The Great Eastern Shipping Co. Ltd. Business & Financial Review August 2015 1
Forward Looking Statements Except for historical information, the statements made in this presentation constitute forward looking statements. These include statements regarding the intent, belief or current expectations of GE Shipping and its management regarding the Company s operations, strategic directions, prospects and future results which in turn involve certain risks and uncertainties. Certain factors may cause actual results to differ materially from those contained in the forward looking statements; including changes in freight rates; global economic and business conditions; effects of competition and technological developments; changes in laws and regulations; difficulties in achieving cost savings; currency, fuel price and interest rate fluctuations etc. The Company assumes no responsibility with regard to publicly amending, modifying or revising the statements based on any subsequent developments, information or events that may occur. 2
Corporate Profile The Great Eastern Shipping Co. Ltd. Incorporated in 1948 Shipping Business Offshore Business Wet bulk Through subsidiary Greatship (India) Limited Crude Tankers Product Tankers - Logistics - Drilling Dry bulk 3
Company at a glance India s largest private sector Shipping Company Diverse asset base with global operations Completed 67 years of operations Over 30 years of uninterrupted dividend track record Shareholding Pattern as on June 30, 2015 Public 21% Bodies Corporate 6% Govt/FI 19% Promoters 30% FIIs 24% 4
Shipping business-owned fleet 30 ships aggregating 2.4 Mn dwt, avg. age 9.6 years 21 Tankers avg.age 11.0 years - 8 Crude carriers (4 Suezmax, 4 Aframax) avg. age 12.2 years - 12 Product tankers (4 LR1, 8 MR) avg. age 8.4 years - 1 Very Large Gas Carrier avg. age 21.0 years 9 Dry bulk carriers avg. age 5.5 years - 4 Kamsarmax - avg. age 3.0 years - 5 Supramax - avg. age 8.4 years 5
Shipping business- CAPEX plan Vessels on Order Vessel Total committed Yard CAPEX: ~ USD 180 mn Expected ADD YR Delivery 1 Medium Range Product WISE TankerCAPEX STX Group BRK UP) Q4 FY16 1 Kamsarmax Dry Bulk Carrier* Tsuneishi Heavy Industries (Cebu) Inc 3 Kamsarmax Dry Bulk Carriers Jiangsu New Yangzi Shipbuilding Co. Ltd, China August/September 2015 (Already contracted for sale upon delivery) H1 FY17 Committed Capex* $ 150 million Paid till 2014-15 $25 mn Paid YTD 2015-16 $7.4 mn (To be paid) 2015-16 $65 mn (To be paid) 2016-17 $53 mn * Includes Jag Aakash which has been committed for sale to buyers upon its delivery to us in August/September 2015 6
Asset Price Movement (5 yr old)- Tankers Timeline- Jan 2001 till July 2015 Amt in US$ mn USD mn VLCC Suezmax MR 180 160 140 120 100 80 60 40 20 0 Source: Clarkson 7 2001-01 2001-07 2002-01 2002-07 2003-01 2003-07 2004-01 2004-07 2005-01 2005-07 2006-01 2006-07 2007-01 2007-07 2008-01 2008-07 2009-01 2009-07 2010-01 2010-07 2011-01 2011-07 2012-01 2012-07 2013-01 2013-07 2014-01 2014-07 2015-01 2015-07
Asset Price Movement (5 yr old) Dry Bulk Timeline- Jan 2001 till July 2015 Amt in US$ mn USD mn Capesize Panamax Supramax 180 160 140 120 100 80 60 40 20 - Source: Clarkson 8 2001-01 2001-07 2002-01 2002-07 2003-01 2003-07 2004-01 2004-07 2005-01 2005-07 2006-01 2006-07 2007-01 2007-07 2008-01 2008-07 2009-01 2009-07 2010-01 2010-07 2011-01 2011-07 2012-01 2012-07 2013-01 2013-07 2014-01 2014-07 2015-01 2015-07
Asset Price Movement Long-term year High /Low: (5 year old assets) (Amt in $mn) High Low Current Tankers VLCC Suezmax MR Capesize Panamax Supramax 165 49 (2008) (1994) 84 105 32 (2008) (1993) 61 46 20 (2007) (1999) 28 Dry Bulk 155 25 (2008) (1999) 35 92 14 (2007) (1999) 18 75 13 (2007) (1998) 15 Source: Clarkson 9
BDTI & BCTI Movement (Jan 2012 to July 2015) 1,200 1,100 1,000 900 800 700 600 500 Jan-12 Mar-12 May-12 Jul-12 Sep-12 Nov-12 Jan-13 Mar-13 May-13 Jul-13 Sep-13 Nov-13 Jan-14 Mar-14 May-14 Jul-14 Sep-14 Nov-14 Jan-15 Mar-15 May-15 Jul-15 Crude tankers freight rates have risen significantly Low oil prices & contango Contributing to Strategic storage & Commercial storage respectively Strong refinery margins Increase in crude processed Rise in end-user demand, especially for Gasoline in several countries Atlantic crude oil surplus prompting long-haul exports from West Africa & Latin America Increase in OPEC crude production & exports Source: Baltic Exchange 10
