dry bulk and product tankers they are more or less even the old heat 6:50 6 minutes, 50 seconds and the and the order book. In crew tankers the order book is at 16 to 17%. 6:57 6 minutes, 57 seconds Uh while the old fleet is 24% of the fleet. Uh scrapping has been very minimal for the last 10 years. So we're 7:05 7 minutes, 5 seconds talking of only about between 8 and 12% of the fleet getting scrapped in an entire 10-year period which is very low 7:13 7 minutes, 13 seconds and that is a scrapping overhang which uh is there in the market which is why you have such a high uh proportion of old. 7:22 7 minutes, 22 seconds Uh coming to the jackup sorry coming to the jackup market this is the international market uh scenario markets 7:29 7 minutes, 29 seconds are showing some recovery. Saudi Aramco has come back into the market. Two years ago, almost two years ago, they had 7:37 7 minutes, 37 seconds offhired about 24 or 25 checkup rigs or they had suspended contracts for those rigs. Uh a lot of those are going back 7:46 7 minutes, 46 seconds uh are being called back by Sao and that again is starting to tighten the market a little bit. 7:54 7 minutes, 54 seconds Uh and this is a slide of course uh of how many old rigs are there in the market, old rigs and old vessels and the 8:01 8 minutes, 1 second order book is extremely low because very few assets have been ordered in the last 10 years. 8:08 8 minutes, 8 seconds Uh for great ship because that's predominantly a time charter business. 8:13 8 minutes, 13 seconds Uh these are the repricings. We have one rig which is on a uh on a short-term contract in India itself. uh as it 8:22 8 minutes, 22 seconds stands her contract gets over in uh end of February. So we will need to find work for her. We are in discussions and 8:31 8 minutes, 31 seconds bidding for contracts. The second rig which is also on a short-term contract comes off contract sometime in May June. 8:38 8 minutes, 38 seconds Uh and we will see what to do about uh the future business for her. the vessels. There's only one which is up 8:45 8 minutes, 45 seconds for pricing in this qu in this quarter and there are four which are up for pricing in the next quarter. So we have a lot of coverage for the vessels. 8:55 8 minutes, 55 seconds Um this is on the break up on the revenue days and the TCI. I won't go too much into it. uh the net asset value uh 9:04 9 minutes, 4 seconds the growth over the last uh five years uh we've seen this uh going up with a 9:10 9 minutes, 10 seconds kagger of 20% plus on a both both a standalone and a consolidated basis and just to look at what happened between 9:19 9 minutes, 19 seconds December 24 and December 25 you will see that the net asset value has actually gone up uh even though we have paid out 9:27 9 minutes, 27 seconds a dividend you can see the fleet value uh reduction is 44 4 rupees per share and we paid out 28 rupees per share in 9:34 9 minutes, 34 seconds this period. However, the NAV has gone up and that's because of the green bar which is the cash profit which is being produced. I've mentioned in the past 9:43 9 minutes, 43 seconds that the net asset value converts into cash uh and that helps to uh to cushion it from a fall in the asset prices. 9:54 9 minutes, 54 seconds Similarly for the consolidated NAV as well. 9:59 9 minutes, 59 seconds Um again uh the stock price to consolidated net asset value we are trading at about a 25 to 30% discount currently. 10:08 10 minutes, 8 seconds Uh again showing that uh we uh focus on timing the market. Last time we levered 10:16 10 minutes, 16 seconds up in 201 uh FI 171 18 and 19 uh from zero net leverage uh in the shipping 10:24 10 minutes, 24 seconds business we went up to 360 million of uh net leverage and we've been uh net cash 10:31 10 minutes, 31 seconds ever since middle of FY23 and now we are uh more than 500 million plus net cash. 10:38 10 minutes, 38 seconds Uh I won't go through these details. 10:41 10 minutes, 41 seconds These are uh the governance details and what we are doing on CSR and ESG. 10:47 10 minutes, 47 seconds Uh so that brings me to the end of uh the presentation and we are happy to take questions now. 10:55 10 minutes, 55 seconds Thank you very much. We will now begin the question and answer session. To ask a question, please click on the raise and icon tab available on your toolbar 11:03 11 minutes, 3 seconds or on the QA tab available on your screen. Kindly turn on your microphone when the operator announces your name. 11:10 11 minutes, 10 seconds In order to ensure that management is able to answer queries from all participants, kindly restrict your questions to three at a time. You may join back the queue for follow-up questions. 11:23 11 minutes, 23 seconds We'll take a first question from Deain Sanoi from Page Investment. Please go ahead. 11:34 11 minutes, 34 seconds Dain please unmute your microphone and go ahead with your question please. 11:44 11 minutes, 44 seconds Sorry since there is no response we'll move on to the next question from Rahil Dasani from MAPL. Please go ahead. 11:53 11 minutes, 53 seconds Yeah, am I audible? Yes, please go ahead. Uh yes, please go ahead. 11:57 11 minutes, 57 seconds Yeah, good afternoon and thank you for this opportunity. First of all, congratulation on a good set of numbers. 12:03 12 minutes, 3 seconds Uh my list of questions was more around our offshore vessel segment particularly. I wanted to understand if 12:11 12 minutes, 11 seconds you can share more about the OSV charter rate cycle that we are in right now. The understanding that I am getting is that 12:18 12 minutes, 18 seconds there is a demand supply gap and the ship building is slow as well as the age of vessels in use already is high which 12:25 12 minutes, 25 seconds is even deepening that gap. So if you can explain where are we in this cycle currently? 12:33 12 minutes, 33 seconds Yeah. Okay. So, we'll have to I'll have to just give you a bit of background to this space. 12:37 12 minutes, 37 seconds So, if you look at the offshore vessel sector, there are large number of ships. There about 3,000 odd ships. 12:45 12 minutes, 45 seconds There are 5 700 ships in what we call coal layout. So, they've not been operated for a long time because as you know the offshore space had gone through 12:53 12 minutes, 53 seconds a downturn. M these vessels we don't count as part of the operational fleet because they will have someone will have to spend a lot of money to get them back into operations. 13:02 13 minutes, 2 seconds As of today we've seen no movement on that. 13:05 13 minutes, 5 seconds When you remove those ships from the fleet supply we then calculate what is the utilization of the industry. The 13:13 13 minutes, 13 seconds utilization of the ships currently are at about 65 60%. It's called marketed utilization. Now while that in an 13:22 13 minutes, 22 seconds absolute terms may seem a bit low for our industry that's actually quite good it doesn't mean that ships are not being used but what happens is that offshore 13:30 13 minutes, 30 seconds vessels are generally fixed for long-term contracts and therefore between contracts there is a gap right 13:37 13 minutes, 37 seconds while business is being negotiated or vessels are in dry dock being serviced also in this business there are many pockets of the market so unlike mainline 13:46 13 minutes, 46 seconds shipping uh the ships don't necessarily always move from one market to the other all the time because there is a cost of positioning. 13:55 13 minutes, 55 seconds So 65% is generally you know relatively healthy. the highest we have ever seen and this is goes back before 2015 uh 14:03 14 minutes, 3 seconds probably 2012 to 2014 when the markets were the strongest utilization number would have been closer to maybe 70 72 14:11 14 minutes, 11 seconds something like that right uh so if you look at it from where we have been at the peak levels that's actually relatively on the higher side 14:20 14 minutes, 20 seconds uh secondly we have also seen uh you know we have seen some um a small amount of ordering that's taken place in the 14:28 14 minutes, 28 seconds last couple of years but on an overall fleet it's still very uh small. Uh there you know uh technically you know when 14:35 14 minutes, 35 seconds you look at the order book there is a published order book that has been there but it's been there for a very long period of time uh and those ships have 14:43 14 minutes, 43 seconds not really gotten delivered. So we assume that you know sometimes what happens is you know people had ordered ships but then the market had turned 14:50 14 minutes, 50 seconds people probably could not afford uh to take delivery of those ships. So they're lying there somewhere. You know, many of these are orders sitting in China. So 14:58 14 minutes, 58 seconds it's quite opaque to know what's happening to those ships, whether those ships really exist. And as you can imagine, no ship owners really going to touch a ship probably lying half built 15:07 15 minutes, 7 seconds somewhere five years later, right? Uh again, you need to be very confident in the market to spend that money to uh take for delivery. So even the order 15:15 15 minutes, 15 seconds book is very very low and because the order book is very low and has been low for the last multiple years even the 15:22 15 minutes, 22 seconds fleet age has you know has crept up uh over the period of time. So from a supply perspective 15:29 15 minutes, 29 seconds uh it is relatively constrained. Uh we don't know what will happen on those 500 odd ships which are in cold storage. Uh like I said they're unlikely to come back. Also they will be relatively old. 15:40 15 minutes, 40 seconds uh uh and as of now the demand is holding up so the utilization levels are quite strong and that's reflected in the earnings. 