Offshore biz will perform better next year: Mercator Lines

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Offshore biz will perform better next year: Mercator Lines

In an interview to CNBC-TV18, Atul Agarwal, Joint MD, Mercator Lines said, shipping continues to remain a challenge. The contribution from shipping, he said, is only 32%. He further said, the offshore division will perform better in the next year.

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In an interview to CNBC-TV18, Atul Agarwal, Joint MD, Mercator Lines said, shipping continues to remain a challenge. The contribution from shipping, he said, is only 32%.

He further said, the offshore division will perform better in the next year.

Below is the edited transcript of his interview with of Udayan Mukherjee and Mitali Mukherjee of CNBC-TV18. Also watch the accompanying video.

Q: Your margins have collapsed and profit after tax (PAT) is down 75%. Both in the shipping and the offshore divisions, you have seen severe margin compression. Can you take us through what happened in the quarter?

A: We are comparing first quarter of last year. If you compare it to quarter four of last year, there margins have improved, the performance has been better. If you look at quarter four of last year, there was a loss. This quarter we have made a profit of Rs 15 crore and there is a cash profit of over Rs 100 crore.

Our top-line has grown by 33%. Shipping continues to remain a challenge. Shipping is draining, especially the tanker division. Tanker division, there has been a loss for the quarter, but there are no cash losses. If you see our last quarter, there was a cash loss. This quarter there is no cash loss. Our dredging division has improved. We have an order book in dredging division of about Rs 300 crore for the next year which is visible.

Q: The problem for your numbers is that on a blended basis there has been tremendous pressure on the margins. How much of an improvement do you expect to see over the course of this year, both in terms of margins and what happens with your bottom-line?

A: We must also realise one more thing, the contribution from shipping is only 32%. Sixty eight percent of our revenues do not come from shipping. Sixty percent is coming from coal, 4% from offshore and 4% from dredging. Going forward, this will go up further. So, the contribution from shipping will continue to drop going forward.

Q: How do you see the coal trading business panning out? That has bailed out your numbers in the current quarter as well with a doubling of sales and offset the performance of the shipping and the offshore division.

A: The offshore division will perform better in the next year. We have sold the drilling rig last quarter, in the month of February. Our new Mobile Offshore Production Units (MOPU), the floating production, storage and offloading (FPSO), which we have of Nigeria, which is on a contract for nine years, commenced commercial productions on April 30. So, we have only two months revenue. Going forward, there will be a full quarter of revenues. So, those numbers will look much better in the coming quarters.

As far as coal is concerned, we are hoping that they will do even better in the coming quarters. Also, we are also in the process of acquiring one more mine where we hope to start production in the first quarter of next year that is calendar year, fourth quarter of the financial year. So that will contribute even better.