The Great Eastern Shipping Company Limited (500620) Earnings Call Transcript & Summary

Good evening, ladies and gentlemen. Thank you for standing by. Welcome to GE Shipping earnings call on declaration of its financial results for the quarter ended 31st December 2021. [Operator Instructions]. I now hand over the proceedings to Ms. Anjali Kumar, Head of Corporate Communications at The Great Eastern Shipping Company Limited to start the proceedings. Over to you.

Hello?

Ms, Anjali Kumar, you'll have to unmute your line.

Yes, Stanford. I'll take it from here. Hello?

Sure, [indiscernible]. Go ahead.

Yes. Good afternoon, everyone. This is Shivakumar here, and welcome to the results con call for the quarter and 9 months ended 31st December 2021. I trust you would have had a chance to go through our results, which were published a couple of hours ago. In any case, we'll go through some of the highlights. We'll go through what the markets have been doing. And while forecasting is always a dangerous business, we will try to look at what could happen going forward. So all the customary disclaimers apply. We don't know what the future holds, but we may be discussing some prognosis on what could happen. So first, let's look at our results. We have in the 9 months declared a net profit on a stand-alone basis of INR 625 crores. On a consolidated basis, somewhat lower at INR 441 crores. Looking at the quarters, this quarter, that's Q3, was slightly better than Q3 of last year. We have -- let's look at the normalized results, and those who have been following us for some time know that we set great store by these normalized results, which take out these impacts of derivatives and exchange rates. So let's move forward. What are normalized results? The impact of the exchange rate, which is very significant in our case and on these derivative transactions, are removed from the -- the impact of those is removed from the P&L. And then you have a clearer picture of what the business has been doing. So here are our normalized highlights. Our numbers are slightly lower than they were -- slightly higher than they were in the previous quarter. Then -- but a little lower than our reported results for the quarter. So we are reporting a stand-alone profit of INR 250-odd crores, while our normalized numbers are about INR 226 crores similarly for the consolidated numbers as well. The balance sheet continues to be in good shape. We have, in fact, accumulated more cash than we would have liked. We would have liked to invest in new capacity, but we have not had that opportunity for the last couple of quarters. So looking at broad ratios, the return on equity is in excess of 10%, close to 15%, in fact, on a stand-alone basis, on an annualized basis. Again, it's dangerous to annualize, but we've just annualized the 9 months to the full year. On an absolute basis, we are in excess of 10% just for the 9 months. The net asset value per share has gone up slightly. We were at about INR 570 stand-alone in -- as of end September. We are now at INR 576. This, of course, has gone up significantly from March. It has gone up by about 18% or 19% since March, showing that there's a lot of movement, a significant movement in the price of shipping assets, along with, of course, significant cash flow from the business, which has enabled us to build up cash as well. In the last quarter, we announced and paid an interim dividend of INR 4.5 per share. We have also announced, and you would have seen at the very end of December, we announced a buyback of up to INR 225 crore at a market price of up to INR 333 per share, and that buyback started from the 7th of January. We post, of course, regular updates as per the requirements, and every day, we give a release on how many shares we've bought. One of the reasons for the buyback, or the main reason for the buyback is that we have, as I mentioned earlier, accumulated cash from operations as a result of our investments in ships at the right time doing well. However, we have not yet been able to get suitable opportunities to reinvest, and therefore we thought that we should put some capital towards buying back our stock, which is trading at a significant discount to the net asset value and to the book value. Looking at the TCYs, and we look at it on a longer-term basis also. We have a couple of crafts coming up. So the TCYs have gone up sort of across the board, crude tankers have done slightly better than -- in Q3 than in Q2. Product tankers also have done slightly better though still not at profitable levels. So on an individual ship basis, these are still below breakeven, but it's a little bit better than it was in the previous quarter. LPG carriers, which are all on time charter, continue to do well, and dry bulk also did a little bit better than they did in Q2 of this financial year. We have -- now this coverage is, of course, for the remaining FY '22. It's -- we have a significant amount of coverage, but that's only -- basically, we are talking of the last 3 months of the year, so it's not very significant. A large proportion of our fleet continues to be in the spot market. All our LPG ships are on time charter, but most of our tankers are on the spot market. So are most of our bulk carriers. Looking at what's been happening in the shipping markets, and this graph says it all. The blue line is of FY '21, and you can see that spectacular start that we had to the year, which boosted the year's average. And after that, we have been at very low levels with little blips here and there, but still at pretty unprofitable levels. So the 9 months -- and these are market averages. These are not our ship averages. These are market averages. So you can see that the Suezmax spot rate has dropped by about 70% from the previous year in this 9 months. And the MR tanker, which is a representative of the product tankers, has dropped by about 50% vis-à-vis the previous year. So that's been a big fall, and we'll come to that in a bit. So what are the reasons for it? We have seen an increase in trade because oil demand is slowly recovering, and so our refinery runs. However, the product trade is still 3% below pre-COVID levels. The crude trade is about 10% below pre-COVID levels. Supply continues to grow, although not very fast. Last year, supply grew by about 1.5%, 2%. However, an additional supply was released into the market because of the release of floating storage, which was about 1.5% for the crude tanker fleet and a little less than 1% for the product tanker fleet. And because of this, freight rates remained at very low levels. Typically, Q3 of the financial year, which is the start of the winter was -- is a strong quarter. Q3 and Q4 tend to be strong quarters for the tanker market. And this Q3, the last quarter, was the second weakest Q3 since 1990. And interestingly, the weakest Q3 since 1990 was of the previous year. So October to December 2020 was the weakest Q3 we have seen for the last 30 years, and this is the second. One silver lining is that both crude oil and product inventories have been drawn down by about 10% but are now below their 5-year lows, and this is based on OECD inventory data, which is the regular release that comes out. So at some point, the drawdown from inventory has to stop, and they have to start importing new oil, and also at some point, maybe start replenishing the inventory, which is a time when the demand will pick up again for tankers. Looking at dry bulk, and dry bulk is sort of the opposite picture to tankers. We had a pretty weak year last year. So Capesizes average $15,500 a day. While in the first 9 months of this financial year, Capesizes have averaged 150% more than that at $38,000. So it's been -- in fact, in October, where you see the number of about $65,000 , that was a high not seen since the super cycle ended in 2008. After that, they've come off to averaging about $30,000 in the