15:48 15 minutes, 48 seconds Got it. And if I were to just get more specific on this post 2122 we saw charter rates doubling uh is that sort 15:57 15 minutes, 57 seconds of growth still continuing or has it slowed down or even we are seeing a dip in growth somewhat in the charter rates? 16:04 16 minutes, 4 seconds No. So see uh firstly um just to clarify on that growth uh the chatter rates were you know very low for a long period of 16:12 16 minutes, 12 seconds time right generating you would have seen it in the results of great ship yes uh but over the so you know the doubling 16:19 16 minutes, 19 seconds happens because the base was so low okay uh now you know from these levels it's not like as if these rates we can keep 16:27 16 minutes, 27 seconds you know saying that okay they've doubled over five years so they'll double again and double again that's not going to happen others the numbers will be astronomical 16:34 16 minutes, 34 seconds All I can tell you is that over the last calendar year uh about a year year and a half at least since the rates have gone 16:42 16 minutes, 42 seconds up a lot they have broadly held up uh at these levels and we've seen no dip again you know pockets of the market reduce a bit in a little bit in 16:51 16 minutes, 51 seconds utilization here and there but broad story they've held up. 16:55 16 minutes, 55 seconds Got it. That's very clear sir. Last one question before I get back to the queue. 16:59 16 minutes, 59 seconds OGC, Reliance uh and Kain have a lot of incoming projects. For example, OGC has 17:06 17 minutes, 6 seconds planned 10 development wells as well as the PRP9 project. Reliance has the KGD6 block plus the general offshore wind and 17:14 17 minutes, 14 seconds the port construction demand. So what sort of offshore vessels demand are we seeing across our set of vessels like 17:20 17 minutes, 20 seconds the PSV, MPV, OSV? if you can quantify it in number of vessels that we can expect from these few pockets of demand. 17:30 17 minutes, 30 seconds So firstly offshore wind there's not much activity here. Secondly on all these other oil projects you have to remember that it takes a lot of time to develop all these projects out. 17:40 17 minutes, 40 seconds So even we do not have any knowledge of how many more additional vessels will come up. uh all we can say is that the 17:46 17 minutes, 46 seconds market is uh uh relatively well balanced and uh uh you know how it pans out over the next few years frankly is anyone's 17:54 17 minutes, 54 seconds guess you have to remember even when they start drilling and you know when they start uh looking at these fields a lot of the oil companies have to see how 18:03 18 minutes, 3 seconds those fields develop what potentials they see how much money they're willing to put in I don't think those companies would also be in a position to give you a firm number of how many more 18:11 18 minutes, 11 seconds additional ships will be required got it and just to get a more general understanding. For example, the KGD6 18:18 18 minutes, 18 seconds block of Reliance came in 2024. So, how long does it usually take for the demand for our sort of vessels to come in? 18:26 18 minutes, 26 seconds We won't be able on how on that. We won't have sufficient knowledge to come in from this. 18:32 18 minutes, 32 seconds Got it. Okay, that was helpful. I have a few more questions. I'll get back in the queue. Thank you. Sure. Thank you. 18:38 18 minutes, 38 seconds Thank you. We'll take our next question from Raja Kumar Vinatan from RK Invest. 18:44 18 minutes, 44 seconds Please go ahead Raja Kumar. Please unmute your mic. Yes, please go ahead. 18:55 18 minutes, 55 seconds Hello Raja Kumar. Are we unable to hear you? Can you hear me now? 19:03 19 minutes, 3 seconds Yes, please go ahead. 19:05 19 minutes, 5 seconds Yeah. Um the f I have two question. The first question is for Shiv. Uh sh I'm looking at your slide seven 19:13 19 minutes, 13 seconds where you given this of capital employed and so on so forth. 19:18 19 minutes, 18 seconds Okay. Uh so just allow me just to give me two minutes to explain the question. 19:23 19 minutes, 23 seconds Uh yeah so sh if I look at your three drivers of your bottom line or the profitability they are your core freight 19:30 19 minutes, 30 seconds earnings profit on sale of ships and then your other income comprising of your interest income and the then the FX gains right 19:39 19 minutes, 39 seconds yes so so for a moment if I back out your profit on sale of ships and the other income as well as the FX gain 19:48 19 minutes, 48 seconds so your uh PBT comes to approximately 520 crores for the quarter as against whatever 840 you reported. So if I take 19:57 19 minutes, 57 seconds that as the numerator and then you know I I'm I'm using your equity as your replacement cost because you're giving 20:05 20 minutes, 5 seconds the number based on the book value which is the whatever,000 rupees approx. So if I have to replace it with your nav of 20:12 20 minutes, 12 seconds 1566 which is working out to almost 22,000 crores. So if I annualize you guys are close to you're making around 10% pre-tax return. 20:24 20 minutes, 24 seconds Yeah. See the only thing is in the 22,000 crores then you'll have to sorry you done with your question. Sorry let me just just one more minute. 20:33 20 minutes, 33 seconds Yeah please go ahead. 20:35 20 minutes, 35 seconds This is one part. So I am looking at this way. Uh second thing uh I know all your segments are firing well. the crew, 20:43 20 minutes, 43 seconds dry bulk, gas, all the freight earnings are doing really well uh you know based on whatever you have put out. So even in 20:51 20 minutes, 51 seconds this scenario if you guys are making only 10% return on the you know whatever the replacement cost basis uh you know 20:59 20 minutes, 59 seconds that [clears throat] is my thing and and my my only worry is if all these tailwinds that you have in terms of better uh you know asset market compared 21:08 21 minutes, 8 seconds to your book values then the rupee depreciation currently it is a tailwind for you because you are holding more cash than loan. So if that were to kind 21:17 21 minutes, 17 seconds of negate because OP is already depreciated quite a bit. So you may not have the staleman go forward. 21:23 21 minutes, 23 seconds So the question is uh are we have we seen the best of earnings for great ship uh you know as of now unless you guys uh 21:31 21 minutes, 31 seconds really do something about the business you know in terms of acquiring more ships and also your uh dependent on your 21:38 21 minutes, 38 seconds uh the freight market. Uh that's my question. 21:42 21 minutes, 42 seconds So couple of things. So first of all uh one adjustment I would make to the calcul fundamentally I don't have a 21:50 21 minutes, 50 seconds disagreement with the way you have approached it the first but I would make one adjustment there if you have taken 21:57 21 minutes, 57 seconds out the other income then you have to take out what results in other income right what you're trying to find out is how much 22:05 22 minutes, 5 seconds yeah yeah I I did that also shift so basically I removed the cash because I didn't have the cash number now that you told it's about 500 million so it's about 4,500 crores 22:13 22 minutes, 13 seconds So if I back it out, your denominator is about 18,000 crores. So even then your pre-ax is about 11%. From 10 to probably 22:22 22 minutes, 22 seconds 11 sorry on a consolidated basis we have 7,000 crores of uh sorry uh of net cash 22:33 22 minutes, 33 seconds uh which has to be taken out of there which is 500 rupees uh on the NAV. So we're talking about 15,000 crores. again 22:42 22 minutes, 42 seconds uh you know uh here and there we can have 1 or 2%. We're talking of 15,000 crores which is the market value of the 22:51 22 minutes, 51 seconds sort of business. Okay, which is about where it is. It's about 14,000 crores if you just take the fleet values of 22:57 22 minutes, 57 seconds shipping and offshore. And uh so what we are saying is that you're making and the number you put and let's just say that we annualize the 500 crores which is 23:06 23 minutes, 6 seconds about 2,000 crores and you're somewhere it's not 10% is maybe 12 13%. Okay but 23:14 23 minutes, 14 seconds yes it is true because the prices are so high you're not going to make a current 23:20 23 minutes, 20 seconds yield on those on the current high prices which is also the reason why we are not investing today. If you are 23:28 23 minutes, 28 seconds making significantly more uh current yield on the ships at today's prices, we would be looking at investing more. 23:38 23 minutes, 38 seconds So yeah, the point you made is correct and it's also showing why we are not really that keen to invest at today's prices. What 23:45 23 minutes, 45 seconds can also happen of course is that 15,000 crores can drop off. If the market drops that market value of that fleet can drop off but 23:53 23 minutes, 53 seconds okay yes cash is a drag on the returns and now let's look at the whole thing right 24:00 24 minutes including the cash so you look at 800 crores on the 22,000 crores number correct 24:08 24 minutes, 8 seconds and that is now bringing you closer to a uh you know to something which is not a very uh great return which is being 24:17 24 minutes, 17 seconds dragged down by cash. Eventually, we hope that this cash will go from earning 3% in dollars, which is what we earn, to 24:26 24 minutes, 26 seconds earning a to to a ship which earns more than 10% in dollars. And that's what we are waiting for. We're waiting for that 24:33 24 minutes, 33 seconds opportunity. And yes, it is not a great situation to have so much of our balance sheet in cash. Uh but it's hopefully it's temporary. 