Great Eastern Shipping : GIL 2023-24

Annual Report 2023-2024

Contents

Corporate Information

Key Performance Indicators (Consolidated)

Management Statement

Board's Report

Management Discussion And Analysis

Corporate Governance

Fleet Profile

Auditor's Report

Financial Statements

Statement Pertaining To Subsidiaries

Consolidated Financial Statements

03

04

06

08

17

25

53

55

65

130

131

Corporate Information

CHAIRMAN Mr. Bharat K. Sheth

MANAGING DIRECTOR Mr. Ravi K. Sheth

INDEPENDENT DIRECTORS Mrs. Bhavna Doshi

Mrs. Rita Bhagwati

Mr. Shaleen Sharma

EXECUTIVE DIRECTOR Mr. P. R. Naware

Executive Director Mr. Alok Mahajan & Chief Operating Officer

REGISTERED OFFICE One International

Center

Tower 3, 23rd Floor,

Senapati Bapat Marg,

Elphinstone Road (West),

Mumbai 400 013

CHIEF FINANCIAL OFFICER

COMPANY SECRETARY

AUDITORS

Mr. G. Shivakumar

Ms. Amisha Ghia

Deloitte Haskins & Sells LLP

Chartered Accountants

One International Center

Tower 3, 27th - 32th Floor

Senapati Bapat Marg

Elphinstone Road (West)

Mumbai 400 013

Maharashtra, India

CORPORATE IDENTITY NUMBER U 63090 MH 2002 PLC 136326

WEBSITE www.greatshipglobal.com

Key Performance Indicators (Consolidated)

Key performance indicators (consolidated)

5 years at a glance

	FY 2019-20	FY 2020-21	FY 2021-22	FY 2022-23
Profit & Loss A/c
Total Income	846.80	668.22	725.45	938.23
Operating Profit (PBIDT)	348.78	205.75	216.80	346.97
Net Profit / (Loss) (PAT)	(64.75)	(131.12)	(143.69)	33.62
Balance Sheet
What the Company owned
Fixed Assets	3,940.88	3,673.15	3,449.91	3,308.90
Investments & Net Current Assets (net of long term portion of current liabilities & provisions)	933.16	678.42	708.18	812.74
TOTAL ASSETS	4,874.04	4,351.57	4,158.09	4,121.64
What the Company owed
Loans	1,684.42	1,296.15	1,196.49	1,093.38
Preference Share	354.57	355.74	356.99	358.33
TOTAL	2,038.99	1,651.89	1,553.48	1,451.71
Shareholders' Funds
Equity Share Capital	111.35	111.35	111.35	111.35
Reserves & Surplus	2,723.70	2,588.33	2,493.26	2,558.58
TOTAL	2,835.05	2,699.68	2,604.61	2,669.93
TOTAL LIABILITIES	4,874.04	4,351.57	4,158.09	4,121.64

• in Crores
  FY 2023-24

1,098.07

481.80

134.70

3,139.07

886.42

4,025.49

870.15

359.77

1,229.92

111.35

2,684.22

2,795.57

4,025.49

IN US DOLLARS	FY 2019-20
Profit & Loss A/c
Total Income (US$ mn)	119.96
Operating Profit (PBIDT)	49.41
PAT (US$ mn)	(9.17)
Balance Sheet
What the Company owned
Fixed Assets	520.80
Investments & Net Current Assets (net of long term portion of current liabilities & provisions)	123.32
Total Assets	644.12
What the Company owed
Loans	222.60
Preference Share	46.86
TOTAL	269.46
Shareholders' Funds
Equity Share Capital	14.72
Reserves & Surplus	359.94
TOTAL	374.66
TOTAL LIABILITIES	644.12

FY 2020-21

FY 2021-22

1. 97.72

1. 29.20

(17.64) (19.35)

502.41 455.19

92.80 93.44

1. 548.63

1. 157.87

48.66 47.10

225.95 204.97

15.23 14.69

354.03 328.97

369.26 343.66

595.21 548.63

(US$ in Millions)

FY 2022-23FY 2023-24

1. 132.76

1. 58.25

1. 16.29

402.69 376.34

98.91 106.27

1. 482.61

1. 104.32

43.61 43.13

176.67 147.45

13.55 13.35

1. 321.81

1. 335.16

1. 482.61

	FY 2019-20	FY 2020-21	FY 2021-22	FY 2022-23
Debt-equity Ratio	0.72	0.61	0.60	0.54
Net Debt-equity Ratio	0.35	0.32	0.30	0.23
Return On Operating Networth (%)	(2.26)	(4.74)	(5.42)	1.27
Return On Operating Capital Employed (%)	1.87	(1.96)	(0.57)	3.46
Earning Per Share (in `)	(5.82)	(11.78)	(12.90)	3.02