Surplus oil led to lower oil prices; strong refinery margins leading to higher crude runs Oil demand, Supply & Surplus Global refinery throughput & growth 97 96 95 Demand (mbpd) Supply (mbpd) 79.0 78.0 Global Refinery Crude Runs (mbpd) Growth in Global Refinery throughput y-o-y (%) Growth in Oil demand y-o-y (%) 3% 3% 94 77.0 2% 93 92 91 76.0 75.0 74.0 2% 1% 90 73.0 1% 89 72.0 0% 88 87 2012 2013 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 71.0 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015-1% Source: Industry reports 11
Strong refinery margins Brent Rotterdam Cracking Refining Margin Arab Light Singapore Simple Refining Margin LLS USG Simple Refining Margin Source: Industry reports 12
Stock building has increased led by contango structure in the oil market China implied crude oil stockbuild (mbpd) 1200 OECD Crude Oil Stocks (m bbls) 1150 1100 1050 1000 950 900 Source: Industry reports 13 Jan-10 Mar-10 May-10 Jul-10 Sep-10 Nov-10 Jan-11 Mar-11 May-11 Jul-11 Sep-11 Nov-11 Jan-12 Mar-12 May-12 Jul-12 Sep-12 Nov-12 Jan-13 Mar-13 May-13 Jul-13 Sep-13 Nov-13 Jan-14 Mar-14 May-14 Jul-14 Sep-14 Nov-14 Jan-15 Mar-15 May-15
Ton-miles rise as surplus Atlantic barrels find home in Asia Indian import growth (tonne-mile & volumes) Other Asia import growth (tonne-mile & volume) China crude imports from Colombia China crude imports from Brazil Source: Industry reports, DNB Markets 14
Middle East refinery capacities get commissioned, Asia to account for bulk of future capacity additions Future refinery capacity additions Middle East (Crude Throughput) New refineries in Saudi Arabia (that came online in 2013-15) have already led to increase in products exports from the region Long-haul naphtha trade & high gasoline demand aiding rally in product tanker freight rates Source: Industry Reports 15
Overcapacity, potential refinery closures in the OECD region Actual and forecast refinery closures Source: Industry Reports 16
Growing Product trade Changing trade patterns Source: Industry Reports 17
12,000 10,000 8,000 6,000 4,000 2,000 BDI Movement (Jan 2001 to August 2015) 0 18 Nov-14 Apr-15 Nov-99 Apr-00 Sep-00 Feb-01 Jul-01 Dec-01 May-02 Oct-02 Mar-03 Aug-03 Jan-04 Jun-04 Nov-04 Apr-05 Sep-05 Feb-06 Jul-06 Dec-06 May-07 Oct-07 Mar-08 Aug-08 Jan-09 Jun-09 Nov-09 Apr-10 Sep-10 Feb-11 Jul-11 Dec-11 May-12 Oct-12 Mar-13 Aug-13 Jan-14 Jun-14 Source: Baltic Exchange China growth slowdown, pollution control, rising renewable power capacity impacting growth
Slow growth in steel consumption impacting demand for seaborne iron ore imports China crude steel production (mt) China iron ore imports (mt) 60 50 40 30 20 10 0 Australia India Brazil Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov Jan Mar May 2013 2014 2015 Substitution of other import sources by Australia leading to short-haul trade Source: Industry Reports 19
Focus on pollution control, rising hydropower generation Severe blow to coal trade China coal imports India coal imports China coal imports decline sharply. Indian coal imports holding up in the short term, however, country s domestic coal production is set to increase going forward Source: Industry Reports 20
World Fleet Growth 800 700 600 500 mn dwt Dry Bulk Crude Product World Fleet addition Fleet Aug 15 CY2015 CY2016 CY2017+ 400 300 200 (in mn dwt) Crude tankers 334 2% 8% 7% 100 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Product tankers 138 5% 8% 4% Dry bulk carriers 768 6% 8% 2% Dry Bulk fleet has grown sharply over the last few years o Increased scrapping, deferment of deliveries & conversion of orders to tankers have gained pace o However, weak demand could offset the positive impact of these measures Crude tankers Negligible fleet growth over the last few years contributed to increase in freight rates Source: Clarkson 21
Accelerated scrapping in Dry Bulk Scrapping as % of world fleet (year wise) Fleet as on Scrapping 1 st Jan 2015 H1 2015 Vessel Category CY2012 CY2013 (in mn dwt) (in mn dwt) 329 0.7 Crude 3% 2% 131 0.3 Product 2% 2% 756 20 Bulk 5% 3% Source: Clarkson 22