24:45 24 minutes, 45 seconds Okay. So, so in terms of the drivers, so I mean I am just laboring on the same question shift. Sorry about that. uh so 24:53 24 minutes, 53 seconds so uh so I think uh since the rupee depreciation is almost kind of close to its peak uh so it would be kind of 25:01 25 minutes, 1 second pertinent that you uh folks look at the cash deploying the cash quickly so that the return ratios don't uh you know fall 25:10 25 minutes, 10 seconds further and and again you know it again depends on your core earnings as well if because given the volatile markets the 25:17 25 minutes, 17 seconds shipping market is doing well today so if the markets have to turn some reason you know things stabilize which you know 25:24 25 minutes, 24 seconds everyone is hoping for I mean which everyone wants other way so but but what I'm saying is you know you will lose all 25:31 25 minutes, 31 seconds the tailwinds that you have currently today all the three livers that which is firing for you today you know then you 25:39 25 minutes, 39 seconds know if all of them have to turn down then you know it'll kind of suppress the earnings go forward so that's my only uh humble submission. 25:47 25 minutes, 47 seconds Yeah. Yeah. See, on a current yield, ships make a decent return. So, if we buy a ship today and earn today's 25:55 25 minutes, 55 seconds earning at today's freight rates, you would probably make a 10% return on that dollar invested. The worry is that 5 26:03 26 minutes, 3 seconds years ago, before this market went up, especially for the tankers, the ship equivalent ship value was 40 to 50% below where it is today. 26:16 26 minutes, 16 seconds Now the question is whether you risk that drop in the asset price in the hope of making this 10% in current deal. 26:24 26 minutes, 24 seconds That's the approach you know that's the thing that we have decided that we'll not do. So in fact we tend to buy when the current yield is very poor because 26:32 26 minutes, 32 seconds that is what gives you the capital appreciation later on when the markets are weak earnings are weak. You will remember that in 2018 19 we actually 26:41 26 minutes, 41 seconds declared a loss and that was because we bought ships when the market was very low and we went out and bought even more we levered up and bought. 26:50 26 minutes, 50 seconds So okay while it is tempting uh uh to convert some cash into an asset which is earning 26:58 26 minutes, 58 seconds uh 10% plus return uh that's not something that we are looking to do currently. 27:06 27 minutes, 6 seconds Okay. Yeah. So, should the May I request you to join back the queue please as we have other participants waiting for the Yeah, sure. Yeah. 27:16 27 minutes, 16 seconds Thank you. 27:17 27 minutes, 17 seconds We'll take our next question from Siddhhat Johan from 361 Capital. Please go ahead. 27:25 27 minutes, 25 seconds Hi Shane and thanks for the opportunity. 27:27 27 minutes, 27 seconds And I have two questions. Firstly now we have net cash of 7,000 crores and at what levels of cash and and obviously at 27:35 27 minutes, 35 seconds this prices that you as you rightly mentioned you're not going to buy an asset you're just going to replace an older asset with a newer one. 27:43 27 minutes, 43 seconds Yeah. 27:44 27 minutes, 44 seconds So then my question is that what levels of cash would you start increasing increase your dividend distribution to investors? That is my first question. 27:55 27 minutes, 55 seconds Yeah. So we have increased the dividend distribution uh between last year and this year we have we were at about 17 18% we are now little about 20% probably 28:04 28 minutes, 4 seconds closer to 25 for this year. So that's one. The second is actually we have also dropped off a little bit in cash since 28:12 28 minutes, 12 seconds then because you would have seen we've done several transactions uh in the recent past. We've done some of these modernization uh transactions. 28:21 28 minutes, 21 seconds So we've actually dropped our net cash position in the last [clears throat] month or so from end December. We are 28:29 28 minutes, 29 seconds deploying some cash. Uh and now you know whether 7,000 is a threshold or 8,000 or 28:36 28 minutes, 36 seconds 5,000 it's a matter of opinion. We believe that we can deploy this cash uh 28:42 28 minutes, 42 seconds well in the next market downturn and that's why we are retaining it. In the meantime, we are paying out what we think are uh are very decent dividends. 28:55 28 minutes, 55 seconds Understood. Understood. So that means in case if the cycle continues for let's say for the next 2 years then we'll actually build up our cash balances. 29:04 29 minutes, 4 seconds This is what I understand. Is it right? 29:06 29 minutes, 6 seconds Yeah. Build up our cash balances to the extent of uh what we are not able to invest in our modernization. You know you we've been modernizing our fleet 29:14 29 minutes, 14 seconds while we have not done capacity expansion. We've been selling our older vessels and buying some more modern vessels. 29:22 29 minutes, 22 seconds So yes, cash balance will build up to till such time we believe that we are not we may not be able to deploy the 29:28 29 minutes, 28 seconds money uh you know profitably at a future cycle but we are not close to that not anywhere close to that. 29:38 29 minutes, 38 seconds Okay understood. And uh secondly, any plans to invest in LG fleet because you see a lot of LG ships which are under 29:47 29 minutes, 47 seconds ship building and coming and there's a huge supply which is going to come up in the next few years. Uh what is your thought on that? 29:54 29 minutes, 54 seconds No, so see the LG business is very different. What happens is a lot of these LG ships firstly they're very expensive you know so you can't just buy one ship. They're right now currently 30:03 30 minutes, 3 seconds for $250 million a piece you can't buy in the secondhand market. You have to buy new building. If you go for a couple, you're going to spend a substantial amount of your investable 30:10 30 minutes, 10 seconds surplus just to do this business which will take away from other businesses, right? Uh secondly, in LNG, what we have seen is the contracts are longer 30:19 30 minutes, 19 seconds duration. They don't have the spot market as a traditional businesses. So what happens is when you buy such an expensive ship and you get 10ear contracts, generally they become project 30:27 30 minutes, 27 seconds financing kind of returns. So what at least as of now we see that that building will provide suboptimal returns from tanker bulker uh LPG and so as at 30:38 30 minutes, 38 seconds the moment at least we are not going to even consider that business. Understood. Very well. Thanks a lot. 30:46 30 minutes, 46 seconds Thank you and all the best. Thank you. 30:50 30 minutes, 50 seconds Thank you. We'll take our next question from David Sangoy from Page Investment. Please go ahead. 31:00 31 minutes Din. Yeah. Can you hear me? Yes, please go ahead. 31:06 31 minutes, 6 seconds Yeah. Congratulation on a good set of numbers. Uh I have one question that there's been a lot of news of late on 31:13 31 minutes, 13 seconds the dark fleet on the crude tanker side and uh you know various you know Europe 31:21 31 minutes, 21 seconds uh Russ, Ukraine, America all are seizing this dark fleet. What's the impact on the freight trades uh when 31:30 31 minutes, 30 seconds such you know this has been the problem for crude market for a long and large part of this crude which was sanctioned 31:38 31 minutes, 38 seconds was moving through this fleet. So how does it change the outlook in near and medium term sir? 31:45 31 minutes, 45 seconds Yeah. So we can at least tell you what has happened up until now. So since the war which has been about now almost four 31:52 31 minutes, 52 seconds years whenever the US or Europe or the UK have sanctioned these ships they've gone out of the international trading 32:00 32 minutes fleet but at the same time a large amount of the Russian trade has gone out. So you got something gone out from the demand side you got something gone 32:07 32 minutes, 7 seconds out from the supply side and so the sanctions of course has had had an impact but for us you know the 32:15 32 minutes, 15 seconds denominator numerator have more or less moved together. Of course, there is a disruption of the Russian trade where the inefficiencies of the trade which we've explained before has been a very 32:24 32 minutes, 24 seconds large reason for the uh rise in the market. Now, the difference that we have seen over the last 6 months is that the 32:32 32 minutes, 32 seconds sanctions have become a lot tighter and because the sanctions have gone off not only on the vessels but have also gone 32:39 32 minutes, 39 seconds on people have gone on refineries. Uh you've got Naira which has been affected. We've got pressure coming from the US even on India taking in more 32:48 32 minutes, 48 seconds Russian uh oil that has had a very big difference and the main difference has been that earlier Russian crude was 32:57 32 minutes, 57 seconds still moving you know they used to export 3.5 odd million barrels before the war they were doing that even during the war however in the last 6 months we 33:05 33 minutes, 5 seconds have seen that maybe half a million to 750,000 barrels per day of Russian crude is not being able to find a destination 33:13 33 minutes, 13 seconds largely because India is not taking that much crude and because of that that require eventually oil needs to be the 33:22 33 minutes, 22 seconds refineries need to be uh their demand needs to be met. So that 750,000 odd barrels has been met from the 33:30 33 minutes, 30 seconds international trading fleet and so there has been an increased demand from countries like Middle East, South America which is largely Brazil and you 33:37 33 minutes, 37 seconds know Guyana and those kind of countries and that has lifted the market. So if you see in the last quarter which is this quarter October to December and 33:45 33 minutes, 45 seconds even as of January the crude market has significantly risen based on this tightness. Now how this all pans out over the next 6 months nine months is anyone's guess. 