FY 2023-24

0.44

0.13

4.93

5.63

12.10

Annual Report 2023-24

4

Key Performance Indicators (Consolidated)

5 years trend

Operating Profit (PBIDT)

(` in Crores)

600		(after adjusting impairment)
500					481.80
400	348.78			346.97
300		205.75	216.80
200
100
0	2019-20	2020-21	2021-22	2022-23	2023-24

NET PROFIT/(LOSS) (PAT)

(` in Crores)

150					134.70
100
50				33.62
0
(50)
(100)	(64.75)
(150)		(131.12)	(143.69)
(200)	2019-20	2020-21	2021-22	2022-23	2023-24

Total Income

(` in Crores)

1,600
1,400
1,200					1098.07
1,000	846.80			938.23
800		668.22	725.45
600
400
200
0	2019-20	2020-21	2021-22	2022-23	2023-24

			Net Debt to Equity
0.40	0.35
0.35	0.32
	0.30
0.30
0.25				0.23
0.20
0.15					0.13
0.10
0.05
0	2019-20	2020-21	2021-22	2022-23	2023-24

Return on Net Worth

6%					4.93%
4%
2%				1.27%
0
(2%)
(4%)	(2.26%)
(6%)		(4.74%)	(5.42%)
(8%)	2019-20	2020-21	2021-22	2022-23	2023-24

			Fixed assets		(` in Crores)
5000
4000	3,940.88	3,673.15
	3,449.91	3,308.90
			3,139.07
3000
2000
1000
0	2019-20	2020-21	2021-22	2022-23	2023-24

Return on Capital Employed

6%					5.63%
4%				3.46%
2%	1.87%
0
-2%			(0.57%)
	(1.96%)
-4%
-6%	2019-20	2020-21	2021-22	2022-23	2023-24

Annual Report 2023-24

5

Management Statement

MANAGEMENT STATEMENT

Dear Stakeholders

In last year's statement, we commented on the long cyclical nature of the offshore oilfield services business. Against the backdrop of positive developments on the demand side and limitations on supply side due to aging global fleet and extremely low new building orderbook, we had stated that FY 23 could well be the year of transition with many healthy years ahead for the sector.

For most of the year, market developments were broadly in sync with the above theme. Offshore oil and gas activity in the major centers showed a strong year on year improvement. According to industry estimates, global offshore E&P capex saw ~15% increase during 2023. After a couple of years of double digit increases from the low point of 2020-21 the total offshore E&P spend is now close to the USD200 billion mark. However, this is still well below the peak of USD 320-330 billion offshore E&P spend seen in 2013 and 2014. But what is noteworthy is that even at this level of activity, by some industry estimates, the offshore services cost index is higher than levels seen in 2013-14. This is symptomatic of the reduction in supply of services during the long downturn and possibly an indication that service providers should have reasonable pricing power even at a lower level of sustained demand. The year also saw a healthy level of Final Investment Decisions (FIDs) for oil and gas projects with a larger share of green field projects. This improvement in FIDs creates a good base for Offshore E&P spending over the coming years.

While most sectors have seen some extent of improvement, the recovery is far from uniform across geographies and across services. Sectors with a better competitive structure have fared better than sectors with fragmented ownership. Similarly, cost increases are higher in certain geographies compared to others depending on the profile of oil and gas fields and the type of assets servicing these markets.

Specific to sectors of our concern, the recent Saudi announcements on suspension of rig contracts has created some uncertainties about the recovery in the offshore oil and gas services space. It is too early to assess whether this development has any long-lasting adverse impact at global level or it only creates a window for others to avail drilling services at reasonable cost. As stated at the start of this statement, going by the length of historical cycles and the extent of catch up required to make up sharp collapse of E&P spending during the downturn, the market fundamentals for the sector appear to be reasonably sound.

Turning to operating performance, during the year Greatdrill Chaaru commenced her new 3-year contract after clearing her surveys and undergoing the necessary contract preparation. As was reported previously, this new contract is at a charter rate which is approximately 75% higher than her previous charter.

In the offshore logistics segment, we have benefited from the increase in spot and short-term rates for vessels trading overseas. We have also managed to secure significantly higher term rates for the vessels that came up for repricing in the Indian market.

Annual Report 2023-24

6

Management Statement

In terms of technical performance, the unplanned technical downtime for the offshore logistics, at 1.3%, was the lowest in last 5 years. This is a very creditable performance considering our fleet profile and the challenging regulatory environment in which we operate. The rig fleet maintained the track record of achieving high technical efficiency. The unplanned downtime for the rig fleet was 0.69%.