month of December. And first quarter of the calendar year, which is Jan, March is typically a weak period for the dry bulk market. Now the Capesizes are currently earning about $6,000 a day in the spot market. That's the CAPE Index I'm talking about. What led to this? The dry bulk trade rose by almost 5% in 2021, and this was mainly led by growth in minor bulks, not the big ones like iron ore and coal. Iron ore, in fact, has been flat year-on-year. And so it's the minor bulks which have provided the bulk of the trade growth. So while the fleet grew by 3.5%, so that's quite a lot of lead growth. Congestion played a big role. We had -- it touched a 10-year high of about 5% in Q2. And I think we touched upon this in the con call last quarter, and that helped tighten the market. So that's one of the reasons why we've had a very strong dry bulk market over the last few months. Looking at LPG, the market continues to be strong. Rates have been lower than last year, but still at very profitable numbers. So for the 9 months, though, they have come down from $47,000 to about $33,000 in the spot market. They are still at very profitable levels. Again, I must reiterate, our ships are on time charter. All our 5 gas carriers are on time charter. However, whenever they come up for pricing, there is an impact of the spot market rates on the rates that we are able to achieve on those vessels. Again, it's driven mainly by long-haul U.S. LPG exports, congestion at the Panama Canal. So there's been a significant increase in the trade over the last 5, 6 years, and that continues. So the one thing, that message that we'd like you to take away from this is despite tankers being at such low levels and having dropped off so much in -- for the last 18 months, the dry bulk ships have taken off the slack and almost compensated for that drop, which shows the benefits of having different types of ships in the fleet, because you will get these cycles moving sometimes and asynchronously, and that will help you to maintain a level of profitability even in the face of different cycles. Looking at supply, we continue to have a low order book across the board. The dry bulk order book has been building up a little bit in the last quarter or 2, so we were at around 6%. Now it's close to 7%. But apart from that, product tankers are at their 25-year low in terms of order book, and crude tankers also at a very low level of order book. Looking at asset prices. Despite -- so the top 2 are crude and product tankers, crude on the left and product tankers on the right. And this is what has sort of baffled us and also frustrated us because we haven't been able to buy ships despite the weak market. You've seen how the freight rates have been, despite ships earning only a little bit above OpEx. Prices during calendar 2021, you can see the Suezmaxes have gone up 10% plus. You can see that the product tankers, the MRs also have gone up by 10% -- sorry, the Suezmax has gone up by 10% plus, the product tankers have gone up by 10% to 15%. So all of this is -- has contributed to not being able to invest in new capacity. On the other hand, you have the dry bulk market where because of rates being high, prices have gone up by more than 50% in the last year or so. And you know that we are value buyers. And we are -- we have not been able to buy tankers because the earnings are too low to justify the prices being at the levels they are. And in dry bulk, the prices have just gone up too much to be able to buy them with a reasonable margin of safety. So we continue to look for opportunities to buy, but only at the right prices. Scrapping has been picking up. So another little bit of good news, but very little good news. It's moved up. So crude tankers, you had 2.5% scrapping, which is the highest in 3 years. But product tankers, you had 2% scrapping, which is the highest since 2012, so it's a 9-year high. It's a good sign. Again, scrap prices continue to be around $600, and hopefully, more tankers will get scrapped, which will remove some of the supply overhang. Coming to the offshore business. Again, this is a slide that we've shown many times before. There are a lot of old rigs which are there, which at some point, hopefully, will be removed. But let's move forward. Utilization, while it's moved up since Jan '21, so in the last year or so, last quarter didn't really see much movement. There has been some excitement around deepwater rigs after the price of crude is at $80 and been moving up, but haven't seen much improvement in the [ backup ] utilization In the last 3 months, though it has improved significantly between Jan last year and Jan this year. So the recovery seems to be underway, but not yet fully reflected in the pricing. In terms of the vessels, we have seen better prices for larger vessels. Like say the large PSVs, we have seen significantly better pricing, more contract inquiry flow. And so we can see the recovery taking place there. Again, I'm talking about markets outside India. India tends to be a time charter market, longer-term time charters, but we're talking about markets outside India. Southeast Asia, Africa, et cetera, where we are seeing improvements in pricing and in some cases, significant improvements in pricing from a year ago levels. So let's hope that, that translates to the markets in India as well. Of course, we have a lot of cover. We have more than 50% of our capacity even for FY '24 in terms -- for the vessels covered. So we don't have too many pricing points coming up. On that note, yes, let's look at what's -- what we have here. These are the repricings to be done. You will notice that the first rig and the rig pricings are the gray bars. The first rig repricing has to happen only in H1 FY '24. We don't have any rig to be priced before then. We have the Greatdrill Chitra, which comes off charter in the next few months. We have already got our next 3-year contract in India itself, so we don't have to worry about her employment. This is the next rig which will come off in middle of calendar '23, which is about 16, 17 months from now, where we have to find employment. And among the vessels we have, basically within the next year, we have the 6 assets to be repriced out of the 19 assets. Looking -- just a couple of the financial ratios. Sorry, I should have mentioned in the context of offshore, we have -- and you may have seen that note in our results as well. The Greatship Rohini, which suffered that unfortunate fire accident in February last year, we had taken significant write-downs on the vessel over the last year or so. We took another write-down of INR 12.5 crores in December. The intention is to sell the vessel, and so we wrote the vessel down to the realizable value. The insurance claim is under process. And -- but we will account for that only after the claim is confirmed by the insurance company. In the meantime, we have taken all the write-downs that we had to take. Financials, again. This is another chart that we show every quarter. We have -- we had levered up starting in end of FY '16, so that's in April 2016 when we were down to about $100 million in net debt, and we bought a lot of assets. And again, the cycle has played out. Our investments have played out. And so we're back down to under $100 million of net debt or 0.11 of net debt to equity. So we are here, we are prepared to -- we are in a good position as far as our balance sheet is concerned. We would like to do CapEx for renewing our fleet. However, we will do it only at the right price. Finally, what is our price to NAV? We are at little above INR 0.5 price to NAV. So -- and yes, that's been trading like that for some time, one of the reasons why we launched the buyback. That brings me to the end of this presentation. We are happy to take questions. Mr. Bharat Sheth, Deputy Chairman and Managing Director, is also here, and we'll be happy to take your questions.