33:56 33 minutes, 56 seconds We saw somewhere in the news of course we don't have data on that but we saw somewhere in the news that even uh uh Reliance was going to take another 150k 34:04 34 minutes, 4 seconds of Russian barrels. So how that's all working you know frankly we are not uh 34:10 34 minutes, 10 seconds and sir uh today uh VLCC uh new built and the second end price of less than 5 years the difference is only five or 34:19 34 minutes, 19 seconds less than 10%. And lot of smart guys or smart operators globally are switching the second uh or the older ship for the 34:27 34 minutes, 27 seconds new one. Do you plan to do anything uh as far as the crude is concerned? 34:33 34 minutes, 33 seconds You mean switching? So you know it just depends on what age you're switching from right so if you're selling a 15 year old tanker and you're buying a 10 year old 5y old it's just based on the 34:42 34 minutes, 42 seconds mathematics that we are doing the view that we take also is that you know if you buy a ship today I think I'm not sure exactly how the data point that you 34:50 34 minutes, 50 seconds are referring to but there are a lot of large owners that have done a lot of new building right uh and that new building 34:58 34 minutes, 58 seconds comes over across multiple years right now they may be getting a new building because some of the oldership is going out or there may be net expanding. 35:06 35 minutes, 6 seconds Largely as an industry there's not been a major expansion over the last few years. So one would assume a lot of the older ships are you know coming off. Uh 35:14 35 minutes, 14 seconds but uh but you know it's just a matter of choice you know whether you would like to you know like say today if you've got a ship that is old and we buy 35:21 35 minutes, 21 seconds a new building ship then that ship comes three years from now. Right. Right now if that ship is coming three years from now what will the charter rates be 35:29 35 minutes, 29 seconds three years from now? If the bull cycle is currently present and we don't know whether it will last six months, one year, two years or three years but that 35:37 35 minutes, 37 seconds but the expectation is that if the market is strong now better to get the earnings now and therefore the secondhand prices tend to rise 35:46 35 minutes, 46 seconds disproportionately to the new building prices in a strong market and it tends to work the other way around in a weak market. 35:53 35 minutes, 53 seconds Has that answered your question or Yes. Yes, I got it. Uh so last question why is the scrapping uh despite of more 36:02 36 minutes, 2 seconds than 18 years fleet both on all the sides you know whether you take it dry bulk wet bulk or uh even uh you know 36:11 36 minutes, 11 seconds crude is pretty high percentage what we have seen in last three decades but the scrapping doesn't happen. 36:19 36 minutes, 19 seconds So basically what happens is so see you know whenever ship owners coming to a survey which is happen you know at the older end it's every three years you have to put in a lot of money 36:28 36 minutes, 28 seconds to do the pass the surveys if you can make up the operating costs and the dry dog costs and the markets are 36:36 36 minutes, 36 seconds substantially stronger than that then owners tend to pass the survey. There are certain protected trades like say in the dry bulk trade where you can sell 36:44 36 minutes, 44 seconds you know maybe those trades are not available to people like us but you know we can sell a old ship you know players like us to another player who has a protected trade and run a very old ship. 36:55 36 minutes, 55 seconds Uh the dryback fleet is not as old as the tanker fleet in the tanker fleet we've seen a large number of tankers you know land up in uh the sanctioned 37:04 37 minutes, 4 seconds trades. So if you see you know the you know the vessels that are carrying the Russian oil a large percentage of them are the older tankers 37:12 37 minutes, 12 seconds you know so the market has to be conducive to support it you know eventually products have to move right right 37:19 37 minutes, 19 seconds and typically are high people tend not to scrap so that's the main thing when rates if rates drop then you'll see ships getting taken out 37:27 37 minutes, 27 seconds see because scrapping can happen for two reasons right one is that you know ships do reach a particular life where you know beyond which is difficult to trade but you know we don't see 18 year old 37:35 37 minutes, 35 seconds ships really being scrapped. Now between 21, 22, 23, you know, you can play on the margin a bit. You know, if the market is strong, the oil majors, the 37:43 37 minutes, 43 seconds terminals, everyone will take the ship because no one wants a shortage of the ships. 37:48 37 minutes, 48 seconds Okay. So, thank you very much. All the best, sir. Thank you. 37:52 37 minutes, 52 seconds Thank you. We'll take our next question from Kiran Ma from Bura BNB Pariba Mutual Fund. Please go ahead. 38:03 38 minutes, 3 seconds you sir for the opportunity. Am I audible? Yeah. Hi. Yeah, we can hear you later. Yeah. 38:11 38 minutes, 11 seconds I just wanted to understand your perspective in terms of the crude price has sort of jumped to around $70 level 38:18 38 minutes, 18 seconds indicating a potential sort of the risk on the Iranian barrels as well as some of the disruptions in the US from 38:27 38 minutes, 27 seconds the shipping side or ship crude ship anchor rate. Are you also seeing similar risk getting priced into the shipping tanker market? 38:37 38 minutes, 37 seconds Nothing has happened on freight rates uh related to this. So this hasn't had an impact on freight rates. Obviously it'll 38:44 38 minutes, 44 seconds be a big event for tanker markets but nothing has happened. 38:49 38 minutes, 49 seconds No, we've not seen really any correlation between the two or Iran risk. If Iran risk is getting priced into freight rate, not yet. 38:57 38 minutes, 57 seconds No, no, not yet. Sure. 39:01 39 minutes, 1 second Another question was about the cash that we have been managing. Are we seeing any signs of some of the markets opening up during FI27? 39:12 39 minutes, 12 seconds Any green shoots, early green shoots? 39:15 39 minutes, 15 seconds Honestly, it's very difficult. As of today, the prices are not at our levels, but to make a forecast in FI27 what those price levels will be is anyone's guess. 39:27 39 minutes, 27 seconds Right. 39:29 39 minutes, 29 seconds The probably the last question was about basically the way we show is that at a console level our stock price at probably around 25% 39:38 39 minutes, 38 seconds discount to the underlying NAV but if we adjust the cash from the NA which you mentioned that around 500 rupee per 39:45 39 minutes, 45 seconds share then the actually the discount is much wider on the ship prices which is a variable which could be probably of the 39:51 39 minutes, 51 seconds order of 40 50%. So is this more sort of reflecting the midcycle value of your shipping asset in your view or is it a 40:00 40 minutes discount to the even the mid midcycle shipping value at this? 40:03 40 minutes, 3 seconds So if it is 40% below is that number correct? 40:05 40 minutes, 5 seconds Yeah, it's below the cycle. It's probably midycle. 40:07 40 minutes, 7 seconds Yeah, it's probably midcycle. If you take if it is 40% then yeah problem. 40:13 40 minutes, 13 seconds Sure sir. That's all from my side. Thank you. Thank you. Thank you. 40:19 40 minutes, 19 seconds Thank you. We'll take a follow-up question from Rahul Dasani from ML. Please go ahead. 40:26 40 minutes, 26 seconds Yeah, thanks for the opportunity again. 40:28 40 minutes, 28 seconds Uh I wanted to pick up one of the points from your introduction. If you can share more into what you said about Saudi 40:34 40 minutes, 34 seconds Aramco uh them giving back the rigs two years back and now they are procuring it again. I it wasn't really clear for me 40:43 40 minutes, 43 seconds if you can explain it more better. Is it only rigs or all offshore procurement had stopped two years back and now it's 40:51 40 minutes, 51 seconds coming back again? If you can share more into that. 40:54 40 minutes, 54 seconds Offshore procurement will be a very large topic. Uh calculating that entire data and ask for share that will be impossible. 