Turning to financial performance, with the cyclical recovery, assets coming up for renewal of their employment are getting repriced at profitable levels. Although the full impact of these improvements will take time to reflect in the financial performance, the year-on-year improvement achieved in FY 24 is noteworthy. For the year, the revenue from operations increased by approx. 23% to cross INR 1000 crores after a gap of 6 years. This improvement in revenues has translated into a significant improvement in profitability. The reported profit for the year at INR 135 crores was 4X of the profit for FY 23. The operating cash flows for the year were the highest since FY20. As a result, despite higher debt repayments during the year we ended the year with slightly higher cash balances compared to the start of the year. The gross and net debt to equity ratio improved to 0.44 and 0.13 respectively from 0.54 and

0.23 at the end of FY 23. Supported by stronger operating cash flows the net bank debt has for the first time become negative at USD -8 Million as of the end of the financial year.

As we look at the long down cycle in the rearview mirror, the strategy of maximizing utilization and control over costs through the downturn has helped us reach a position of financial strength. This allows us freedom to take asset specific chartering calls to suit present market conditions without worrying about the financial necessities. As usual, we will remain focused on maintaining quality of our assets and operations which ensures a wider acceptability with Indian as well as global clients and helps us achieve a high technical uptime. The new financial year will see many assets coming up for repricing. We will keep a close eye on the market developments across geographies to decide on the deployment strategies for these assets.

As always, we look forward to continued support from all the stakeholders.

Warm Regards

Bharat K. Sheth

Ravi K. Sheth

Mumbai, April 29, 2024

Annual Report 2023-24

7

Board's Report

BOARD'S REPORT

Your Directors have pleasure in presenting the fourteenth Annual Report for the year ended March 31, 2024.

FINANCIAL HIGHLIGHTS

The financial highlights of your Company for the current year and previous year on a standalone and consolidated basis are as under:

STANDALONE

(` in crores)

CONSOLIDATED

PARTICULARS	Current Year
Total Revenue	888.51
Total Expenses	629.82
Depreciation and amortisation expense	215.37
Reversal of impairment loss	(13.03)

Profit / (Loss) before tax	56.35
Less: Provision of tax
- Current tax	0.09
- Reversal of taxes for earlier year	(8.11)
- Deferred Tax	5.81
Total Tax	(2.21)
Profit for the year after tax	58.56
Retained Earnings
Balance at the beginning of the year	116.83
Add : On account of Onerous contract	-
Add: Profit for the year after tax	58.56
Add: Other Comprehensive Loss	(0.64)
Less: Transfer to Tonnage Tax Reserve Account	(9.00)
under section 115VT of the Income-tax Act, 1961

Previous Year

804.19

597.49

207.29

-

(0.59)

0.09

(45.56)

(11.44)

(56.91)

56.32

100.88

(29.30)

56.32

(1.07)

(10.00)

Current Year

1,098.07

710.92

270.75

(13.03)

129.43

0.09

(8.11)

2.75

(5.27)

134.70

295.86

-

134.70

(0.64)

(9.00)

Previous Year

938.23

700.71

261.96

-

(24.44)

5.00

(45.56)

(17.50)

(58.06)

33.62

302.61

(29.30)

33.62

(1.07)

(10.00)

Balance at the end of the year	165.75

116.83

420.92 295.86

The financial statements (standalone and consolidated) have been prepared by your Company in accordance with the requirements of Indian Accounting Standards prescribed under section 133 of the Companies Act, 2013, read with the Companies (Indian Accounting Standards) Rules, 2015 as may have been amended from time to time. The highlights of the performance/operations of the Company are included in detail in the report on 'Management Discussion and Analysis' which is annexed as Annexure 1 to this Report.

Annual Report 2023-24

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Board's Report

DIVIDEND

Although your Company has made profit during the financial year ended on March 31, 2024 and has sufficient accumulated profits and free reserves, your Directors have not recommended any equity dividend for the financial year ended March 31, 2024, in order to conserve resources.

Dividend on the preference shares of your Company for the financial year ended March 31, 2024 would be payable, in accordance with the terms of preference shares, as detailed below:

1. ` 10.95 crores on 44,500,000 fully paid preference shares of face value of ` 10 each at the rate of 24.60% p.a. and
2. ` 13.64 crores on 60,624,000 fully paid preference shares of face value of ` 10 each at the rate of 22.50% p.a.; entailing a total outgo of ` 24.59 crores.

The net amount of dividend after deduction of necessary taxes would be paid to the preference shareholder of the Company, 'The Great Eastern Shipping Company Limited', on May 20, 2024 or immediately next working day in accordance with the terms of preference shares.