[Operator Instructions] We take the first question from the line of Anuj Sharma from M3 Investments.

My first question is, we spoke about a rig repricing for next 3 years. Can you just give a sense as to what was the repricing difference between the last and the new?

So unfortunately, this pricing happened -- the system in India is L1. Unfortunately, in that particular tender, the L1 bidder was significantly lower than us, and we had to match that price. So that pricing actually went in about, well, 13% lower than the previously done price, which was our own contract. So we had got a contract at X, and this happened at 0.87x.

All right. My second question is there is a lot of clutter about new fuel and norms for supply for ships. So can there be a situation like the double hull versus the single hull in [ 2,000 ]? And the traditional ships becoming much cheaper because everyone wants to buy the new category of ships? Just some thoughts into that.

Yes. Okay. So at the moment, there is a lot of confusion on what would be the fuel and use. And we saw what happened on double and single hull, that everybody rushed out to build double hull ships and then those prices came off considerably. And the single hulls actually provided a much better return on capital than the double hulls, right? So long as they could last. So similarly, because there is so much confusion, right, nobody knows whether it's going to be hydrogen, ammonia, LNG, biofuel, et cetera. We clearly have taken a position that we don't want to be first off the block. We don't know what's going to happen. There's a lot of confusion in the marketplace, and we therefore think that these ships will continue to either hold value as the CFO has just shown or if the market goes up, they will actually gain in value. So it's not as if there are no buyers for these ships. Even today, as the CFO has just mentioned, there are plenty of -- there are no sellers of these convention -- what we call conventional units, right? There are very few sellers of conventional units, and that's one of -- and there are more buyers than sellers for conventional units. And therefore, you see the prices have gone up.

The next question is from the line of Archan Pathak from Centra Advisors.

My first question would be regarding the shipping yard, right? So as you saw, the order book for the dry bulk has increased from 5.5% to 8% now since the first quarter. So can you tell us how much percentage of the current [ CPRs ] are filled up with the container ships? And when will they start freeing up making space for the other segments? Also, if any new dry bulk ships is being ordered today, till when will it get delivered? So that would be my first question.

Yes. So if I can answer the first question. The yards are pretty full for cal '22 and cal '23. I think there is space open for cal '24. The bulk of this ordering has been containers and LNG. As we have shared in the past, the container space is significantly taking all -- the bulk of the newbuilding orders. And I think if today you wanted to place an order, again, it depends on whether that order is placed in Japan, Korea or China. But I would say, if today, one were to contract, one would possibly get slots for first half of cal '24 on dry bulk. Yes.

Okay. Okay. Got it. Okay. My second question would be regarding the asset prices. Like since the first quarter, we have been seeing how the crude tanker prices have remained quite lower the freight rate, but the asset prices have remained the higher range owing to the thinking that the markets are going to be better in the next quarter. So how do you see it going further away? And how do you see planning your CapEx? Like are we going to wait for the 2016 levels or our new bottom buying rate has increased?

So number one, if you look at where secondhand prices are -- so let's break up the secondhand ships into vessels, which are 0 to 10, right, and then 11 to 20, right? The vessels which are 0 to 10 are very closely linked to newbuilding prices. And if you see today the ratio of 10-year-old ships to newbuilding prices, it is at the lower end of the last 10 years. So what are the chances of 10-year-old ships coming down if newbuilding prices stay strong, which I guess they will because of where steel plates are, then the chances of the values coming down are quite limited, okay? Now if you go to the other category, I think if you break it up 11 to 20 and further break that up into 11 to 15 and 15 to 20, 11 to 15, there is some chance of values coming down if these earnings go nowhere. And let's say the tanker market remains weak for the rest of cal '22. I think some people will begin to throw in the towel. For those ships which are 15 to 20, those are underlined by scrap. And so long as the steel prices are where they are, we don't see too much of a chance of scrap prices coming off. And as the CFO mentioned in his commentary, scrap is again at a multiyear high at $600 per lightweight. So what is Great Eastern's CapEx program in light of all this? It's going to be a challenge. I don't think we have the luxury of waiting for 2016 prices. '16 and '17, we got very, very lucky with what we bought. I personally don't think those prices are going to come back in a hurry. So I guess we will have no choice but to raise our -- what we call value price. But we won't go crazy about it, right? So we are not going to compromise too much. We'll have to make some compromise on value with growth, but we will draw a line in the sand somewhere.

The next question is from the line of Vaibhav Badjatya from Honesty and Integrity Investment.

Sir, just a small 1 question. So on this Russia and Ukraine crisis that is going on, I just wanted to understand, if something were to happen, how the shipping market -- how the tanker shipping market, both under crude and product tankers might get impacted due to changes in shipping routes. If you can throw some light on that, that would be really interesting.

Yes, sure. So Russia, as you know, is now possibly the world's largest exporter of crude oil, but some of that crude is getting piped. And if -- now it all depends on not just the war. It depends on the sanctions, right? So let's say, God forbid, there is Russia-Ukraine sort of conflict, it depends on what sanctions are brought in. If it is trade sanctions like, for example, let's say, you can't trade Iran. If they say no one can buy Russian oil, no one can buy Russian grain, then, of course, there will be lots of disruptions to trade groups. As you know, Russia and Ukraine, between them, account for a meaningful part of the global grain trade, right? And let's say that countries just can't buy from them. Obviously, in the short term, there will be a lot of disruption because eventually, the countries that are importing grain have to get it from somewhere. But what will happen immediately is you will see a huge shoot up in prices, right, of grain as well as oil. Now I think we are already aware that the world is headed for meaningful inflation, and therefore if there was this sanction on trade, the first thing that would happen was oil would pop up significantly, food grain prices would pop up significantly. And it's very difficult to know whether, at those prices, are people going to wait? Because, obviously, it's not going to be a year-long conflict. If there is a conflict, it will get resolved in a few weeks, or will people assess whether these are temporary pickups, and therefore we'll wait for the commodity price to come down again. So if you ask me, I think it's a very hazy picture. My own view, and this is of course a personal view, that it is going to be near impossible to bring in trade sanctions. Because already, oil prices are at $90, right? Unless, of course, OPEC is pushed. And as you know, I don't know whether China, as you know, is meaningfully supporting Russia. And China may continue. Sanctioned or not, China may continue to import. The point is whether companies like us or other companies will be permitted to carry Russian oil. Like today, we can't carry Iranian oil, right, because it's sanctioned, or Venezuelan oil. So I think the jury is out. There is a big joker in the pack. We've got to wait and watch. But my personal view is that it is unlikely, in already an accelerated inflationary environment, for trade sanctions.

Got it. So if Russian exports were to decline, so wherever Russia is exporting, I think it is mostly to Europe. So a...

So Europe and China. Russia exports a lot of crude oil to China. That may continue because China will not bother about sanctions, right? And the trade into Europe will get substituted by other trades. Now whether that trade comes from the U.S. can supply crude oil, West Africa can supply crude oil. So that will be positive because, obviously, you will have a little more ton mile. Russia to Europe is much lesser of a distance than if you take, let's say, U.S. to Europe or South America to Europe or West Africa to Europe or AG to Europe. But the question is, do people have surplus oil to supply in the first place? Because a lot of this oil, don't forget, is contracted to customers over 12 months. So if you are contracted to customers, you -- even if the demand is there, you may not have the oil. Unless, of course, OPEC+ says, look, we've got to stabilize oil price. There's political pressure on them. And let's say that they all decide we now need to pump x number of million barrels more in order to help stabilize oil prices. And if they decide to do that, that's positive for the tanker market. But not so positive for the dry bulk market, because you can never substitute the quantum of grain that is exported from Russia and the Ukraine. I mean that's just impossible to substitute.

The next question is from the line of Vikram Suryavanshi from PhillipCapital.

Okay. Great. Sir, what I understood is, I think the spread between this low sulfur oil has increased substantially. So if you can comment how is the current spread? And will that changing the thought process for going for more number of scrubbers for our fleet? And any CapEx on that? That was my first question.