41:03 41 minutes, 3 seconds What I mean is our set of vessels. 41:07 41 minutes, 7 seconds So I mentioned to you earlier you know on the offshore utilization right vessel utilization. So I can share with you a similar statistic on the jackup rigs 41:14 41 minutes, 14 seconds right again on the marketed without using the cold day of jackup rigs right the utilization is about 85% 84 41:22 41 minutes, 22 seconds something like that right and the peak that we've seen historically is about 90%. 41:27 41 minutes, 27 seconds So that five six% is you know the gap between where we are today and the top of the market in terms of the utilization. Now that 56% on 440 rigs is only about 20 30 rigs right thereabouts. 41:40 41 minutes, 40 seconds So we saw that Saudi Aramco had taken a large number of rigs uh pre2024 41:47 41 minutes, 47 seconds and then they you know there was some internal discussion and they had a capacity they had declared that they 41:54 41 minutes, 54 seconds would like to increase the max capacity of production from from 12 million to 13 million barrels which which is why they 42:02 42 minutes, 2 seconds had taken a large number of rates. Then in Jan 24 they said we are going to reduce this 13 to 12 million. That's why they released some of those rigs. I 42:12 42 minutes, 12 seconds think they released about 30 35 rigs something like that right okay now what they have declared is that 12 million barrels of m and this we have to 42:20 42 minutes, 20 seconds remember Saudi declares a max production capability as of but in history they have generally not produced for a sustained period of 42:29 42 minutes, 29 seconds time more than about 10 10.5 million barrels per day. Okay. As of today, they have still kept their target of 12 42:37 42 minutes, 37 seconds million barrels. They have not increased it to 13. But the difference is that two years ago, they were physically producing 9 million barrels per day. 42:47 42 minutes, 47 seconds Okay? 42:48 42 minutes, 48 seconds Today, they are producing 10 10.5 million barrels per day. One of the impacts has that has been on the crew tanker market because they're exporting 42:55 42 minutes, 55 seconds a lot more oil. So if you see how much Saudi Arabia was actually produced and exported over the last frankly 15 20 43:03 43 minutes, 3 seconds years right it had it is now at its close to its peak which is 10 10.5 million. 43:10 43 minutes, 10 seconds Now maybe they could increase it a little bit more for short periods of time but not sustainably. 43:14 43 minutes, 14 seconds So we are seeing the first green shoots in their change of policy where they're saying let's take nine more additional jacka bricks which are going to be taken 43:22 43 minutes, 22 seconds across the calendar 2026. the exact timelines as you can imagine they don't declare it but you know what happened is 43:30 43 minutes, 30 seconds some of those rigs that they let off you know they have this clause where they can suspend the rigs but they don't eventually they're not redelivering it 43:37 43 minutes, 37 seconds to you you know to the owner the rates may be zero but you know they're like on standby they're waiting there and they've given some notices to those 43:44 43 minutes, 44 seconds owners to come back so nine of those rigs are coming back which increases the utilization by 2%. So there are some green shoots in that market tightening 43:52 43 minutes, 52 seconds further. But again as you can imagine you know how Saudi Aramco decides how to uh change its capex plans you know that 43:59 43 minutes, 59 seconds can change uh you know those internal discussions we can't be privy to of course uh but in line to the 44:07 44 minutes, 7 seconds procurement of the rigs are we also seeing a proportionate procurement of other sort of vessels excluding the rigs in the offshore segment from Aramco 44:17 44 minutes, 17 seconds you know we didn't see the utilization of the offshore vessels actually coming off in the last two years and that is mainly Because you know the number of rigs you have you need to have a 44:25 44 minutes, 25 seconds proportionate number of vessels that clearly is there but even though the rig count came down we didn't see the vessel count coming down mainly because the vessels are also used for additional 44:33 44 minutes, 33 seconds activities you know they already used producing wells they also used to lay construction cables pipelines etc you 44:41 44 minutes, 41 seconds know there are a lot more activities happening in the sea so because of that we didn't actually see those utilizations come on got it and another thing is how easy is 44:50 44 minutes, 50 seconds it for a new income coming competitor or peer to buy these vessels and just start competing in tenders or is there some long approval process from the side of 44:59 44 minutes, 59 seconds our customers like OGC or Reliance or Kane or some other complexities to enter this offshore segment and compete with us. 45:08 45 minutes, 8 seconds See private charters see firstly you have to depend on how much liquidity is there in the market to actually buy these ships. You know as we mentioned earlier the order book has not been a 45:16 45 minutes, 16 seconds lot. So for the last seven eight years it's very difficult to get modern assets right so the liquidity would be relatively low if you wanted to buy a 45:24 45 minutes, 24 seconds lot of secondhand ships uh maybe you have to pay up the price and secondly a lot of the private charters yes it's you know in tender-driven businesses 45:33 45 minutes, 33 seconds generally you know more participants can participate but with private charters there is a level at which you know 45:41 45 minutes, 41 seconds operators prefer to work with owners who they know about and there are sufficient owners with a long history where you know they don't have to maybe go to a 45:50 45 minutes, 50 seconds new player because there's a you know shortage of supply and the new owner has the vessels and so you know if that kind of situation arose then it'd be easier 45:57 45 minutes, 57 seconds for the oil companies to say okay you know I don't have the ship let me go to new incumbent players but of course new incumbent players can always come into the business no one can stop them from 46:05 46 minutes, 5 seconds that it's not like as if there's such a barrier that they could not bid for those contracts at all of course no but from what I had 46:13 46 minutes, 13 seconds Rahul I request you to join back the queue please It's fine. Let him just finish this question. I think he just had a leading question. 46:19 46 minutes, 19 seconds Yeah. Yeah. Thank you. So the understanding that I got from the mar insurance industry is that usually to 46:26 46 minutes, 26 seconds enter these sort of customers like OMGC, like Kreg, like Reliance, the tender requirements, the tender requires a time 46:34 46 minutes, 34 seconds limit or contract period of experience of a similar contract of maybe three to four years. Is that the right understanding or is that you need certain amount of experience? 46:44 46 minutes, 44 seconds Correct. That is correct. or you need a partner who will provide that experience. If you're completely new, you need a partner who will tie up with you to give you that experience. 46:52 46 minutes, 52 seconds But you know even on the jackup rigs right you know if you're tendering into the OMGC contract or even if you're tendering into some other place in the 46:59 46 minutes, 59 seconds world it's not as simple because you know so what happens is those rigs have to sit on the seat and there are a lot 47:06 47 minutes, 6 seconds of additional equipment you know the the design of the rig etc etc those adjustments need to be made. They can happen but they happen at a cost and a 47:15 47 minutes, 15 seconds time. So there is certain barriers you know to moving and therefore someone who's already in that region could be slightly more competitive than a new person who wants to enter and if you go 47:23 47 minutes, 23 seconds to countries like Malaysia, Kuwait or these other countries then they have local partner rules. So you have to look at those also aspects. Nothing is 47:31 47 minutes, 31 seconds impossible but they all come up with its own risk its own cost. Got it. Perfect sir. This helps me out a lot. Uh thank you. 47:40 47 minutes, 40 seconds Okay. Thank you. Thank you. 47:43 47 minutes, 43 seconds We'll take some text questions. There's a question from Hersh C, an individual investor. What's the spot versus time charter breakup for shipping segments? 47:53 47 minutes, 53 seconds What were segment wise DCE and how do they compare to average bench segment earnings during the quarter? Basis last 48:02 48 minutes, 2 seconds quarter's call understand short-term contract for one rate was ending in Q4 FI26. Has a new contract been arranged for C? 48:12 48 minutes, 12 seconds The typically on the shipping segments we have about uh between 15 and 20% of 48:21 48 minutes, 21 seconds the capacity on time charter. This is a normal situation. Uh in each of the 48:28 48 minutes, 28 seconds sectors which is products uh and drybulk in crude we are 100% on spot currently. 