Great Eastern Shipping informed the Bombay Stock Exchange on Saturday that its board of directors will meet on August 31 to consider proposals of restructuring its business.
Although no details were available, it is learnt that the board of directors of the country's largest private sector shipping company might consider spinning off the offshore business into a separate identity.
The offshore business contributed 12 per cent to the total revenue and nine per cent to the net profit of the company in the financial year ended March 2005. The company posted a net profit of Rs 808 crore (Rs 8.08 billion) over a turnover of Rs 2,100 crore (Rs 21 billion) in 2004-05.
Great Eastern Shipping has a fleet of 75 vessels comprising 44 ships and 33 offshore vessels. Sources familiar with the development said Bharat Sheth, deputy chairman of the group and managing director of the shipping division, may be asked to manage the shipping business.
Vijay K Sheth, managing director of the offshore division, might get the final responsibility of managing the offshore business.
The sources added that the proposed restructuring was aimed at unlocking the value of Mumbai-based Sheth family controlled shipping company.
The restructuring, once approved, would divide responsibilities among the Sheth cousins. Shareholders of Great Eastern Shipping, post restructuring, would receive shares of the new business entity which would be carved out of the offshore business.
The shipping companies across the globe are traded at 6-9 multiples of their price/earning (P/E) ratios while the Great Eastern Shipping stock is being traded at 3.4 times of its P/E ratio. The offshore entities are traded at 12-15 multiples of their P/E ratios worldwide.
After the restructuring, analysts expect shares of both the entities to be traded in line with global trends.Company scrip was traded at Rs 169.65 on Friday. The company's M-Cap stands at Rs 3,300 crore (Rs 33 billion).