Yes. So I'll answer your first question. The current spread is -- again, it varies marginally between Singapore, Fujairah and Rotterdam, which are the 3 big fueling centers. But the range is between $150 and $180. Now we saw that when oil prices were down to $30, $40, the spread had narrowed down to $40. So now with the spread having widened, the decision that we took of putting scrubbers on 6 of our ships is looking a little more beneficial than it was looking last year. As to your part B of the question, would we put in or invest in additional scrubbers on our ships? The answer is no. because at the current spreads of $160, $170, it's not a great investment. We've already got the scrubbers of the past, and so we've got to live with that. But would we put in incremental CapEx? Clearly not.

Okay. And in presentation, there was a comment that there was whatever TCY rates what we are having for tankers are significantly below breakeven though there is improvement. So approximately what of the level the TCY should be there for tanker for breakeven?

See, actually, it all depends how you define breakeven, right? And different companies will define breakeven in different ways. So the way we just look at it is on cash breakeven. So we look at sort of what is required for each ship's contribution on debt repayments. So I would say on the crude oil tankers, roughly it will be in the region of $15,000 to $16,000 a day, roughly. And on the product tankers, it would be around $12,000 to $13,000 a day.

Understood. For us, it may be lower because of our assets, what we typically price?

Yes. Because of...

Or new, I think it should be substantially higher.

Much higher. Much, much, much higher. The reason it is much lower for us is because of the fact that our capital that we invested in was at much lower price points. See, that's the whole point that what we have set out to do is build a very, very competitive fleet that would bring in levels of profit even at very low points of the cycle.

Yes. Because with your experience, how you see that in long term, this kind of rates at get least adjusted to the long-term cost structure of it purely depends on the short-term demand supply sentiment?

Sorry, can you repeat your question? I missed the first point, the first sentence.

Yes. Because I was just talking about general trade rate in the system. Are they covered by long-term cost structure of this breakeven for the new assets or it typically tends to be impacted by the short-term sentiment?

No, it is just purely impacted by short-term events and is really not a function of this current breakeven. But of course, what will happen, right, if there is a sustainable disparity between, let's say, new building breakevens and where the spot markets are or whether 1 year, 2 year, 3 rates are, people will not build ships, right? And we have seen in the month of January, which is now coming to an end, 0 newbuilding contracts have taken place across the tanker spectrum, 0.

Understood. And one more question regarding offshore, which is oil now significantly a good level for offshore market, what we take as a reference for. So are we seeing that investment in E&P improving in the offshore? Or is it changing the outlook for aftermarket?

So as the CFO mentioned, there is a marginal uptick in the utilization of rigs, but those are much more the deepwater rigs. And we are now at a utilization in the high 60s. We have seen that the price point goes in the supplier's favor, i.e., the [indiscernible] favor when utilization crosses 80%. So we still have a way to go. On some of our boats though, which are again required for some more complicated or complex operations, we have seen a decent improvement in the rates. We have seen -- we've clearly seen a demand for those assets. And across, whether it be West Africa, South Asia, North Asia, et cetera, there is clearly more demand for those kind of assets. For the very conventional boats, which just do up and down supplies, we haven't yet seen -- as we -- as you know, that was a very meaningfully overbuilt sector when the markets were strong, so we haven't quite seen an improvement there. But if oil prices sustain, again, it all depends on sustaining, and there is a lot of talk that the worst of the oil price is behind us. and that oil could average, I think it's averaged in the very low 70s for cal '21. I think there is a sporting chance it will average somewhere between the 70% and 80%, 85% mark is what the majority of so-called pundits over cal '22. And at these prices, eventually, there has to be an enhanced E&P program by the oil company. And this is in spite of all these ESG noise that one is hearing.

Got it. And the last question from my side. We have got order book percentage, but with your understanding in terms of scrapping and all that. what could be the net addition in a fleet for tanker and travel for CY '22 and CY '23 approximately?

I think it will be somewhere in the 3% mark.

For both the segments?

For each of the 2 years, yes. Yes. I mean it could be 3%, 3.5%, but somewhere in that region, right? So I must say that the supply side is really not a challenge at least for the next 2 years. I think what we really need eventually is for demand to pick up. As we've just shared in one of the slides that demand on crude is still 10% below pre-COVID levels. That's a lot. So we need that bit to change.

Yes. Yes. How important is this aviation fuel for this crude demand?

Very important. ATF is -- in fact, if you see one of the most disappointing sort of petroleum demand areas has been ATF. The demand is coming back to gasoline. Demand is coming back to gas oil, but ATF, which is equally critical commodity, that demand is well below pre-COVID levels.

The next question is from the line of Amit Khetan from Laburnum Capital.

Yes. So my first question is, if you look at the tanker markets, obviously, there's a big disconnect what's happening between the asset markets and the freight markets and this will have to get resolved one way or the other. Based on your own historical experience and perspective, could you throw some light on if asset markets are leading indicators of freight rates? Or is it the other way around? And if it's the former, shouldn't we be buying more?

So asset prices at times have lagged the freight market and at times led the freight market, right? So there is no consistent pattern that asset values will necessarily lead what's likely to happen in the freight market. We've now seen almost 18 months of crude oil tankers earning only OpEx. Only OpEx with virtually no EBITDA contribution, right? And yet you've got values where they are. As I was explaining to one of the earlier questioners, this time around, it's clearly a function of where new building prices rest. And it is our concern, and it remains our concern that if tanker values do go. I mean if tanker earnings go up, which at some point they will, what's going to happen to prices? Have they led -- have they already led the market, and therefore you might see earnings go up, but asset values stabilize? Or is it that they will, at some point, somebody will throw in the towel and come off. It's a tough -- it's really difficult to answer. But what we think and what history tells us that at current price points, you don't create a meaningful return on capital. I mean then you're just better of buying paper. Because think about it, right? Today, let's say my steel is valued at $100 and I'm able to buy my paper at $50. So my better use of capital is buying paper.

Got it. Got it. And do you see -- if you leave out the part of sanctions, which are anyways difficult to predict, do you foresee any kind of trade route changes over the next 2, 3 years in terms of where oil and oil products are produced and consumed, which could lead to either an increase or decrease in ton miles?