48:36 48 minutes, 36 seconds In LPG we are 100% in the last quarter we were 100% on time charter. The 48:42 48 minutes, 42 seconds segment wise TCS compare uh well with the benchmarks. Uh we are we are in line 48:50 48 minutes, 50 seconds with what most of our peers in international markets are earning because these are pretty transparent markets. uh sometimes you get the 48:59 48 minutes, 59 seconds advantage of good timing uh and sometimes you're unlucky but we are more or less in line with uh the 49:06 49 minutes, 6 seconds international peers and uh yes uh the short-term contract of the great Chetna 49:13 49 minutes, 13 seconds is to uh is scheduled to get over in end February. Uh we are in discussions with customers and potential customers on the 49:22 49 minutes, 22 seconds next contract and uh but we have not yet tied up anything yet. So hopefully we will tie up something on that soon. 49:31 49 minutes, 31 seconds Thank you. 49:33 49 minutes, 33 seconds Next question is from Amit Ketan from Labour Capital. The question is the strength in the crude tanker markets is 49:40 49 minutes, 40 seconds not yet reflected in the product tanker markets going by our realized rates. If the crude segment continues to be strong, will there be increased 49:49 49 minutes, 49 seconds switching of vessels from product to crude thereby tightening the market for the former? 49:56 49 minutes, 56 seconds Yes. Uh the answer is yes. There will be increased switching. We have already seen switching in LR2s 50:04 50 minutes, 4 seconds uh which are the most common uh vessels to move between crude and product trade. 50:12 50 minutes, 12 seconds So there's been a significant amount of switching from LR2s to Afroax trade uh which has now pushed up the LR2 rates as 50:20 50 minutes, 20 seconds well because then the LR2 market has tightened. the MRS don't switch so much. 50:25 50 minutes, 25 seconds Therefore, they have not uh that impact has not yet come on the MR tankers. But on the LR2, certainly the impact has come after the switching has happened. 50:37 50 minutes, 37 seconds Thank you. The next text question is from Rajumar Vanapan from RK Invest. The question is to Mr. Rahul. As the 50:46 50 minutes, 46 seconds financial year 2526 comes to an end, what are the areas which has actually done ahead of your expectations? What 50:54 50 minutes, 54 seconds are the areas strategies that have gone behind or below your expectations? What are the plans regarding foraying into container segment? 51:03 51 minutes, 3 seconds Okay, for FI26 clearly the outperformance has been in the crude sector. Um, you know, LPG has also surprised us to the upside, but we've 51:11 51 minutes, 11 seconds been fixed on contracts. Uh the charter rates that we fixed out have been very good. Um but the spot market continues 51:19 51 minutes, 19 seconds to remain strong. Uh dry bulk on the other hand you know um in the last quarter has been uh much stronger. We've 51:27 51 minutes, 27 seconds been in the spot market. So we've been able to take advantage of that. Some of the data points at least as of you know the beginning of the year were pointing 51:35 51 minutes, 35 seconds to a slightly weaker market. uh but the market has u uh remained quite strong across the board for the capes and the 51:43 51 minutes, 43 seconds subcapes. uh on the container space. Um so as of now we have no plans. Uh the 51:50 51 minutes, 50 seconds container markets um we can just share one interesting point um which we have not actually seen for um a long period 51:59 51 minutes, 59 seconds of time is that the freight box rates and that's the rate. So you know in the container business is slightly different uh from the traditional shipping 52:08 52 minutes, 8 seconds businesses that we are in where you've got liners you know you've got the companies like MSE MK etc. And then you've got potential players like us. We 52:16 52 minutes, 16 seconds are called tanish providers. We give our ships to people like MSE and Musk and Musk. MSSE sell the box rates to you 52:24 52 minutes, 24 seconds know companies like Amazon etc that want to move goods all across the world. So we have seen those box rates come down substantially over the last year and the 52:32 52 minutes, 32 seconds year before that. uh but we have seen that the rates that they're willing to pay the tonnage providers staying 52:38 52 minutes, 38 seconds unusually strong and that difference is probably at the highest differential we have seen over a long period of time. 52:47 52 minutes, 47 seconds Now whether the box rates will come up or whether the charter rates will come down again is anyone's guess. Uh the fleet supply on the container side is 52:55 52 minutes, 55 seconds very strong going forward. So maybe you know maybe uh that uh the tonnage rates come down and maybe the asset values of 53:02 53 minutes, 2 seconds the tonnage sectors come down uh but uh yes and yeah I think that's yeah okay 53:12 53 minutes, 12 seconds thank you we have a live question from Vikram Suryawanchi from Philip yeah sure 53:20 53 minutes, 20 seconds Mr. Mr. Suryani, please go ahead with your question. 53:26 53 minutes, 26 seconds Vicram, Vicram, can you please unmute your line? 53:30 53 minutes, 30 seconds Uh, okay. Sorry, there are some technical issues. So, I think uh I'm not sure whether you have answered it because my internet was on and off. So 53:38 53 minutes, 38 seconds particularly on offshore support vessel we have seen good improvement and utilization of MP SSV is uh now I think 53:47 53 minutes, 47 seconds is fully is that like a long-term contract we have got and how is the outlook on this I think uh vessel option vessel side if you can give outlook 53:55 53 minutes, 55 seconds yeah so the MPSS fees are both fixed on short-term contracts these are 6 to9 month contracts uh so they've got that 54:03 54 minutes, 3 seconds employment uh the outlook so Rahul mentioned earlier the uh rates have gone 54:10 54 minutes, 10 seconds up significantly from where they were say 3 years ago and they continue to stay at those levels. They are pretty 54:17 54 minutes, 17 seconds profitable. Uh again this is not like a homogeneous market where you can say this is the rate for a midsize PSV. It 54:25 54 minutes, 25 seconds depends on the kind of business uh which you're doing and the specific requirements of that job. So the same 54:33 54 minutes, 33 seconds vessel in two different businesses could earn as much as $3,000 a day more in earnings. But the market continues to be 54:41 54 minutes, 41 seconds strong uh and it continues to provide good profitability. 54:49 54 minutes, 49 seconds Got it. And how would be the renewals in gas segment coming up? 54:54 54 minutes, 54 seconds U so we have uh one vessel. So uh we have contracted to sell the Jug Vishnu. 55:01 55 minutes, 1 second Uh she's so she's come off a contract. 55:04 55 minutes, 4 seconds She's operating on currently she's doing a spot voyage and we'll deliver her in the next uh month or two to the buyers. 55:14 55 minutes, 14 seconds We have purchased uh a modern LPG ship which has come with a contract attached which goes till about a year from now. 55:24 55 minutes, 24 seconds We have two vessels the Vasant and Virat which come off contract within the next 6 months. We will see at that time whether we want to put them on time 55:32 55 minutes, 32 seconds charters or whether we want to run them on the spot market. 55:36 55 minutes, 36 seconds So we haven't had any recent pricings if that's what you're asking. Got it sir. Thank you very much. 55:44 55 minutes, 44 seconds Thank you V. 55:45 55 minutes, 45 seconds Thank you. We have a follow-up question from Rahul Dasani from MAPL. Please go ahead. 55:52 55 minutes, 52 seconds Yeah. Uh sir considering the shortage that we are the supply demand gap that we are seeing in the offshore segment 56:00 56 minutes are we looking to aggressively expand in this segment or do you think that in the current market situation it's not a good 56:06 56 minutes, 6 seconds strategy to add offshore vessels offshore vessels you know we will look at ships to buy it does not necessarily 56:15 56 minutes, 15 seconds mean we may go ahead with it because in the offshore space you have to be a bit careful of the type of ship you know one of the concerns like I mentioned that 56:24 56 minutes, 24 seconds not many ships have really come and delivered between 2016 and today. So uh you know by definition you're going to 56:31 56 minutes, 31 seconds buy a 10-year-old ship. Now offshore vessels have also an age limit all across the world. uh you know in certain 56:39 56 minutes, 39 seconds places 15 years in certain places 21 years mainly because you know they do very you know there may be smaller ships than mainline shipping but they've got 56:47 56 minutes, 47 seconds more equipment on board because the kind of activities they perform are far more complex and because of those complex activities and you know in the sensitive 56:55 56 minutes, 55 seconds areas in which they operate you cannot have any issues going wrong because you know the impact of that you know from a safety angle from a fire angle from a 57:04 57 minutes, 4 seconds damage angle is very very high. So when we're looking at ships and like I told you you know the liquidity is not very high in this space. So if we do look for 57:12 57 minutes, 12 seconds ships it not you know it has to be the correct price it has to be the correct age it has to be the correct specification and it has to also be in 57:21 57 minutes, 21 seconds the correct region because let's say someone is selling a ship in a region where the demand may be a bit lower and I have to pay a lot of money to move it 57:29 57 minutes, 29 seconds all the