Q2 FY08-09 total income at Rs. 18,025 lakhs up by 6.25%
H1 FY08-09 total income at Rs. 41,330 lakhs up by 20%
Great Offshore Ltd. at its Board meeting today approved the standalone - unaudited financial results (provisional) for the second quarter and half year ended on September 30, 2008.
Financial Performance (standalone) unaudited during Q2 FY08-09
- Income from Operations Rs.15,934 lakhs (corresponding Q2FY 2007-08 - Rs. 15,233 lakhs)
Financial Performance (standalone) unaudited during H1 FY08-09
- EBIDTA of Rs.6,855 lakhs (corresponding Q2FY 2007-08 - Rs.8,957 lakhs)
- Income from Operations Rs.36,202 lakhs (corresponding H1FY 2007-08- Rs. 29,734 lakhs)
Hedge Accounting Policy as per principles set out in AS 30 - Financial Instruments: Recognition and Measurement
- EBIDTA of Rs.18,319 lakhs (corresponding H1FY 2007-08- Rs.18,255 lakhs)
The Company has borrowings and revenue streams in foreign currency, which provides an inherent hedge against exchange rates fluctuations. Accordingly, the Company has decided to change its accounting policy with regard to recognition of exchange differences arising on translation of foreign currency borrowings by following an appropriate Hedge Accounting Policy and applying the principles set out in AS-30 Financial Instruments: Recognition and Measurement.
The objective of adopting hedge accounting is to ensure that the gain or loss on the hedging instrument is recognized in the statement of profit and loss in the same period when the hedged item affects profit or loss.
The Company has w.e.f. 1st April 2008 designated borrowings in foreign currency as hedge instrument to hedge its foreign currency risks of its firm commitments and highly probable forecast transactions (of revenue streams) to be accounted as cash flow hedge.
During the current quarter, the net unrealized exchange difference on foreign currency borrowings aggregating to Rs.7,319 lakhs has been recognized directly in Hedge Reserve. As a result, the charge on account of exchange difference for the current quarter is lower by Rs.7,319 lakhs.
The cumulative half yearly results have accordingly been restated, with the result exchange difference of Rs.5,315 lakhs relating to the first quarter has been written back and added to Hedge Reserve.
Financials unaudited (Consolidated) for quarter ended September 30, 2008
For the quarter ended September 30, 2008, consolidating the wholly owned subsidiaries, Deepwater Services (India) Ltd. (which has inchartered “Badrinath”), and Great Offshore (International) Ltd. (which acquired a modern high end AHTSV during August 2008) the company registered a profit after tax of around Rs. 2,862 lakhs on a total income of around Rs. 22,051 lakhs.
During Q2FY 2008-09, while the drilling rigs and the harbour tugs were fully utilised (utilisation for the corresponding quarter was 61% and 91% respectively), the offshore support vessels were utilised to the extent of around 81% as against 85 % during Q2 FY 2007-08. The marine construction barge underwent special survey including dry dock. The said two Platform Supply Vessels and the Multi Support Vessel were non operational for the whole quarter under review resulting in a decrease in revenue days hence also the earnings. Two of the PSVs faced technical downtime and were pressed back into service after carrying out emergency repairs which got partly accentuated with delay in arrival of critical spares from OEMs. The MSV faced operational difficulties and needed dry docking. Hence operating costs on these assets dampened profitability during the quarter. However, as on date all the offshore support vessels have commenced their respective charters.
As on October 24, 2008, the owned fleet (including wholly owned subsidiaries) comprises 41 vessels ( 2 drilling units, a construction barge and a heavy lift vessel , 26 offshore support vessels and 11 harbour tugs).
The company was awarded a lump-sum turnkey engineering contract of around Rs.23,400 lakhs by ONGC. Critical evaluation of the subcontractors and vendors has been completed, work / purchase orders have already been placed. Preparatory activities have been initiated to commence work awaiting fair weather clearance.
The procedural formalities for seamless completion of the company’s foray into port management and single point mooring business through equity stake buyout in KEI-ROSS Maritime Ltd. and Rajamahendri Shipping & Oilfield Services Ltd. is underway and expected to be completed shortly.
The company has completed its equity buy back scheme aggregating around Rs. 5,524 lakhs. Total number of 9,78,977 equity shares have been extinguished, shrinking the equity share capital by around 2.56% to 3,71,39,504 equity shares as on date.
Global turmoil in the financial markets, slide in oil and other commodity prices has certainly dampened confidence across sectors. Oil demand destruction, production cuts by OPEC and credit squeeze have called for a relook at economic viability parameters. Further, delay by equipment manufacturers due to paucity of funding have vitiated delivery schedule of yards posing fresh challenges to the sector.
ONGC (India’s foremost national E&P company) is committed to provide energy for India’s long term economic development and has a substantial E&P budgetary outlay. Additionally other E&P companies operating in India are at various stages of exploration and production which will keep utilisation levels of offshore oil field services assets relatively high. With most of the assets locked in for period charters the company is relatively protected on risk from downside revenues.
As on September 30, 2008, revenue visibility for the balance of the half year ended March 31, 2009 is around Rs. 37,000 lakhs. While the drilling units are fully chartered , the marine construction barge is covered to the extent of 85% of the balance revenue days for the half year ended March 31, 2009. The asset classes of offshore support vessels and harbour tugs are covered to the extent of 78 % and 92% respectively of their operating days.
Click here to view the results