Yes. So if you just keep all sanctions out and you just look at just the pure macro picture, right, clearly, there will be change in patterns. For example, there is a big refinery coming in West Africa. And that means that West Africa, from exporting crude oil -- I mean they will export crude because the refinery that's coming up can't absorb all the crude, but the crude export will reduce and the import, the product import will also reduce. And maybe West Africa will start exporting products. So -- and we are seeing a refinery -- big refineries coming up in Saudi Arabia, which again is very positive for the big product tankers, not so positive necessarily for crude. Now that crude -- but the demand is still there. So then that crude, instead of coming from the Persian Gulf, needs to come from somewhere. Now if it comes from South America, that's very good for the market. If it comes from, let's say, if it comes from Libya or if it comes from North America, that's also very good for the market. We are seeing a lot of crude oil come from Mexico and North America into India. Now that's positive to the market. So trade flows will never be a constant. It will be all over the place. And also you have to remember on the configuration of the refinery, because very few refineries and work can only survive on sour crudes. So you need some sweet crudes, and then it depends on where your contracts are on sweet versus sour et cetera, and what the differentials are and so on and so forth. So we don't even think about these issues, honestly. We just -- our focus is entirely on value. Because if you get the value right, and there's no point predicting these things, but if we get the value right, we are done.

Got it. And lastly, if you look at the rates that we have earned on our LPG carriers over the last 7 or 8 quarters, they are pretty good if I square them with our operating costs. So -- and obviously, this is on time charter. So why aren't we investing more here? Is it because we have a negative outlook on the segment? Or is the asset market here less liquid? And could you just throw some light on our strategy here?

Certainly. So on LPG, as you know, the market is a little less liquid. The last few transactions that have taken place are way above our price points, right? Again, I'm not comparing -- somebody asked me, would I wait until -- for the same price points as when we bought in 2016-17? The answer is no. we are happy to pay more than those prices. But we just don't see a lot of sense in today's prices, because even if you pay today's prices and you get the same 2-year earnings that we are getting today, the write-down is very minimal relative to historical pricing of the asset. So if I'm only going to write down and earn my depreciation, what have I earned in terms of return on capital? It will be in the low single digits, right? Now today, it's okay because interest rates are very cheap and Great Eastern possibly is able to borrow capital or debt capital at possibly amongst the lowest rates in the world for a shipping company, but there's no point borrowing at 3.5% and trying to make a 6% return on capital.

Got it. Got it. And we had 1 ship coming off of time charter last quarter. Could you -- has that been fixed at a higher rate than our previous rate?

No, it has been fixed marginally below.

The next question is a text question from Samraj N from Dwarka Share Brokers. The question is kindly give the split of net income of INR 228 crores between bulkers and tankers. Secondly, if you could give a back of the envelope S&P price for a 10-year-old MR2, LR1, Suez and Afra, also Kamsar and Supra.

Yes. Shiv, since there's so much data required, can we just deal with that off-line?

Yes. Only thing on net profit, I just mentioned, we don't give that split. But the fact is that tankers have been in -- I mentioned during my presentation also, they are at negative levels. They are below breakeven. So they have a negative contribution to the profit. But we don't give the breakup between dry bulk and tankers between sectors. Yes. And for the...

On the net income level -- at a net income.

At a net income, that's right. Obviously, they're making a positive EBITDA, but at a net income level, they are negative. On the asset prices, maybe we can connect separately on that.

You can just request Mr. Samraj to leave his e-mail ID in the chat box as well so we can come back to him.

Yes. Maybe Anjali, if you can coordinate with them. Yes.

Can I just request Mr. Samraj again to just leave this e-mail ID in the chat box as well, please? Thank you.

The next question is from the line of Sanjiv Pandya from Old Bridge Capital Management.

Sir, if I could just -- I mean, to take a line out of Warren Buffett, that airlines are a candle burning at both ends. Now if we were to keep a shipping company like a candle burning at both ends, now when you take a view on what price to pay, you just spoke in reply to a previous question that the baseline of ship prices has kind of gone up, and then you talked about asset market sometimes leading product markets. So if in this particular case we are seeing a relative sophistication on the part of asset markets, whether it is driven by scrap prices or a view on carbon emission norms of 2030, et cetera, and especially the new fuels coming in. And you're seeing ship prices go up structurally, there would be a kind of a payback on the delta which can be recovered from higher freight rates that would happen to you with a lag. So I'm just trying to see whether there is any space where you will sort of give up your, what should I call it, your determination to get the right value for your ships. And a provocative comment, sir. Aren't you fighting the last battle -- in the sense -- last year's battle in the sense that you're constantly looking at the downside on ships? And right now, maybe it's time to not look at downside on ships. You should be looking at the potential upside. Even if you overpay for a particular ship, maybe freight rates will work out for you. And of course, the prices also might do the same.

Yes. So I think this is a constant struggle in our own minds as you can appreciate. As I have said to one of the previous or a couple of the previous participants that we are not just wanting -- we are not trying to fight the market and say, look, we are convinced that 2016, '17 prices will come back. We don't know. We are happy to pay higher prices. But having said that, are we prepared to pay today's prices? The answer is possibly no. And let me share with you that in dry bulk from December, I mean, or let's say, from October, November values to today, asset values are down about 15%, between 10% and 15%, right? So from our perspective, they are moving in the right direction. Now maybe they'll reverse again and go up. I don't know. I can't answer that. But what we don't wish to do, because remember, once you bought an expensive ship, it is expensive for all its life. And then you have to pray for a strong freight market. You have no optionality left. And why should I go out and take that risk when I can take virtually a 0 risk by buying my own ships, more of my own ships, at half the price?

That is fair. I mean, it's just that...

Think about it, right? If this market goes up, right, today, if you look at our EBITDA on a 9-month basis to the market value of our assets, cash on cash, right, we earn about 15% in dollars. 15% cash on cash. And if you take Great Eastern's depreciation, right, it's an accounting charge. But with asset values going up, where is the depreciation? So that's cash we have burned. You've captured all that cash, right?

Right. But -- okay. Sorry, sir.

Yes. So you've captured all that cash, right? So cash on cash, and now that's on my current NAV. Now if I'm able to buy that 50% of that NAV, my cash on my buyback price is massive, right? It's like 20-plus percent. Now I can't find steel that were going to give me that return.

Sure. Sir, this would be a fair argument if you were, let's say, doing a kind of an LBO, where you're issuing a massive amount of debt, my guess is your check writing capability right now would be at least INR 10,000 crores. So you could buy the whole company out and just do more of it instead of treating it like a dividend policy and just incrementally doing about INR 200 crores.

No, no, no. So let me tell you why we have not done more of it, right? So see, you get a very narrow window in which to do the buyback, number one, right? Number two, you have to look at what is your daily trading volume. Of the -- of your daily trading volume, what is your delivery volume? Now if you look at our stock and if you look at the daily delivery volume, there's only a certain percentage you can buy. You're not going to get 100 out of 100 of our delivery volume, correct?

Sure.

