Ge Shipping

The main reason for the dip in net profit is the decrease in gains from sale of ships, increased interest burden and depreciation. In 1995-96, the company had sold five ships resulting in a gain of Rs 33.83 crore. Last year, however, it could sell only one ship, which netted the company Rs 9.56 crore.

It is heartening to note that, despite the Baltic Freight Index ruling low throughout the year, the company could increase the operating profit as well as the margin from its core shipping activity. The operating profit from this activity increased by 23.41 per cent to Rs 257.32 crore. This could be the result of higher freight rates for tankers during the year. The company also increased its cargo charter operations, thereby consolidating its margins. The cargo charter operations have come to be a moneyspinner in that it has a captive clientele: GE will continue to have confirmed levels of business even if there is a slack in global business.

 

However, the companys other businesses, offshore and property development, have shown a slump, as reflected in the operating profit.

Due to the tight liquidity prevailing in the market, as well as some funds being locked up in expanding its fleet, GE Shippings interest burden increased 52.34 per cent to Rs 69.06 crore. Analysts feel the future of the company is good and if there is any improvement in Baltic Freight Index, the company would post excellent results in the current year.