SHARE CAPITAL

The total paid up equity share capital of your Company as on March 31, 2024 is ` 111.35 crores comprising of 111,345,500 equity shares of face value of ` 10 each. Your Company has also issued two series of redeemable cumulative preference shares and the details of total outstanding preference shares under two series as on March 31, 2024 are as under:

1. Series I - 44,500,000 preference shares of face value of ` 10 each with dividend rate of 24.60% p.a. and
2. Series II - 60,624,000 preference shares of face value of ` 10 each with dividend rate of 22.50% p.a.

As per the terms of issue (modified from time to time) of these preference shares, the redemption of Series I and Series II preference shares is scheduled to commence from April 2025 in four equal annual tranches of 11,125,000 shares and 15,156,000 shares, respectively.

FINANCIAL PERFORMANCE (CONSOLIDATED)

The audited consolidated financial statements of your Company and its Subsidiaries along with the Auditors' Report thereon form part of the Annual Report.

The consolidated net worth of the Group for financial year 2023-24 was ` 2,795.57 crores as compared to ` 2,669.93 crores for financial year 2022-23.

SUBSIDIARIES

As on March 31, 2024, your Company has four (4) wholly owned subsidiaries as under (together referred to as 'Subsidiaries'):

1. Greatship Global Energy Services Pte. Ltd., Singapore
2. Greatship Global Offshore Services Pte. Ltd., Singapore
3. Greatship (UK) Limited, United Kingdom
4. Greatship Oilfield Services Limited, India

Your Company's investment in its Subsidiaries as on March 31, 2024 stands at ` 493.23 crores. During the year, your Company has not made any further investment in its Subsidiaries. A statement pursuant to section 129(3) of the Companies Act, 2013 read with rule 5 of the Companies (Accounts) Rules, 2014, containing the salient features of the financial statements of your Company's Subsidiaries has been attached along with the financial statements of your Company.

Annual Report 2023-24

9

Board's Report

The summary of performance of Subsidiaries of your Company is as follows:

1. Greatship Global Energy Services Pte. Ltd., Singapore (GGES)
   GGES has earned a net profit of USD 0.27 Mn for the current financial year as against the net profit of USD 0.11 Mn in the previous year. The increase in net profit in the current year has been on account of the higher interest received on bank deposits attributable to higher deposit amounts.
2. Greatship Global Offshore Services Pte. Ltd., Singapore (GGOS)
   GGOS owns and operates two Multi-purpose Platform Supply and Support Vessels and one R-Class Supply Vessel. GGOS has earned a net profit of USD 13.42 Mn for the current financial year as against the net profit of USD 1.80 Mn in the previous year. The reason for the increase in profit in current financial year is due to higher charter rates and vessel utilization, as well as higher interest received on bank deposits attributable to higher deposit amounts.
3. Greatship (UK) Limited, United Kingdom (GUK)
   GUK's net loss for the current financial year amounted to USD 0.02 Mn same as in the previous year. The net loss in the current financial year has been on account of certain expenses incurred by GUK.
4. Greatship Oilfield Services Limited, India (GOSL)

During the year under review, on account of reversal of certain provisions, GOSL has earned a net profit of less than ` 0.01 crore for the current financial year as against the net loss of less than ` 0.01 crore in the previous year.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

Your Company has in place adequate internal financial control systems commensurate with the nature of its business and the size of its operations. The Company has an internal control framework which establishes the essential components of internal controls.

These processes and controls include various activities such as approvals, authorisations, verifications, reconciliations, reviews of operating and financial performance, security of assets, segregation of duties, preventive and defective controls. The policies and procedures adopted by your Company ensure the orderly and efficient conduct of its business, including adherence to Company's policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records and the timely preparation of reliable financial information. These systems are tested and audited from time to time by the Company through internal as well as statutory audits to ensure that the systems are reinforced on an ongoing basis.

No reportable material weakness or significant deficiencies in the design or operation of internal financial controls were observed during the year.

The internal audit covering the key business processes of your Company is carried out by a firm of external Chartered Accountants. The scope of the internal audit exercise including the key business processes and selected risk areas to be audited is finalized in consultation with the Audit Committee. The audit reports with significant observations, if any and follow up actions thereon are reported to the Audit Committee. Ernst & Young LLP have been acting as the internal auditors of the Company since financial year 2018-19. At the Board meeting held on April 29, 2024, Ernst & Young LLP has been re-appointed to act as Company's internal auditors for financial year 2024-25 and financial year 2025-26 based on the recommendation of the Audit Committee of the Company.

Annual Report 2023-24

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