So if you do the mathematics on that, and you just break it up, Great Eastern's daily trading volume is say 200,000 shares. Delivery volume is 100,000 shares. Great Eastern gets 50% of that. What more can I do? So within that narrow window, there's only so many shares I can buy. Now yes, if I, let's say, instead of the price that we announced, let's say, we went up 30%, 40%, 50%. Of course, the volume will go up. But then if I factor in the tax that I'm paying on that buyback amount, am I providing a sensible service to my remaining shareholders? Because then I'm buying it closer to steel. So if I -- if my all-in cost, let's say, comes in at INR 500 or INR 550, right, and my NAV is INR 600, then I'm coming very close to my all-in cost, I mean, to my steel costs. Then I might as well buy steel. Even on paper, like we look at steel, we want to be value buyers. Similarly, even on paper, eventually, we have a responsibility to the long-term shareholder, right, to the remaining shareholder. And for the remaining shareholder, it's wonderful if we can successfully do this buyback at the price at which we've announced, right? And even after paying the dividend tax on it, we are getting it at a significant discount to steel and I'm getting the same cash flow. So my cash flow on paper is so much better than my cash flow on steel and if steel value goes up, my paper value is bound to go up.

Sure. Right. Okay. So basically, I just wanted to understand what will -- because while buyback is a defensive argument, it's that you are...

No, it's not defensive. It's not -- honestly, it is not defensive. It's pure sensible capital allocation. Why should -- okay, let's say, you were in management position. Why would you buy something for $100 when the market says we are valuing it at $50? Give me one reason.

So I'll wear the owner's hat here. The message you're sending out is that you can't find enough avenues to invest?

No, sensibly, I can find plenty today for Great Eastern to go and buy another 20, 30 ships. It's not difficult. But will I be serving my shareholder correctly? Let's say that I have to take impairments after 1 to -- Great Eastern has taken a $300 million impairment in the past. You don't want to be in that position again where you're impairing assets. What have I achieved? I have achieved growth at -- without trading value. I will create a lot more value. I mean the only problem is we can't continuously buy back. We can't just do it every second day. But if we could, we have the money to do it. And it would be the best thing for the Great Eastern shareholder, if we could. Imagine if I could privatize the company at INR 333. Look at the arbitrage. I can sell steel at INR 600 and buy it back at INR 333. It's a no-brainer. My problem is the liquidity. Why would I not privatize the business today? I mean, theoretically, if I can make 15% return in dollars. Show me another asset that gives you this. Of course, today, the fact is the bigger the loss, the bigger the cash burn, the greater the P/E multiple. That's the fact today. It will change.

I'm not looking at that part of the market. This is a different...

No, no. That's reality. That's reality. We may not like it a lot, but it's there.

No, then again, back to Warren Buffett, our company gets the shareholders it deserves. So therefore, I mean, what you just said, there are people who are -- I mean, people like me, for example, we've been around for a long time. I've held you almost from 2017. So -- and we saw the change in the return on marginal investment, et cetera. So I mean if we see, like you said, that the cash on the return on paper going up, fine. So you'll get a particular kind of investors staying with you. And well, whoever is selling out will -- is probably more short term in nature. The other -- I'm just saying if there was a law that prevented you from buying back your shares, or for any reason that route was closed, you'd look at reinvestment. Another place where which is hurting, I mean, hurting the existing investors, is the negative spread that you're carrying on your cash. So isn't it the right time to look at the cash management, operational cash management competency that outperforms? It's not very difficult to outperform the dollar cost just now.

Yes. So see, today, I mean the only thing you can do is say that, all right. I will not hold any dollars overseas, and I will bring it all into rupees. As you know, dollar, with the depreciation that has taken place has, let's say, earned us 3%. Rupee cash is earning us 5%, 5.5%, somewhere in that region, right? And therefore, if you take the blend, it's clearly got a negative carry versus interest costs, no denying that. Now unfortunately, here, we are not allowed to prepay loans also because of RBI restrictions, right? So please remember our hands are tied there. The only thing we can do is to say we won't hold dollars, we'll bring everything into rupees. And then -- but remember that we eventually buy dollar assets, right? So you've got to be net long in dollars as a philosophy. Now imagine if the rupee, for any reason, meaningfully depreciated, I have reduced the purchasing power of my cash, correct? I've reduced the purchasing power. Now the second thing is, let's say, I hold cash with a negative carry of, let's call it, 1% or 2%. Let's say I hold it for 3 years, so 6%. Each year, I'm losing 2% on negative carry, correct? Now if asset values dropped 10% at some point, right, I can afford to wait. If asset values don't drop for 5 or 10 years, yes, I would be completely wrong in sitting on cash, and that would clearly destroy value. Now if you see the historical trend of cycles, right, if you go back 30, 40 years, trough, only in 1 time has the trough stayed for 5 years, right? That's the longest period ever, and that was in the '80s. But remember, that is when U.S. dollar interest rates were 12% and 14%. If you strip that bit out, that extraordinary period when U.S. dollar rates were 12% and 14%, troughs have lasted for not longer than 3 years, actually just a shade below 3 years. Now we've already had 18 months of the trough, roughly, right? So either the market will go up, the freight markets will go up. And if the asset values have led, that asset values will stabilize at these prices. And obviously, they won't come down. If on the other hand, asset values or the freight markets have disappointed, I believe, asset value -- and if interest rates go up, which there is every talk of U.S. dollar interest rates going up, asset values must come down. So it is possible we'll be wrong by sitting on cash. I'm not denying that. But at the same time, there is an equal chance we'll be right.

So maybe this is not the right forum to be discussing these?

You can talk to me whenever you like. I love these discussions, so please give me a call.

Yes, there are a few insights, which I really wanted to sort of talk about.

Yes, yes. Just give me a call any time you like.

Especially that bit about cash management with a hedge, so it's...

Cash management, you've got to speak to the CFO. But I'm equally happy to engage with you. So please do give him a call, and I'm sure he...

I meant this as a structural competency that ranks along with your [ shipping ] capabilities, something.

Yes. I understood. So best is if you talk to the CFO on cash management and satisfy yourself. And of course, we are happy to learn if there is something we can do better, we are more than happy to take it on board.

The next question is from the line of Himanshu Pathak from Oaktree Capital.

Yes. So my 1 question was in one of the previous questions, you implied that we find paper being more attractive than steel looking. And even in 2016, '17, we invested in stocks outside India, okay? How did that whole thing pan out? Because when we see this U.S. annual report, nothing much is remaining out of that. So are we finding similar opportunities besides our own stock price? And did that whole exercise make a decent amount of money? And is it a viable strategy for you, because you keep money in U.S. dollar terms? Or do you think that is not -- or it was not a very feasible exercise [indiscernible]. So just your thoughts on that.

If I can take that?

Yes, sure. You take it.