way to an area where the demand is better that also adds up a lot to the costs you know and in this business is not necess you know you know in mainline 57:37 57 minutes, 37 seconds shipping ships are naturally moving from one place to the other they're actually moving all across the world in this business in offshore it it is much less 57:44 57 minutes, 44 seconds so and so you need a lot of tick boxes to happen but if you do see the opportunity you know of course you know 57:51 57 minutes, 51 seconds we may uh look to buy a ship or two but a lot has to be you know signed off makes sense and just one last question 57:59 57 minutes, 59 seconds from my side I'm I'm a bit new to this industry but I know that the the last cycle peaked out in 2015 16 uh so if I 58:06 58 minutes, 6 seconds were to compare that cycle to our current cycle where again the rates have spiked And I know the rates the charter rates as of date are not close to what 58:14 58 minutes, 14 seconds they were in 20145 but uh what led to that drop post 2015 was it new ship building or what was 58:22 58 minutes, 22 seconds that reason and how is the current timeline different to that if at all it is. So in 2040 you know offshore vessels 58:30 58 minutes, 30 seconds are not too far off from those levels but on the rigs there is a bigger gap um 58:38 58 minutes, 38 seconds compared to that you know in those days the rig rig rates were substantially higher uh but you know what exactly happened was that you know from you know 58:48 58 minutes, 48 seconds just to give you a bit of history right um you know all the oil originally was onshore and then over the years onshore 58:56 58 minutes, 56 seconds oil started started plateauing and so everyone moved offshore and that's why we saw in the beginning of 2000s you 59:04 59 minutes, 4 seconds know actually late 90s 2000s a lot of activity started building up for the offshore space because all the incremental oil to meet the incremental 59:12 59 minutes, 12 seconds demand had to come from the offshore fields but then there was another development which was shale oil and shale oil got produced in America there 59:20 59 minutes, 20 seconds was zero barrels broadly zero barrels of oil being produced in America in 2000 and by 2004 14 there was 8 million 59:28 59 minutes, 28 seconds barrels of oil being produced from those shale regions. Now like I mentioned earlier Saudi Aramco produces 10 million barrels. So this was like a full Saudi Arabia coming up all from onshore oil. 59:39 59 minutes, 39 seconds So because they had so much more oil the break evens were lower. It was easier to produce right. A large part of the incremental 59:47 59 minutes, 47 seconds demand from 2014 till now came from onshore shale oil. And now what we are seeing is that a lot of shale oil is 59:54 59 minutes, 54 seconds peeking out. And there was a theory that all the shade oil can come up in other countries you know like UK which was a failure, China which was largely a failure, Argentina is largely a failure. 1:00:05 1 hour, 5 seconds We are seeing some barrels coming from Argentina but it's like 100 200,000 barrels you know nothing major but over the last 10 years they've not been able 1:00:12 1 hour, 12 seconds to produce that on oil. So people have started realizing that you need now you know meaning oil demand then there was again a worry that you know oil demand 1:00:19 1 hour, 19 seconds will peak which has clearly not happened and we don't see that happening in the foreseeable future and so therefore to meet this gap you need oil again and 1:00:27 1 hour, 27 seconds that oil is again coming back to offshore got your question you have one more 1:00:35 1 hour, 35 seconds yeah so are we worried uh a very broad question but are we worried about the cycle fizzling out in the next two three years or this is a much more stable 1:00:44 1 hour, 44 seconds place that we believe we are in right now. 1:00:47 1 hour, 47 seconds And you know difficult to say you know the the way in 2014 the Saudi Aramco changed its view you know happened overnight you know so these kind of 1:00:56 1 hour, 56 seconds events do tend to happen businesses dependent on you know a few major players in the world and how they look at demand but at least on the offshore 1:01:04 1 hour, 1 minute, 4 seconds vessel front I can tell you in FI27 we are largely fixed out at these rates you know at about 80% is our coverage and 1:01:11 1 hour, 1 minute, 11 seconds most of our rigs also are covered for FI28. 1:01:15 1 hour, 1 minute, 15 seconds Fair enough. Got it. That would be all for the coverage is not as high as offshure vessels but we've got decent cover. 1:01:21 1 hour, 1 minute, 21 seconds Got it. Thank you very much sir. Thank you. 1:01:25 1 hour, 1 minute, 25 seconds Thank you. We have a text question from Rajakumar Vanad from RK Invest. With the recent developments in Venezuela, do you 1:01:33 1 hour, 1 minute, 33 seconds see any upside for the rich market due to increased deployment or demand? 1:01:39 1 hour, 1 minute, 39 seconds This will take very long to assess. uh you know we don't know the condition of you know this Venezuela used to produce 1:01:46 1 hour, 1 minute, 46 seconds three and a half million barrels they're now producing like under a million barrels you know all those wells what conditions they are in whether they're investable or not Exxon actually made a 1:01:55 1 hour, 1 minute, 55 seconds statement saying that a lot of those fields aren't investable because when you leave those kind of fields for long periods of time without taking care of 1:02:02 1 hour, 2 minutes, 2 seconds them uh you know there is a change of the the geology below uh where you know you could have more gas and therefore it 1:02:10 1 hour, 2 minutes, 10 seconds is more difficult to extract act uh the oil out and so you know you know frankly this you know people have to go in the 1:02:17 1 hour, 2 minutes, 17 seconds country assess it uh then see whether it's viable and then only if they feel like it's viable then only will they 1:02:24 1 hour, 2 minutes, 24 seconds start asking for rigs so this could be a very long time away thank you there's one more text question 1:02:32 1 hour, 2 minutes, 32 seconds from hers C an individual investor with increased geopolitical uncertainties does the management plan to move from 1:02:40 1 hour, 2 minutes, 40 seconds current 100% Indian flag feed to a mixture of Indian plus other flags. Same for largely Korean Japanese mil vessels 1:02:49 1 hour, 2 minutes, 49 seconds to more Chinese build in the tanker segment. 1:02:52 1 hour, 2 minutes, 52 seconds This uh actually it has nothing to do with geopolitical uncertainties. Uh sometimes for operational reasons uh we 1:03:00 1 hour, 3 minutes have flown different flags. Our base fleet will continue to be Indian flag. 1:03:06 1 hour, 3 minutes, 6 seconds So for operational reasons, we may do other flags for a small part of our fleet. Uh when it comes to where the 1:03:14 1 hour, 3 minutes, 14 seconds ships are built, if it's a good quality ship built in a good quality yard, we 1:03:21 1 hour, 3 minutes, 21 seconds have uh no uh preference specifically for any country or uh of country of 1:03:30 1 hour, 3 minutes, 30 seconds build of the ship. So what we're looking for is good quality ships at good quality prices. 1:03:36 1 hour, 3 minutes, 36 seconds U and we don't think of all of these other uh factors really. 1:03:42 1 hour, 3 minutes, 42 seconds Thank you. We have a live question from Shrek Scatani from SG Securities. Please go ahead. 1:03:52 1 hour, 3 minutes, 52 seconds Hi uh good afternoon. So I had a question on uh how just trying to understand how you uh take a decision 1:04:00 1 hour, 4 minutes between going uh you know on time chatter or doing a spot uh you know com 1:04:07 1 hour, 4 minutes, 7 seconds uh rate on on a ship and what like do you like is there a threshold irr 1:04:14 1 hour, 4 minutes, 14 seconds charter or just trying to understand the strategy. 1:04:19 1 hour, 4 minutes, 19 seconds Um you know honestly it's um it's quite complex from our historical understanding we have seen that you know you are better off in the 1:04:28 1 hour, 4 minutes, 28 seconds spot market than the time charter market because you know what tends to happen is you know let's just take so maxes right uh you know you could fix out a vessel 1:04:36 1 hour, 4 minutes, 36 seconds at $40,000 per day and then the market does $60,000 even for a quarter and it affects your break evens for the charter rate for the entire period and now you 1:04:45 1 hour, 4 minutes, 45 seconds know uh in a market you know it's like the stock market right you don't know what the price is going to be tomorrow. 1:04:50 1 hour, 4 minutes, 50 seconds You can take a view over a period of time but you know on day-to-day fluctuations you know prices can be up 10% down 10%. It's difficult to say but 1:04:58 1 hour, 4 minutes, 58 seconds historically it says that you're better off being spot and that's what that's the strategy we largely keep in mind from a risk management perspective and 1:05:06 1 hour, 5 minutes, 6 seconds you know a bit of it is based on our own analysis market view etc. We do take time chartered decisions but we keep it on the margin. Uh and as a business 1:05:15 1 hour, 5 minutes, 15 seconds overall you know you can be um you know you can take more time chatter fixtures and be more financially leveraged or you can be more spot market you know and 1:05:23 1 hour, 5 minutes, 23 seconds then take the volatility of the freight rates and be financially uh take you know be more conservative on the financial leverage and that's the option we tend to prefer. 