But the year 2000 started on a good note for the shipping industry with major companies riding the crest of a surf, due to buoyed net profit and income earnings. A study of quarterly net profit of five major trend setting shipping companies, reveals that these companies are coming out of the long recession and are turning around.

The first quarter (April-June 2000) net profit of these companies showed a minimal decline of 4.1 per cent over the previous quarter. This was followed by a marginal growth of 1.03 per cent in the second quarter (June-September 2000). The onset of winter saw an upturn in the fortunes of these companies with the third quarter (October-December 2000) net profit, growing by nearly 23.1 per cent over the previous quarter. The increased demand for tankers and crude carriers saw a growing demand for Great Eastern Shipping (Gesco) and Essar Shipping's crude carriers.

Gesco's net profit rose from Rs 32.75 crore in the second quarter to Rs 45.38 crore in the third quarter. On the other hand, Essar Shipping showed a modest dip of 1.04 per cent net profit during the same period. Improvement in dry bulk rates saw a complete turnaround of Chowgule Steamship profits from Rs 0.78 crore in the second quarter to Rs 3.8 crore in the third quarter, a growth of 387.2 per cent!!

Garware Shipping's net profit rose by 100 per cent from Rs 0.54 crore in the second quarter to Rs 1.08 crore in the third quarter.

As compared to the first quarter, the third quarter saw a net profit growth of 24.3 per cent for these five companies. Varun Shipping saw a growth of 109.7 per cent in net profit. Essar Shipping saw a growth of 91.1 per cent, followed by Garware Shipping witnessing a 20 per cent growth. Chowgule Steamship, which made a loss of Rs 2.39 crore in the first quarter, turned around only in the third quarter to make a profit of Rs 3.8 crore.

Only Gesco's net profit dipped from Rs 48.52 crore in the first quarter to Rs 45.38 crore in the third quarter.

Looking at the profit after tax (PAT) to income ratio of these five companies reveals an increase from 15.7 per cent in the first quarter to 16.4 per cent in the third quarter. Chowgule Steamship and Varun Shipping saw a phenomenal change in PAT to income ratio during this period.

Chowgule Steamship's ratio increased from 3.16 per cent in the second quarter to a double digit ratio of 13.5 per cent in the third quarter. Varun Shipping's ratio nearly doubled from 3.02 per cent in the first quarter to 5.8 per cent in the third quarter after reaching a peak of 9.6 per cent in the second quarter.

Essar Shipping saw an increase from 10.7 per cent in first quarter to 22.1 per cent in the second quarter and declined thereafter to 17.4 per cent in the third quarter. Only Gesco and Garware saw a decrease in ratio during this period. Gesco's ratio decreased from 23.9 per cent in the first quarter to 18.3 per cent in the third quarter. Similarly, Garware Shipping saw a decline from 25.6 per cent in the first quarter to 23.9 per cent in the third quarter.

An improving situation in the South East Asian market has buoyed the performance of the shipping industry in the recent time.

Increase in demand in the tanker market due to new refining capacity set up in Korea, Taiwan and China has led to demand of crude carriers.Essar Shipping has six Suezmax vessels on long term charter outside India.

Great Eastern Shipping has three crude carriers operating on international charter.

According to industry sources, Gesco's earnings from tanker operations accounted for about 70 per cent of the profit in the third quarter. Essar Shipping has deployed most of its Suezmax tanker vessels in the international market enabling it to capitalise on rising charter rates.

Besides this the rates of the tanker market, after touching a 10 year low, price has improved by 50 per cent to 75 per cent. Spot market rates for such vessels are in the range of $65,000 to $70,000 per day.

Improvement of freight rates in the dry bulk market from $7,500 per day in 1999-2000 to $9,000 per day in 2000-2001, accelerated production of Japanese steel mills and new construction activities taking place globally, explains Chowgule Steamship company's demand of bulk carriers.

Looking at a recovery in freight in all the segments of the shipping industry is heartening. Though, stability of earnings is yet to be reflected, but the current market has rekindled investors hopes in the shipping industry.