I'll just react first. So Himanshu, there are 2 different companies which are doing this. The company which was investing in the shares of other shipping companies was our overseas subsidiary, okay? They are not -- they're only buying shares of other shipping companies. They are not buying our shares, okay? Our company, Great Eastern Shipping Mumbai, so that's an independent activity by that company. It has done well in that activity, okay? They are still invested in shares of shipping companies based on the view that they are taking. So net-net, they have done well with that activity over the last 4, 5 years or so since they started it. Coming to Great Eastern Shipping, we don't invest in shares of other shipping companies, okay. So that's a completely different activity altogether, which is done by that company. So it's not an either or because these are 2 different companies, both of which have different objectives and both of which will not get into the other's area. We are not -- Great Eastern Shipping Mumbai is not investing in shares of other shipping companies. Our focus is here when we have to buy, we are doing a buyback here. Sorry, now we can move forward.

Yes. And Shiv, correct me if I'm wrong, but I guess on that overseas subsidiary, which had sort of idle cash in [ inverted ] commerce which was earning under 1%, would you say that from the time we started that activity, we probably averaged 10% to 12%?

Yes, that's right.

In dollars?

That is correct, yes.

Yes. So we haven't done badly there at all.

Okay. Okay. Secondly, the research team, so we used to have a research team in India for shipping assets only. So the research team, will it be common for that subsidiary in India. So at least some fund manager may be different? Or do you think the fund...

That exercise cannot be handled in India. It's a completely independent set of people based in Singapore.

So they take inputs from us, but it's an independent...

They may take a view, but eventually, it is their call.

Okay. So it's a separate line activity we should understand. And depending upon equity markets behavior, they will behave? And our behavior would be based on what asset prices are there and what our stock price is there. So that is the behavior differences there.

No. And it's completely different. As the CFO said, there is no correlation, independent decision making. And so far, over these 4 years, there is not a single stock on which we have lost money.

And we don't leverage at that end?

No, not at all.

So the thing is they are looking at it as a -- whether you invest in say, bank deposit versus equities. Again, sometimes they also do -- their function is to do chartering as well. If they don't get those opportunities, they look at this as a way to take that exposure. In our case, when we are looking at buyback, we are looking at it as a way to take the exposure to ships itself to the steel of the ships itself by buying the underlying stock when Great Eastern is doing it.

And secondly, we are hearing a lot about this paper tantrum and interest rates going up. In shipping, how does it impact? See, what we've seen fixed income markets, the weaker credit spreads increased very fast, okay, in such a scenario. Does it also happen in that way in shipping and this cost of funds increasing at current point of time for weaker players much faster? Or you are seeing nothing of that sort happening? And how does it generally play out in the future?

Weaker players are really struggling to get financed. More and more banks now are being disciplined in supporting weaker players because they've all burned their fingers. Also they wish to use their portfolio into investing in more modern assets or supporting only the strong players. So the spreads will -- very, very clearly, the spreads have increased and will continue to increase meaningfully for the weak players.

Okay. Okay. And one last thing on the offshore side, okay. We had a pretty tough period in the offshore side. But with the next means of rig getting now occupied, okay, can we start seeing that at EBIT level, it will start making more money or it will start flattening out after the last 2 tough years? Or how is that business going to behave means? So you may not get that...

At the moment, we are not impacted. Let's say, the business does well, right? Let's say that the markets go up. At the moment, as I think the CFO mentioned, we don't have any repricing to be done until '24, '25. So in that sense, we are on an indifference curve whether the market goes up or the market comes down because you can't sell the asset nor can you benefit from repricing. Where we can benefit from repricing is on the boat side. And there, I think the CFO mentioned, we have -- we are seeing an improvement in E&P activity and some of the boats which are required to do a little more complex operation. There, the earnings have gone up by between 20% and 30%. And again, also, the customer is willing to take the asset for a longer period of time. So that's, again, an indication that liquidity is beginning to come into that space. If you ask me, have asset values gone up? They have not, in spite of earnings having gone up 20%, 30%. But I think it is no longer possible to buy a cheap offshore asset. If you look at a little more complex asset. The basic asset, I don't think values have gone up. But on the boats that can do some deeper stuff and do a little more complex operation in the field, I guess, asset values must go up. And this is a mystery that their earnings are up 20%, 30%. Values have hardly moved, if it at all. They're static. In dry bulk, earnings came off 15%, values have come off 15%. In tankers, earnings have dropped 70% to 80% and values have come down. If anything, they've gone up. Now let somebody try and explain this to me.

And any change in opinion on capital allocation on the offshore side? I mean would we start looking at it? Or has that moment come? When we -- I mean historically, we have stated that once we start realizing that the market is improving and you can get the rates, good rates and get a vessel, we'd like to be more in the market, okay? So has that moment of truth come? Or do you think that it's still...

No, we want to wait to see -- it's just been happening over the last couple of months, and we would really want to see it sustained rather than this being a blip. So currently, we have no plans of enhancing the capital allocation there.

See, it's a funny thing -- or it means my question is funny. But again, we want surety of assets. We want the rates to improve and also the assets to be cheap, okay?

No, no, no. No, that's not true. We obviously don't want assets to remain cheap and rich. We just want rates to stabilize at least for a few months, right? Yes, we would ideally want rates to stabilize. We need to see more demand. And remember that even a seller is now playing the same game as you who is a buyer, right? But what is happening in the offshore sector is that banks are taking more and more control of the assets because I would say a very significant majority of offshore players worldwide are in trouble, significant majority. And either they are going through the process of that Chapter 11 or whatever it's called or they are talking to the banks. So it is something that we've got our eyes open to, but we would ideally want to see this stabilize a bit. And maybe it's even worth paying up a little more money, but making sure that this is a little more sustainable rally. I mean we know that oil is at $90 today, but we also know that OPEC+ is controlling the price to a significant extent.

And one last, we had an incident on Greatship Rohini, okay? And a fault-finding research was being ordered, a team or investigation was on. Have everything closed down on that? And was it a personal issue or a process issue? Or I would say just natural event that sometimes happens? And have we changed any process and workings on those things? So some elaboration on that would be [indiscernible]...

Yes. So the matter is now -- we are waiting for the insurance company. As the CFO said, we've already taken all the impairment we need to take on that asset. The matter now rests with the insurance company to process the insurance claim. We are hoping that the insurance claim will all conclude and -- but at this stage, we would first wait for all the entire loop to conclude before we comment on sort of where the challenge lies. What we have done is set up a team that now visits all the assets, physically goes on the assets and continuously talks to the people on safety demonstration, on making sure that nobody is taking any shortcuts. Everybody is doing the work as they should do it and so on and so forth.

The next question is from the line of Sanjiv Pandya from Old Bridge Capital Management.

So just an intervention, I'd like to react to that thing you said about explain that. So I thought I'd anticipated that prices in the crude market would not come out, because we've seen this in a lot of commodity cycles. If you make too much money on the upside, I'm referring to the contango trade, then people hold out for longer until they run out of cash. So you could be seeing that rather than look at freight rates. To try to understand this pattern, you should be looking at how much cash people are holding left over from the contango trade. So maybe pure shippers have too much cash on their hands. And they will hold out for higher and higher prices, and along with that, if scrap rates have gone up, then there's not much of a cost to holding out, which is why people live in hope, and you see a sudden change in the fundamentals, just something I've seen in other commodity markets.

