While the shipping assets of the company have seen a 9% drop in the fleet value, the cash balance rose to Rs. 3,710 crores from Rs. 3,459 croresGreat Eastern Shipping Company Ltd will hold to its accumulated cash and wait for an opportune time to deploy it, Mr. G. Shivakumar, Chief Financial Officer of the company, told analysts.
“Just because we are sitting on a big pile of cash during the past couple of years, we won’t be doing any hasty acquisitions. Depending on the market conditions, we will plan our next round of acquisitions. So we will be holding on the cash and be wise enough to deploy it when the time is right,” he stated.
As on Sept. 30, the company had cash and bank balance of Rs. 3,710 crores in its books. While the shipping assets of the company have seen a 9% drop in the fleet value, the cash balance rose to Rs. 3,710 crores from Rs. 3,459 crores over the six-month period ending Sept. 30.
The book value of the company’s asset was Rs. 9,220 crores as on Sept. 30.
Mr. Shivakumar pointed out: “Large part of the value of cash is higher than the market value of the fleet. The value of dollar assets is more or less matched with the value of the dollar liabilities. In offshore, the value of the dollar asset, which is the fleet, is much higher than the value of the dollar liabilities.”
Antique Stock Broking Ltd believes that GE Shipping would be the strongest player in the weak and volatile market in shipping due to its strong balance sheet with cash balance to capitalize on fall in asset prices.
Speaking about the outlook, he observed that there has been 10-15% rise in earnings in July-September, but more than that it is utilization which has improved. The company believes that the charter rates will remain healthy going forward.
On scrapping, Mr. Shivakumar noted that it has picked up in a very large way especially in the dry bulk segment.
“We have already seen around 28 million DWT getting scrapped in this segment. But with huge new building deliveries expected to hit the market in next two years, the scrapping number requires to accelerate from here to have demand supply equilibrium,” he remarked.
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