GREAT Offshore (GOL) recently completed the acquisition of 100% stake in two companies operating on India’s east coast — KEI RSOS Maritime and Rajamahendri Shipping & Oilfield Services — for Rs 160 crore. The company had announced this deal in early September. These companies are mainly into port management services, single-point mooring and offshore support.
This acquisition added 19 vessels (nine offshore support vessels and 10 harbour tugs) to GOL’s existing fleet of 41 vessels, with four more to join over the next six months. GOL itself has ordered a drilling rig and multi-support vessel to be delivered in March ’09 and September ’09, respectively, at a cost of $230 million. This acquisition is expected to add Rs 30-32 crore to GOL’s consolidated bottomline in FY10. Last year, GOL had raised around Rs 168 crore through foreign currency convertible bonds (FCCBs) and Rs 150 crore through preference shares, specifically for acquisition purposes. It was also planning to acquire a foreign company, but the deal did not fructify. The company recently spent Rs 55.2 crore on share buybacks at an average price of Rs 564. This reduced its share capital by around 2.6%, resulting in an increase in promoters' holding to 20.5%.
GOL’s results for the past couple of quarters have been dismal with a significant fall in profits, though it is the largest offshore support company in India in terms of fleet size. Over the past couple of years, the company has been trying to grow rapidly, which has resulted in cash outflow on investment activities, outstripping operating cash inflows. In view of the recent weakness in economic environment and the fall in crude oil prices, the company’s ability to secure high charter rates for its vessels remains crucial for future success. GOL faces the risk of a fall in charter rates in the offshore drilling industry by the time its two high-value vessels are delivered.
This acquisition added 19 vessels (nine offshore support vessels and 10 harbour tugs) to GOL’s existing fleet of 41 vessels, with four more to join over the next six months. GOL itself has ordered a drilling rig and multi-support vessel to be delivered in March ’09 and September ’09, respectively, at a cost of $230 million. This acquisition is expected to add Rs 30-32 crore to GOL’s consolidated bottomline in FY10. Last year, GOL had raised around Rs 168 crore through foreign currency convertible bonds (FCCBs) and Rs 150 crore through preference shares, specifically for acquisition purposes. It was also planning to acquire a foreign company, but the deal did not fructify. The company recently spent Rs 55.2 crore on share buybacks at an average price of Rs 564. This reduced its share capital by around 2.6%, resulting in an increase in promoters' holding to 20.5%.
GOL’s results for the past couple of quarters have been dismal with a significant fall in profits, though it is the largest offshore support company in India in terms of fleet size. Over the past couple of years, the company has been trying to grow rapidly, which has resulted in cash outflow on investment activities, outstripping operating cash inflows. In view of the recent weakness in economic environment and the fall in crude oil prices, the company’s ability to secure high charter rates for its vessels remains crucial for future success. GOL faces the risk of a fall in charter rates in the offshore drilling industry by the time its two high-value vessels are delivered.
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