ABS Shipping Secures Contract with Oil & Natural Gas Corporation

ABS Marine Services Ltd has commenced a significant contract agreement with Oil & Natural Gas Corporation (ONGC) as of 4th July 2024. The contract, spanning three years, involves the charter hire of an Offshore Supply Vessel, valued at approximately Rs 102 crores, inclusive of GST. This agreement does not involve any related party transactions, ensuring a clear and transparent deal focused on enhancing the operational capabilities of ONGC through ABS Shipping’s specialised services.

Nature of the Contract

The contract entails the chartering of an Offshore Supply Vessel, designed to support offshore operations, including the transportation of goods, equipment, and personnel to and from offshore platforms and other installations. The consideration for this contract stands at USD 12.29 million (approximately Rs 102 crores), reflecting the substantial investment by ONGC in leveraging ABS Shipping’s expertise in maritime services.

About ABS Marine Services Ltd

ABS Marine Services Ltd is a prominent SME specialising in ship management, vessel ownership, marine services, and project management. With over three decades of experience in third-party management, ABS Shipping is committed to maintaining the highest standards of safety and energy conservation both onboard and ashore. Their core businesses include ship owning, which remains a steadfast aspect of their operations, and providing a wide range of marine services tailored to the needs of the shipping industry.

Ship Management Expertise

ABS Shipping engages in crew and technical management, managing a fleet of over 30 vessels spanning various sectors. These include Offshore Vessels for the Oil & Gas Sector, Research Vessels for the Government of India, Bulk Carriers, Gas Tankers, Oil Tankers for private shipping companies, Passenger Vessels, High-Speed Crafts for government agencies, and Harbour Crafts for ports. Their focus on crew management ensures the selection, development, and management of highly qualified professionals, essential for safe and efficient operations. With a seafarer pool of over 2,000 highly qualified professionals, ABS Shipping boasts high retention rates, reflecting their proficiency in managing all aspects of the recruitment process.

Financial Overview

ABS Shipping has shown impressive financial growth over the past few years. The company’s revenues increased from Rs 71.63 crore in FY22 to Rs 135.15 crore in FY24, surging 88.68% over past two financial years. Despite the rise in direct expenses and other costs, ABS Shipping achieved an EBITDA of Rs 44.67 crore in FY24, with an EBITDA margin of 33.05%. The company’s profit before tax for FY24 was Rs 2,6.32 crore, with a profit after tax of Rs 25.41 crore.

Revenue Breakdown by Sector

The company’s revenue is primarily derived from the government, public sector undertakings, and other sources. In FY24, revenue from the government amounted to Rs 74.49 crore, from public sector undertakings to Rs 53.46 crore, and from other sources to Rs 10.06 crore.

Prospects in the Maritime Sector

India’s maritime sector is a significant contributor to the country’s trade, handling around 95% of trade by volume and 70% by value. The government has introduced various fiscal and non-fiscal incentives to promote enterprises involved in ports, inland waterways, and shipbuilding. Initiatives like the Sagar Mala Program, launched in 2017, aim to drive port-led development and logistics-intensive industries, with a planned investment of USD 123 billion across 415 projects. Foreign Direct Investment (FDI) is encouraged, with 100% FDI allowed under both government and automatic routes.

India boasts 12 major ports and 200 non-major/intermediate ports, with significant contributions from ports like Jawaharlal Nehru Port Trust and Mudra. Public-private partnership projects worth approximately USD5 billion are underway, further boosting the sector’s growth and development. As one of the world’s top ship recycling countries, India ranks third globally by tonnage.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. The information is based on various secondary sources on the internet and is subject to change. Please consult with a financial expert before making investment decisions.