Greatship (India) Limited (a 100% subsidiary) Business Review August 2015 23
Offshore business- Fleet Profile The Greatship Group Current Owned Fleet 4 Jack Up Rigs (350ft) High Fleet Utilization 5 Platform Supply Vessels (PSV) Category Extent of coverage of fleet's operating days (per cent) 8 Anchor Handling Tug cum Supply Vessels (AHTSV) 2 Multipurpose Platform Supply and Support Vessels (MPSSV) 6 Platform / ROV Support Vessels (ROVSV) PSV 90 ROVSV 100 AHTSV 85 MPSSV 33 Jackup Rigs 97 24
Greatship s Modern & Technologically Advanced Fleet & High Utilization Young Fleet Young fleet with an average age of approx. 4 years by FY 2014-15 Demand shifting to modern vessels, especially as safety becomes a major concern for oil companies Revenue Efficiencies - Higher utilization rates - Minimum down time Technologically Advanced Specialized/technologically advanced vessels equipped with DP I/DP II (Dynamic Positioning) and FiFi I (Fire Fighting) technologies Equipped to operate in challenging environments Efficient and versatile vessels Cost Efficiencies - Lower Operating costs - Reduced maintenance capex & opex 25
Sharp decline in E&P spending led by lower oil prices E&P spending set to decline Oversupply of crude oil led to significant decline in E&P spending Stacking of rigs & renegotiations of rates on the rise, utilisations levels decline Deep & Ultra-deep water projects severely impacted Impact on shallow water offshore projects will be less severe due to lower break-even Source: Market Reports 26
Global Fleet Supply Offshore Fleet & Orderbook (Nos) Jackup Rigs AHTSVs PSV / Supply Current Fleet 489 1,959 1,392 Orderbook 127 204 307 % of O/B to current fleet 22% 10% 26% Orderbook is high Slippages on Asian yards could be high Cold stacking of vessels has increased Older vessels previously not in operation have now been officially declared as cold stacked Jack-up rigs Delays in deliveries could rise Source: Rigzone, Marinebase, Industry Reports 27
FINANCIAL HIGHLIGHTS Q1 FY 2015-16 28
Q1 FY 2015-16 Financial Highlights Standalone Key Figures Consolidated Q1 FY16 Q1 FY15 (Amount in Rs. crs) Q1 FY16 Q1 FY15 Income Statement 541.42 494.02 Revenue (including other income) 1026.87 906.05 287.98 218.44 EBITDA (including other income) 584.73 468.57 162.16 87.61 Net Profit 323.67 222.93 Balance Sheet 9496.54 9441.84 Total Assets 15782.08 14693.12 5091.54 4935.22 Equity 7809.97 7047.71 3050.16 3243.79 Total Debt (Gross) 6399.65 6149.32 98.05 224.09 Long Term Debt (Net of Cash) 2575.18 2452.73 Cash Flow 219.25 109.40 From operating activities 433.76 302.24 (616.97) 66.70 From investing activities (553.49) (154.59) (79.09) (112.07) From financing activities (300.20) (59.97) (476.81) 64.03 Net cash inflow/(outflow) (419.93) 87.68 29
Q1 FY 2015-16 Financial Highlights Standalone Key Figures Consolidated Q1 FY16 Q1 FY15 Q1 FY16 Q1 FY15 53.19% 44.22% EBITDA Margin (%) 56.94% 51.72% 12.94% 7.19% Return on Equity (ROE) (%) 16.99% 12.90% 10.23% 6.61% Return on Capital Employed (ROCE) (%) 11.17% 9.15% 0.60 0.66 Gross Debt/Equity Ratio (x) 0.82 0.87 0.02 0.05 Net Debt/Equity Ratio (x) 0.33 0.35 63.15 59.74 Exchange rate USD/INR, average (Rs) 63.15 59.74 63.65 60.18 Exchange rate USD/INR, end of period (Rs) 63.65 60.18 Share related figures 10.75 5.81 Earnings per share, EPS (Rs) 21.47 14.79 10.73 5.80 Diluted earnings per share (Rs) 21.42 14.76 15.83 10.63 Cash Profit per share (Rs) 32.17 24.24-4.00 Earnings per share, EPS (Rs) - 4.00 30
Q1 FY 2015-16 Performance Highlights Breakup of revenue days Revenue Days Q1 FY16 Q1 FY15 Owned Tonnage 2,574 2,602 Inchartered Tonnage 68 0 Total Revenue Days 2,642 2,602 Total Owned Tonnage (mn.dwt)* 2.36 2.37 * As on 30 th June Average TCY Details Average (TCY $ per day) Q1 FY16 Q1 FY15 % Chg Crude Carriers 32,485 16,477 97% Product Carriers (Incl. Gas) 22,402 15,554 44% Dry Bulk 7,423 12,878-42% Mix of Spot & Time Days (in %) Dry Bulk Q1 FY16 Q1 FY15 Spot % 74% 75% Time % 26% 25% Tankers Spot % 64% 43% Time % 36% 57% Total Spot % 66% 52% Time % 34% 48% 31
Book Value & Net Asset Value (NAV) comparison Last 4 quarters Consol. Book Value (Rs. Per share) Consol. NAV (Rs. Per share) June 2015 518 536 March 2015 493 518 December 2014 496 557 September 2014 480 558 32
THANK YOU visit us at www.greatship.com 33