(Commonwealth_ G. Sivakumar, Executive Director and CFO of GE Shipping emphasized the company’s focus on meeting the growing demands for a robust network of ports and connectivity. He stated, “We are there to meet that requirement if it comes up.” Addressing a query on ship purchases, he explained that GE Shipping primarily acquires vessels from the second-hand market. The company follows strict balance sheet management policies and avoids issuing equity, maintaining a controlled approach to debt levels.
When asked about the company’s recent sale of an older MR (Medium Range) product tanker and the acquisition of a comparatively younger one, Sivakumar provided insights into the operational and financial advantages of these transactions. Over the last nine months, GE Shipping has sold four older vessels and replaced them with slightly newer ships of the same type. The goal of these transactions, according to Sivakumar, is twofold: enhancing fuel efficiency and maintaining the company’s position in the international market.
One example is the Jag Priyanka, which is more fuel-efficient than the older Jag Pranam. This fuel efficiency translates into better operating performance, which, in turn, improves the company’s bottom line. However, Sivakumar highlighted that the primary driver behind these fleet upgrades is not just operational efficiency. He explained that once ships cross the 20-year mark, it becomes increasingly difficult to meet the stringent requirements of international customers. As a result, GE Shipping has been replacing older vessels to ensure compliance with international standards and to maintain the company’s competitive position in the global shipping market.
In discussing the maintenance and servicing of such a large fleet, Sivakumar noted the importance of modern ships in the company’s strategy. While newer ships tend to be more fuel-efficient and compliant with global regulations, they also require sophisticated servicing and maintenance facilities. Sivakumar mentioned that the fleet’s servicing and repairs are carefully managed, though he did not delve into specific details about the locations or facilities used for these purposes.
The focus then shifted to the broader strategic framework of GE Shipping, specifically its approach to acquiring ships. As the company primarily purchases vessels from the second-hand market, Sivakumar was asked about the impact of India’s policy environment on such decisions. Although the question was left somewhat open-ended in his initial response, it is clear that GE Shipping’s strategy prioritizes the acquisition of modern, second-hand ships to maintain a balance between financial prudence and operational effectiveness.
Sivakumar reiterated that GE Shipping’s ship purchases are not driven by the need for new equity injections but rather by a disciplined approach to managing its balance sheet. The company has set strict criteria for the amount of debt it is willing to take on and adheres to these limits to maintain financial stability. This conservative financial strategy allows GE Shipping to continue acquiring ships while keeping its debt levels under control, ensuring that the company remains well-positioned in the global shipping industry.
Looking ahead, GE Shipping seems poised to continue its fleet modernization efforts. The company’s recent transactions, which involve selling older vessels and replacing them with slightly newer, more efficient ones, suggest that this strategy will remain a key component of its long-term plan. Sivakumar’s comments indicate that the company will continue to focus on acquiring second-hand ships that meet both operational efficiency and international compliance standards. This approach not only ensures that GE Shipping remains competitive in the global market but also helps the company maintain a strong financial position.
