The Hindu Business Line : GE allows Great Offshore to enter shipping biz

No interference
GE Shipping to continue its offshore business through Greatship (India) Ltd.
Greatship placed order for first asset after de-merger plan was approved.
There is a supply-demand gap in the industry leaving enough room for all.

Kolkata , Aug. 14

The arrangement between the two factions of GE Shipping Ltd promoters has not barred either from entering each other's territory.

The scheme to de-merge the offshore business from the shipping operations of GE Shipping, extension of which is now being sought, does not prohibit the proposed offshore entity - Great Offshore Ltd — to foray into shipping at any point in time in future.

GE Shipping, which is now transferring its existing offshore assets and business to Great Offshore is also proposing to provide performance guarantee to its main customer for the new entity (only for the existing contracts), has already prepared the ground for continuing its offshore business through a wholly-owned subsidiary Greatship (India) Ltd.

Greatship, which procured its first asset last week and is slated to acquire three other offshore support vessels between the third quarter of 2006-07 and third quarter of `08-09, has been kept out of the purview of the de-merger scheme. Earlier a shell company, Greatship placed order for first asset after de-merger plan was officially approved.

According to sources, Great Offshore may not look at the possibility of entering shipping immediately after de-merger because current prices will make the shipping asset acquisition very costly and also for relatively lower returns prospects than offshore business.

At present, in the domestic offshore support services market, there are eight players. Of them, Essar Shipping has 33 offshore support vessels, while GE Shipping (offshore division) boasts 20, SCI 10, Garware Offshore four, SEAMAC three and Dolphin Offshore and Varun Shipping two each. The new entrant Greatship (India) has one.

Though the proposed entity Great Offshore will start with GE Shipping's existing fleet 20 offshore vessels, after de-merger it will get another five such vessels already contracted for by GE Shipping.

Garware has also ordered for two more. Incidentally, ONGC itself owns and operates 32 offshore support vessels. SCI too has planned offshore fleet expansion. According to industry sources, there is a supply-demand gap in the booming domestic offshore support service area leaving enough room for all.

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