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Essar Shipping Ltd
Performance Update
Quarter ended 31st December 2011
1
Essar Shipping
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VLCC – MT Smiti Semi-submersible – Essar Wildcat
Land Logistics Bulk Carrier – MV Kamlesh
Essar Shipping – Overview
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Poised to cater to the growing market requirements
High operating margins
Experienced and credible operator with
strong HSE track record
Diversified mix of assets and clients
across geographies
Long term contracts with strong client
base consisting of Schlumberger,
ConocoPhillips, Essar Oil, etc.
1 Semi Submersible offshore rig
12 Land Rigs
2 new Jack Ups under construction
Oilfields Services
Experienced and credible operator with
more than 250 ship years of experience
India’s largest Cape-size fleet
All ships on long term contracts
Strong client base consisting of
Baosteel, SAIL, Indian Oil Corporation,
Essar Steel, Essar Oil, etc., all with long
term contracts, ensuring steady cash
flows in a volatile market
Fleet of 25 vessels, DWT of 1.83Mn
2 modern Double Hull VLCCs
6 Capesize ships
2 Mini-Capesize Ship
2 Supramax bulk carriers
2 13,000 dwt General Cargo
ships
7 Mini Bulk Carriers
10 new ships on order
Shipping
Multi modal inland transportation of
steel and petroleum products.
Project Cargo logistics.
Intercarting Services for inter plant
logistics
End to end plant to consumer
transportation solutions
Land Logistics
Operates fleet of 5,000 chartered trucks
220 owned trailers and tippers
Fleet of intercarting assets
Transhipment Assets:
10 Articulated Barges
6 tugs
Logistics
4
Essar Shipping – Key Highlights
Essar Shipping revenue increased to Rs 729.20 crore for Q3 FY12 as against Rs 658.88 crore in Q3 FY11, an increase of 11%.
Essar Shipping PAT increased to Rs 48.65 crore in Q3 FY12 as against Rs 33.97 crore in Q3 FY11, an increase of 43%.
Essar Shipping EBITDA increased to Rs 242.30 crore in Q3 FY12 as against Rs 173.59 crore in Q3 FY11, an increase of 40%.
Strong performance by the company in challenging global markets, highlighting the strength of having minimal exposure to spot
markets and most of the business based on long term contracts.
First results presentation after demerger from Essar Shipping Ports & Logistics Ltd.
Sea Transportation
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Sea Transportation – Industry Outlook
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Spot markets expected to continue being volatile
Source: Clarkson’s
(USD / day) 2009 2010 2011 2012
VLCC Average Earnings 32,009 37,929 16,856 19,573
Capesize Average Earnings 39,064 30,587 14,433 9,120
Essar Shipping is hedged against spot markets volatility through time charters and CoA’s
Essar Shipping Consistently Outperforming the markets
Source: Clarkson’s
Sea Transportation – Key Operational Highlights & Financial Performance
7
Essar Shipping awarded “Bulk Operator of the Year” at the Gateway Awards for
Excellence in Ports and Shipping
Essar Shipping awarded the “Shipping Line of the Year (Bulk)” at Samudra
Manthan Awards in December 2011
Took Delivery of MV Kamlesh, a Mini-Capesize dry bulk carrier of 105,000 Dwt, in the
month of December 2011 and MV Arun in February 2012.
Have entered into 15 year long term contract with Essar Steel Limited for
transportation of Iron Ore along the Indian coast.
Fleet renewal is expected to bring down the average age of the fleet from 16.83 yrs in
Dec 2011 to 11.69 yrs by end of FY2012.