I think what you say is absolutely right. And we are aware that people made a lot of money in the first few months of cal, what was it, cal 2020? But it's now been 18 months of a cash fleet. If you see the results of the pure tanker companies, right, those who don't have any other assets but crude oil tankers, they are all heavily bleeding cash. And they are now borrowing money in dollars at somewhere between 6% and 10%, which is very expensive today in dollars, right, by issuing bonds and all that. So now the private players, it's impossible. 75% of global shipping is privately owned. And it is very, very difficult to know the private players' philosophy on this. Many of them have cash from lots of other businesses and have very, very deep pockets. But what we have seen in the past is that even the strongest of players do sell ships. For whatever reason, but they do sell ships. Maybe they want to invest in another sector, maybe they need cash for investing in other businesses, because they're all privately owned. They don't need to necessarily follow just being in shipping. So they look at other businesses as well. And we have seen them come and sell. This time around, they haven't sold, and my guess is also because interest rates are where they are. If they're not seeing interest rates go up and they can earn, I don't know, 3%, 4% in dollars, maybe things will change, I don't know. I mean today, we know that on deposits, we are all earning under 1%.

The next question is from the line of Amit Khetan from Laburnum Capital.

Just a quick question around -- so if I compare our operations to -- and benchmark them to some of the global companies, both in the tanker and the dry bulk space, it's clear that we are doing a fantastic job. Have we ever -- but yet we kind of get valuations which are much inferior to those companies. Have we ever debated this at the Board level in terms of listing at other exchanges? And what has been the conclusion of that?

So honestly, we have -- I think both the points you raised are very valid. I would say that on operations and all the data that we provide on operating costs, on the way we maintain the assets, customer satisfaction, on everything, I would guess we are in the very top quartile globally, both private and public companies included. And at the same time, as you very rightly pointed out, our valuations are below the median pricing that we see on price to book or price to NAV globally in spite of producing a superior debt -- a superior return on equity and with a lower risk because, as you know, our net debt to equity is possibly amongst the lowest globally, both private and public included as a shipping company. So what you say is absolutely right. Have we taken it for a Board discussion on an overseas listing? Answer is no, we haven't. CFO Shiv, you want to add something to that? Because you have looked at it on and off, I guess.

Yes. We have had discussions with some of the international -- and these are not very serious discussions. So we've had discussions with some of the international tankers who deal with shipping. One of the feedbacks that -- and one of the things you may have noticed yourself, Amit, with the international companies, is most of the Western-listed companies are pure plays. And -- which is either -- and pure play in the sense that not just a tanker company, but a crude tanker company or just a product tanker company or just a dry bulk company or just an LPG company. So one of the areas of feedback that we got you said that market doesn't seem to like these companies which are in different sectors. And remember that investing in Great Eastern is not just these 4 different sectors. It is also an investment in offshore rigs and offshore supply vessels. So it appeared -- and that is the feedback we got, that, that market doesn't like non-pure plays. I don't know whether this has changed. There are some companies which are not pure plays even in the U.S., but they don't trade very well. So that's sort of the feedback. Again, as I said, this was very informal discussions, just to ask because the same question that occurred to you had occurred to us as well. And when we asked, this is the reply that we got from them.

Got it. Got it. The reason I ask this is because if I look at your cash flows and compare them with your peers globally, obviously, my -- the way I look at it is that once the market sees that your cash flows are so stable and the companies which are operating in single segments, so shouldn't they be giving you a better valuation just because of that?

[indiscernible] noticing and saying, yes. But yes, somehow that seems to be their preference. So in any case, we will...

Yes, yes. But I think both [indiscernible] is absolutely right. And if you see the most successful of privately held companies, they're all diversified like us. I'm talking about the very, very best privately-owned companies. And therefore there is a little doubt that a diversified play provides much, much better long-term return than a pure play. And I think there is plenty of empirical data to support what we are saying. But for some inexplicable reason, people prefer pure play. So apparently, it's because fund managers prefer to make very specific calls on individual markets. rather than leave it to...

Yes. But Shiv, [indiscernible] fund manager can make a call on the tanker market when we with 40 years' experience can't? It's just a waste of time trying to make a call on the market.

But I think this is something which may be worth considering.

Yes. Yes. Absolutely. Yes.

The only thing worth considering is privatized.

The next question is from the line of Samraj M from Dwarka Share Brokers.

First, I just wanted to confirm whether Ms. Anjali has got my mail. I had sent in the block. Have you got that, ma'am?

Yes, we have got that. We'll come back to you.

Right. Okay. So just one query I had. This time, you didn't reflect in your opening remarks on the freight rates of -- the spot freight rates for the different vessels. So if you could just, in a few lines, just give me a freight rate spot rates for the bulkers and the tankers, I'll really appreciate it.

Yes, sure. No, I think we did -- we showed it on a graph. But in any case, if you want to know -- and remember, this is valid for today. It can change tomorrow.

Yes, sure. Just the current rate.

Yes. So the larger crude oil tankers, which are the very large crude oil tankers, the VLCCs what they call, if they earn somewhere between negative, means below 0, to let's say $10,000 a day. The Suez tankers are earning, again, depending on the asset -- the kind of Suezmax tanker you own, whether it's eco, scrubber, fitted, so on and so forth, is earning between $2,000 and $10,000 a day. The Aframax is similar, between $2,000 and $10,000. On the product side, the bigger product tankers, which are the LR2s, are earning between $5,000 and $10,000. The smaller product tankers, the MRs are earning also between, let's call it, $6,000 and $10,000. On the Capes, just at the moment, the Capesize bulk carriers, the earnings are sort of between $7,000 and $9,000. The Kamsarmaxes, the spot market earnings depending on where your ship is, et cetera, et cetera, is between $16,000 and $18,000, and the Supramaxes are again something similar to the Kamsars, between $16,000 and $18,000. But I repeat, this is spot for today. Tomorrow, [indiscernible].

Ladies and gentlemen, as there are no further questions from the participants. I would now like to hand the conference over to the management for closing comments.

Yes. Thank you, everyone. That was an interesting call with lots of interesting questions. Thank you for making us think, and thank you for giving us the opportunity to share our views on the markets and our views on how we are approaching these markets. As always, the transcript and the recording of the call will be uploaded within a couple of -- within a few days. Yes.

And Shiva, I would just like to add, if anyone even beyond this call has suggestions on how -- if there are any areas of improvement or they want us to think on certain issues, I'm sure they are free to mail either to Head of our Corporate Comm or to you.

Yes. Yes, absolutely.

Yes.

Yes. Thank you, everyone. Stay safe.

Ladies and gentlemen, on behalf of GE Shipping, that concludes this conference. We thank you all for joining us, and you may now disconnect.