1:05:34 1 hour, 5 minutes, 34 seconds Got it. So, so I'm asking because you know as this cycle you know as maybe you know it's coming to a very long period 1:05:43 1 hour, 5 minutes, 43 seconds of you know a super cycle kind of a maybe not not as big but if there's certain prices that you know we can just 1:05:51 1 hour, 5 minutes, 51 seconds lock in at good rates uh is that something that you look at or no? We do look at it but remember you know if 1:05:58 1 hour, 5 minutes, 58 seconds let's say the spot market on s maxes could do 60 or $70,000 and you're fixing for a year you have to take a much lower rate uh to get that so the you know the 1:06:08 1 hour, 6 minutes, 8 seconds cover that you're getting is not coming uh free of risk right so it may look good on paper that I've taken a cover for a year but I've given up a lot of 1:06:16 1 hour, 6 minutes, 16 seconds upfront earnings and the longer I go the more steeper backquidation I need to take so sometimes it's actually better to take the cover earn the earnings up 1:06:24 1 hour, 6 minutes, 24 seconds front and take the volatility of the market when it comes. 1:06:28 1 hour, 6 minutes, 28 seconds Got it. Got it. That's helpful. Thank you so much. That's all from my end. Yeah. 1:06:33 1 hour, 6 minutes, 33 seconds Thank you. We'll take a follow-up question from Rahim Masani from L. Please go ahead. Yeah. Thanks for the opportunity again. 1:06:42 1 hour, 6 minutes, 42 seconds I really hope this is my last question. 1:06:44 1 hour, 6 minutes, 44 seconds Uh yeah, I just wanted to get some understanding on the stimulation vessel. 1:06:49 1 hour, 6 minutes, 49 seconds As of last year, the demand of these sort of vessels were very high. And what the customers of these vessels have been 1:06:56 1 hour, 6 minutes, 56 seconds doing is they are procuring PSVs and OSVs and upgrading them to the stimulation vessels. So uh how are we 1:07:05 1 hour, 7 minutes, 5 seconds looking at this market? Because I believe India as of late has only five of these and two are not in a functioning state if I can say that. So 1:07:13 1 hour, 7 minutes, 13 seconds are we trying to focus on this segment because I believe the charter rates here are very healthy and so is the demand. 1:07:20 1 hour, 7 minutes, 20 seconds So we have got two vessels that are doing well stimulation work. But you to remember you know the well stimulation like you know like I said the offshore market is very different from uh 1:07:28 1 hour, 7 minutes, 28 seconds shipping uh because these vessels are very specific you know you have to get into negotiation with companies like Schlumbumber Schlumbumber Alibbertton 1:07:36 1 hour, 7 minutes, 36 seconds and those kind of companies then they work on a project you know sometimes the equipment for these well stimulations that they put on the ship the equipment is theirs it's not ours but the 1:07:45 1 hour, 7 minutes, 45 seconds equipment can cost more than the value of the ship you know and you know it takes like months uh for them to install it you know where your ship is being paid and they are not earning on that. 1:07:55 1 hour, 7 minutes, 55 seconds So you know they have to have the project then they will talk to players like us or others you know who they you know value to be partners with and uh 1:08:04 1 hour, 8 minutes, 4 seconds you know and then those projects come to fruition. It's not as simple to say okay you know there are two ships less so the demand is not being met therefore we have to get them. 1:08:12 1 hour, 8 minutes, 12 seconds So we have these projects we have been operating uh one of our vessels as a well stimulation vessel for the last 10 1:08:18 1 hour, 8 minutes, 18 seconds years plus. So we've been in this market for quite some time. 1:08:22 1 hour, 8 minutes, 22 seconds Another vessel went into this business last year. So we are very much there when and because we are talking with uh 1:08:31 1 hour, 8 minutes, 31 seconds these you know highquality customers all the time. Uh and of course uh they are happy to deal with us as a highquality 1:08:40 1 hour, 8 minutes, 40 seconds service provider as well. When these opportunities come up they are speaking with us as well. 1:08:45 1 hour, 8 minutes, 45 seconds All yeah got it. Yeah, that's helpful. And sir, like you said in the earlier response 1:08:52 1 hour, 8 minutes, 52 seconds that uh vessels with the age of more than 15 years are being less preferred due to several reasons and based on our 1:09:01 1 hour, 9 minutes, 1 second fleet age that we have shared in the presentation. Uh I guess our the anchor holding uh tugs as well as 1:09:11 1 hour, 9 minutes, 11 seconds the PSVs as well as the MPVS are aged north of 15 years. So how is it affecting our ability to win contract 1:09:19 1 hour, 9 minutes, 19 seconds from the likes of O and GCK Reliance etc or is it not as much of an issue for us? 1:09:26 1 hour, 9 minutes, 26 seconds As of now it's not an issue we are able to uh we've seen it from the earnings we've been able to suitably employ them. 1:09:32 1 hour, 9 minutes, 32 seconds Charters will also take a view given that the market is uh aging right it's not like only we are aging and 1:09:40 1 hour, 9 minutes, 40 seconds everyone else is not. that was the case then okay fine there could be a problem but you know considering the whole industry is aging together right and we 1:09:48 1 hour, 9 minutes, 48 seconds have very good relationships with all you know of course government but even some of the international private charters who can take any owner we have 1:09:56 1 hour, 9 minutes, 56 seconds very good relationships with them even if our vessels are slightly on the older side got it so I guess it's more of an uh 1:10:04 1 hour, 10 minutes, 4 seconds supply issue and the preference would of course be more towards the younger vessels if at all they are available that's Right. Got it. And on an average 1:10:13 1 hour, 10 minutes, 13 seconds considering the age of your offshore fleet, what's the optimum utilization you can achieve of the 365 days in an year? How many days does our fleet 1:10:21 1 hour, 10 minutes, 21 seconds operate? And does it need more repairing or uh more docking time or how does that the amount of extra repair time that it requires to a new ship is on the margin. 1:10:31 1 hour, 10 minutes, 31 seconds We keep our ships uh very well maintained and you know we spend a lot of time and effort to make sure that we limit the downtime and uh you know 1:10:38 1 hour, 10 minutes, 38 seconds whenever the statutory surveys are taken undertaken from a older newer ship there's very marginal difference in time but we do spend a lot of money to ensure 1:10:47 1 hour, 10 minutes, 47 seconds they kept in good nick so that you know during the period where they're operating we have very very limited downtime. 1:10:54 1 hour, 10 minutes, 54 seconds Got it. Got it. Yeah that's a final last question for me. Thank you. 1:10:58 1 hour, 10 minutes, 58 seconds Thank you. Thank you. Thank you. Thank you. We have a text question from VIM. 1:11:05 1 hour, 11 minutes, 5 seconds Significant free cash flow has been generated since your last share buyback. 1:11:10 1 hour, 11 minutes, 10 seconds Why did you choose to issue dividends rather than create additional value for shareholders by more pursuing aggressive buybacks? This especially when buyback 1:11:19 1 hour, 11 minutes, 19 seconds price could have been easily been paid below the NAP. 1:11:24 1 hour, 11 minutes, 24 seconds Yeah. So we have chosen dividends because this is something that goes to every shareholder. Uh buybacks go to the shareholders who tender in the buyback. 1:11:35 1 hour, 11 minutes, 35 seconds We've also had this issue in the last uh few years where the tax treatment of the 1:11:42 1 hour, 11 minutes, 42 seconds buyback has made it uh uh somewhat unviable 1:11:48 1 hour, 11 minutes, 48 seconds uh as as an option. So uh it is something that is there in our minds at 1:11:55 1 hour, 11 minutes, 55 seconds an appropriate price. Uh just as we would like to buy ships at an appropriate price, we look at buybacks 1:12:03 1 hour, 12 minutes, 3 seconds as a replacement for the capital allocation decision. Uh if we can buy 1:12:10 1 hour, 12 minutes, 10 seconds the stock with the underlying ships at a certain price, then that is how we compare uh compare buybacks themselves. 1:12:19 1 hour, 12 minutes, 19 seconds So it is not a way for uh uh for returning cash. If you had to return cash to shareholders, it is by way of dividend. 1:12:30 1 hour, 12 minutes, 30 seconds Thank you. 1:12:31 1 hour, 12 minutes, 31 seconds As there are no further questions, I now hand the conference over to Mr. Shiva Kumar for closing comments. Over to you, sir. 1:12:37 1 hour, 12 minutes, 37 seconds Uh thank you everyone. Uh that was an interesting session. As always, uh the transcript will be up uh in a couple of 1:12:46 1 hour, 12 minutes, 46 seconds days time. We will also be posting the recording of this call. Uh our uh investor relations uh and corporate 1:12:56 1 hour, 12 minutes, 56 seconds communication contacts are in our presentation. Please reach out if you want to meet to discuss anything further. Thank you very much. 1:13:06 1 hour, 13 minutes, 6 seconds Thank you sir. On behalf of the Great Eastern Shipping Company that concludes this conference. Thank you for joining us. Animina exit.