Fin
an
cia
l P
erf
orm
an
ce
In ` crore In ` crore
317 264
954
858
100
200
300
400
500
600
700
800
900
1,000
Q3FY12 Q3FY11 YTD FY12 YTD FY11
Revenue
136 113
363 336
-
50
100
150
200
250
300
350
400
Q3FY12 Q3FY11 YTD FY12 YTD FY11
EBITDA
Tonnage utilization backed by long term contracts
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(a) Capacities represent DWT (Dead Weight Tonnage)
(b) ** - Vessels currently trading in spot markets for short period
Source: Company information
Current fleet and ships ordered have long-term contracts in place
Vessel
DWT Vessel Type Year Built Charter Type Cargo Comm. Date Term
Tan
kers
MT Smiti 281,396 VLCC 2005 Time Crude Oil Sep - 11 12 m
MT Ashna 301,428 VLCC 1999 Time Crude Oil Nov-11 3 m
Bu
lk C
arr
iers
MV Kiran 175,048 Capesize 1993 COA Iron Ore Apr-07 5 yrs
MV Mahavir Prasad 136,608 Capesize 1983 COA Iron Ore Apr-11 15 yrs
MV Badri Prasad 150,000 Capesize 1990 COA Iron Ore Apr-11 15 yrs
MV Ram Prasad 138,000 Capesize 1982 COA Iron ore Jun-11 15 yrs
MV Chandi Prasad ** 152,065 Capesize 1989 COA Iron Ore Jul-11 15 Yrs
MV Govind Prasad ** 129,329 Capesize 1983 COA Iron Ore Apr-11 15 yrs
MV Kamlesh 105,000 Minicape 2011 Spot Iron Ore Dec-11 2 m
MV Arun 105,000 Minicape 2012 Spot Iron Ore Feb-12 2 m
MV Malathi 55,707 Supramax 2004 COA Coal Apr-08 5 yrs
MV Malavika 53,169 Supramax 2005 COA Coal Apr-08 5 yrs
MV Tvisha 13,000 Handysize 1998 Time Steel Jul-10 8 yrs
MV Tuhina 13,000 Handysize 1999 Time Steel Jul-10 8 yrs
New
bu
ild
ing
V
essels
Hull No 2042 98,000 Minicape Mar-12 COA Iron Ore Mar-12 15-25 yrs
Hull No 2045 98,000 Minicape Apr-12 COA Iron Ore Apr-12 15-25 yrs
Hull No 2046 98,000 Minicape May-12 COA Iron Ore May-12 15-25 yrs
Hull No 2048 98,000 Minicape Jun-12 COA Iron Ore Jun-12 15-25 yrs
Hull No 291 54,000 Supramax Sep-12 Time Coal Sep-12
Hull No 292 54,000 Supramax Oct-12 Time Coal Oct-12
Hull No 293 54,000 Supramax Nov-12 Time Coal Nov-12
Hull No 294 54,000 Supramax Dec-12 Time Coal Dec-12
Hull No 295 54,000 Supramax Jan-13 Jan-13
Hull No 297 54,000 Supramax Mar-13 Mar-13
A Global List of Clients
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Oilfields Services
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Oilfields Services – Industry Outlook
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Markets have been improving for both floaters and Jack Ups
3G Semi-submersible markets have been steady and expected to recover further
Projections of USD 160,000 have been made in the Jack Up markets, suggesting strong recovery for high spec assets
E&
P S
pe
nd
ing T
ren
ds
Pareto Research
Day Rates for New Jack Up Rigs as on January 2012
Pareto Research
Midwater Day rates in UK as on January 2012
Dayrate Estimates
Oilfields Services – Key Operational Highlights and Financial Performance
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Successfully deployed Essar Wildcat post extensive refurbishment and upgrade at Singapore
Essar Wildcat deployed for an 18 month contract with Conoco Phillips in Indonesia starting from
October 2011
Essar Wildcat successfully completed 3 years of LTI free operations
LOA received for LR-3 from BG Shirke on a Long-term contract
Fin
an
cia
l P
erf
orm
an
ce
In ` crore In ` crore
144
92
259 261
-
50
100
150
200
250
300
Q3FY12 Q3FY11 YTD FY12 YTD FY11
Revenue
96
48
123
137
-
20
40
60
80
100
120
140
160
Q3FY12 Q3FY11 YTD FY12 YTD FY11
EBITDA
Oilfield Services – A Global List of Clients
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Logistics
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Logistics – Industry Outlook
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India has one of the highest logistics costs among emerging
economies thus creating a huge demand for 3PL and 4PL logistics
services
Road transportation accounts for 70% of the total cargo moved, in
value and volume terms
90% of India’s logistics sector is unorganized but evolving rapidly
The NHDP and addition of higher capacity, multi-axle trucks to fleets
has improved the competitiveness of the sector
Indian Logistics industry is expected to grow at 15-20% YOY and
reach USD 350 Bn by 2015 from USD 80 Bn
Logistics Cost Comparison across Regions
Region Logistics
Cost/GDP
Logistics by
3PL (% of total)
China/ India 16-20% < 10%
US 10% 57%
Europe 10% 30-40%
Japan 11.4% 80% Logistics in India, SSKI
Growth in Logistics
Outsourcing
Increasing Trade
Greater Outsourcing of Manufacturing
Greater Propensity to
Outsource Logistics
Better Enabling Environment
Entry of MNC's
Greater Economic
Activity
Strong Growth Drivers in Place for Logistics Outsourcing
KPMG / CII
284 339
850
933
-
100
200
300
400
500
600
700
800
900
1,000
Q3FY12 Q3FY11 YTD FY12 YTD FY11
Revenue
16
Logistics – Financial Performance & Cargo Handled F
ina
nc
ial P
erf
orm
an
ce
9.92 8.48
24.77 23.57
1.01 2.96
3.89 1.37
0.74 0.42 0.21
0.5
0
5
10
15
20
25
30
35
40
45
Q3FY2012 Q3FY2011
ESPF-Exports
ESPF-Domestic
OCEAN FREIGHT
LIGHTERAGE
OIL
INTERCARTING
STEEL-ROAD
In ` crore In ` crore
21
32
56 58
-
10
20
30
40
50
60
70
Q3FY12 Q3FY11 YTD FY12 YTD FY11
EBITDA
Essar Shipping – Financial Performance
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21
32
18
-
5
10
15
20
25
30
35
Q3FY12 Q3FY11 Q2FY12
EBITDA
284
339
280
-
50
100
150
200
250
300
350
400
Q3FY12 Q3FY11 Q2FY12
Revenue
96
48
(17)
(40)
(20)
-
20
40
60
80
100
120
Q3FY12 Q3FY11 Q2FY12
EBITDA
144
92
33
-
20
40
60
80
100
120
140
160
Q3FY12 Q3FY11 Q2FY12
Revenue
136
113
98
-
20
40
60
80
100
120
140
160
Q3FY12 Q3FY11 Q2FY12
EBITDA
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Essar Shipping – Financial Performance (Sea Transportation, Oilfields Services, Logistics)
Sea Transportation Oilfields Services Logistics
In ` crore In ` crore
In ` crore
In ` crore
In ` crore
317
264
316
100
150
200
250
300
350
Q3FY12 Q3FY11 Q2FY12
Revenue In ` crore
Financial Highlights by Business Segment
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YTD FY2012
(INR Crore)
Sea
Transportation
Oilfield
Services Logistics Consolidated
Total Income 954.17 259.32 849.72 2009.30
Total Expenses 590.96 136.72 793.76 1505.08
EBITDA 363.21 122.60 55.96 504.22
EBITDA Margin 38.1% 47.2% 6.6% 25.1%
Interest and Finance
Expenses 171.55 84.31 10.42 238.53
Profit Before
Depreciation and
Tax 191.66 38.30 45.54 265.69
Depreciation 117.44 126.97 24.09 267.12
Profit Before Tax 74.22 (88.67) 21.45 (1.43)
Tax 1.20 8.59 6.96 16.75
Profit After Tax 73.02 (97.26) 14.49 (18.17)
Operating Cash
Profit (PAT +
Depreciation ) 190.46 29.71 38.58 248.95
In ` crore
954.17
259.32
849.72
363.2
122.6 56.0 0
200
400
600
800
1000
1200
Sea Transportation Oilfields Logistics
Revenue
EBITDA
Essar Shipping – Consolidated Financial Performance
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Note: Financials reported as per Indian GAAP
(INR Crore)
As on December 31st 2011
Networth 5,298.3
Gross Block 5,994.5
CWIP 1630.3
(INR Crore)
Debt as on September 11
Sea Transportation 2,245.2
Oilfield Services Business 1538.9
Logistics Business 245.9
Corporate Debt 1,821.7
TOTAL DEBT 5,851.7
Ending December 2011
Weighted Average
Cost of Debt 8.27%
Project Debt 2262.82
Operating Debt 3588.92
Q3 FY12 Q3 FY11 YTD FY12 YTD FY11
Income
Operating and Chartering Earnings 572.87 555.92 1,718.31 1,587.81
Oilfields Services Income 140.66 91.56 251.45 260.09
Other Income / Forex Variation (Gain) 15.67 11.40 39.55 159.89
Total income 729.20 658.88 2,009.30 2,007.79
Expenditure
Operating Expenses 446.13 457.19 1,405.45 1,365.17
Establishment and Other Expenses 34.23 28.09 92.40 82.39
Forex Variation (Loss) 6.54 - 7.24 -
Total Expenses 486.90 485.29 1,505.08 1,447.55
EBITDA 242.30 173.59 504.22 560.24
Interest and Finance Expenses 83.11 59.69 238.53 240.18
Profit Before Depreciation and Tax 159.20 113.90 265.69 320.06
Depreciation 99.40 77.07 267.12 229.02
Profit Before Tax 59.80 36.83 (1.43) 91.04
Tax 11.15 2.86 16.75 24.12
Profit After Tax 48.65 33.97 (18.17) 66.92
Operating Cash Profit (PAT + Depreciation ) 148.05 111.04 248.95 295.95
INR Crores
Note: YTD FY11 Financials are carved out from erstwhile ESPLL for the three business segments: Sea Transportation, Oilfields Services, Logistics Business
Vikram Gupta
Chief Financial Officer
Essar Shipping Management Team
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A.R. Ramakrishnan
Managing Director
Mr. Ramakrishnan is a Mechanical Engineer and a Post Graduate from IIM Calcutta. With over 32 years of rich experience in the
industry, Mr. Ramakrishnan has been associated with the Essar Group since 1992 when he joined the Group as a Business
Analyst. Prior to taking over as the Managing Director of Your Company, Mr. Ramakrishnan was a Whole-time Director of Essar
Shipping Ports & Logistics Limited (ESPLL).
Mr. Ramakrishnan is also on the Board of Directors of the Indian National Shipowners’ Association.
Capt Anoop Sharma
CEO –Sea Transportion
Capt. Sharma is a Master Mariner with an experience of 28 years spanning the entire breadth of the shipping industry. After rising
to the level of Senior Vice President for Chartering at Shipping Corporation of India where he was built the company’s
comprehensive strategy to explore global business opportunities, Capt. Sharma joined Essar in 2008 as the Chief Executive
Officer of the Sea Transportation business of ESPLL.
Capt. Sharma also holds a Diploma in Marketing Management from the Narsee Monjee Institute of Management Studies, Mumbai.
Ankur Gupta
CEO - Oilfield Services
Mr. Gupta holds a Bachelor of Technology degree in Electrical Engineering from IIT Delhi. Starting his career with Schlumberger
Oilfield Services, Mr. Gupta held various managerial, technical and marketing roles in various geographies. He joined the Essar
Group in 2010 as the Chief Executive Officer of the Oilfields Services business after spending 5 years as the Regional Vice
President – Asia Pacific for Paradigm Geophysical.
With over 23 years of experience in the hydrocarbon industry, Mr. Gupta has worked in diverse regions such as North America,
Europe, Middle East and the Far East.
Mr. Gupta holds a Masters in Management degree from the University of Mumbai and has over 9 years of experience in corporate
finance. Mr. Gupta has been associated with the Essar Group since 2002 when he joined the Shipping business as a management
trainee and has since been an integral part of the growth of the Group since.
Prior to being appointed as the Chief Financial Officer of Essar Shipping Limited, Mr. Gupta was the Chief Financial Officer of the
Sea Transportation business of ESPLL where he led the company’s fund raising activities and financial management.
Rahul Himatsingka
CEO - Logistics Services
Mr. Himatsingka holds an Economics degree from Hansraj College, Delhi University and has an MBA from the Indian Institute of
Social Welfare and Business Management, Kolkata with a specialization in finance.
Mr. Himatsingka has been a part of the Essar Group since the inception of the logistics business, and was instrumental in its set
up and putting in the processes for its effective management. Mr. Himatsingka has been associated with organizations such as
Reliance Logistics and India Online Network prior to his association with Essar.
Analyst Contacts
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Mr. Vikram Gupta
CFO
Essar Shipping Limited
Tel: + 91 22 6660 1504 / + 91 98197 31424
Email: [email protected]
Mr. Anshumali Dwivedi
Head – Investor Relations
Essar Shipping Limited
Tel: + 91 22 6660 1100 (Extn 1544) / + 91 98339 45648
Email: [email protected]
Mr. Murali Batchala
Manager - Investor Relations
Essar Shipping Limited
Tel: + 91 22 6660 1100 (Extn 1561) / + 91 9930136593
Email: [email protected]
Legal Disclaimer
“This presentation is for information purposes only and does not constitute an offer, solicitation or advertisement with respect to the purchase or sale of any security of Essar Shipping Ports & Logistics Limited (the “Company” or “ESPLL” or “Essar Shipping Ports & Logistics Limited”) and no part of it shall form the basis of or be relied upon in connection with any contract or commitment whatsoever.
This presentation is not a complete description of the Company. Certain statements in this presentation contain words or phrases that are forward looking statements. All forward-looking statements are subject to risks, uncertainties and assumptions that could cause actual results to differ materially from those contemplated by the relevant forward looking statement. Any opinion, estimate or projection herein constitutes a judgment as of the date of this presentation, and there can be no assurance that future results or events will be consistent with any such opinion, estimate or projection. The information in this presentation is subject to change without notice, its accuracy is not guaranteed, it may be incomplete or condensed and it may not contain all material information concerning the Company. We do not have any obligation to, and do not intend to, update or otherwise revise any statements reflecting circumstances arising after the date of this presentation or to reflect the occurrence of underlying events, even if the underlying assumptions do not come to fruition.
All information contained in this presentation has been prepared solely by the Company. No information contained herein has been independently verified by anyone else. No representation or warranty (express or implied) of any nature is made nor is any responsibility or liability of any kind accepted with respect to the truthfulness, completeness or accuracy of any information, projection, representation or warranty (expressed or implied) or omissions in this presentation. Neither the Company nor anyone else accepts any liability whatsoever for any loss, howsoever, arising from any use or reliance on this presentation or its contents or otherwise arising in connection therewith. This presentation may not be used, reproduced, copied, distributed, shared or disseminated in any other manner.
The distribution of this document in certain jurisdictions may be restricted by law and persons into whose possession this presentation comes should inform them about, and observe, any such restrictions.”
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