QUOTE AND NEWS
The Hindu Business Line  Dec 12  Comment 
Will continue to operate the facility
The Economic Times  Dec 9  Comment 
Sepco has said that the Indian infrastructure company has arbitrarily invoked the bank guarantee under "liquidated damages" for the delay.
The Economic Times  Dec 5  Comment 
GMR Group would prefer to steer clear of power and road projects as issues in those sectors may take a while to get sorted, said group’s head GM Rao.
The Hindu Business Line  Nov 25  Comment 
GMR Infrastructure has received the Securities and Exchange Board of India approval to raise up to Rs 1,500 crore through rights issue. In a rights issue, shares are issued to existing in...
The Hindu Business Line  Nov 21  Comment 
GMR Male International Airport Pvt Ltd (GMIAL), a subsidiary of GMR Infrastructure Ltd (GMR), has claimed $803 million (around Rs 4,987 crore) from the Maldivian Government for ‘wrongfully’ termin...
The Hindu Business Line  Nov 21  Comment 
The Hindu Business Line  Nov 20  Comment 
National carrier has to pay Delhi airport operator ₹57 crore every month, owes ₹300 crore
The Economic Times  Nov 19  Comment 
In the infra sector, IL&FS Transportation is one of my best picks. It has performed decently in the recent past also.
The Times of India  Nov 15  Comment 
GMR Infrastructure Limited on Saturday said its net loss for the quarter ended September 30 widened to Rs 610 crore (after minority interest) against Rs 393 crore during the same quarter a year ago.
The Economic Times  Nov 13  Comment 
What has happened with companies like JP have been that they do not have enough assets now to produce income.
The Hindu Business Line  Oct 31  Comment 
GMR-Megawide Cebu Airport Corporation (GMCAC) a joint venture between GMR Group and Megawide Construction Corporation has taken full operational control of the Mactan Cebu International Airport (M...




 
TOP CONTRIBUTORS

General Maritime Corporation (NYSE: GMR) is a tanker company that ships crude oil and petroleum products. The company has fewer ships than many of its competitors, but attempts to offset this disadvantage by focusing exclusively on the mid-size (80,000-200,000 deadweight tonnes) tanker market. Its singular focus on one market segment allows it to compete more effectively with larger companies-- most of which operate in several markets-- in terms of scale. For instance, GMR had 31 mid-size tankers in its operating fleet at the end of February, 2010.[1] Although Overseas Shipholding Group, the company's primary competitor, has 4 times as many ships, it only fewer midsized tankers.

The number of tankers and the overall tonnage available to transport crude oil has grown faster than world oil demand. Rates for an Aframax tanker, a common type of mid-sized tanker, decline significantly when there is an oversupply of ships. GMR, which generates approximately 75% of its revenues from short-term or spot contracts, is significantly affected when this occurs.

Company Overview

The company has been able to modernize its fleet since 2005 by aggressively selling its non-double-hull vessels. Single-hulled tankers are not as safe and will be phased out by 2026, in accordance with the 1973 International Convention for the Prevention of Pollution from Ships. Since then, the company's safety record has been a strong selling point to potential charterers.[2]

GMR's fleet of double hulled ships is well suited to do business in the Atlantic Basin because of the stricter environmental regulations. As a result, the company transports a lot of oil to the United States, the world's leading importer of crude oil. .[3]

Business Financials

In 2009, total revenues for GMR were $350 million, an increase from the previous year's revenues of $326 million.[4] However, its net income actually declined between 2008 and 2009. In 2009, GMR posted a net loss of $12 million, compared to its net income of $30 million in 2008.[4] This loss was largely due to an impairment charge on its goodwill of $40 million in 2009.

Trends and Forces

Exchange rates mean higher expenses and lower real revenue

Because the functional currency of the international tanker industry is the U.S. Dollar, the depreciation of the dollar means less real revenue for GMR. Moreover, GMR's revenues and operating costs are in U.S. Dollars, while some operating expenses and overhead costs are in other currencies like the British Pound, Japanese Yen, Singapore Dollar, Australian Dollar, and Norwegian Kroners. To combat the weakening dollar, the company has in the past entered into forward contracts to acquire Euros for Dollars[5], but this practice has proven unsustainable in the face of a consistently changing rates.

World tanker supply is growing faster than tanker demand

Too many tankers mean that GMR will have to lower its charter rates. While GMR hedges against such risks by employing many of its ships on long-term, fixed-rate charters, it nevertheless earns most of its revenues from spot market charters whose rates have historically been tied to the supply and demand balance for carrying capacity.[6]

On the other hand, GMR may also be poised to take advantage of a shift in the supply-demand balance for tankers. The company has many fewer ships than its competitors[7] and also has one of the lowest fleet carrying capacities among the large tanker companies (see below). Since tanker values drop in periods of oversupply, GMR could benefit from the opportunity to buy tankers cheaply.

Competitors

Some of GMR's major competitors include:

  • Frontline, a crude oil shipping company that operates 83 vessels worldwide and has a total tonnage of approximately 19.35 million dwt.[8][9].
  • Overseas Shipholding Group, a U.S. based tanker company that transports crude oil, petroleum product, and liquefied natural gas internationally. Domestically, they also operate a U.S. Flagged fleet[10][11].
  • Teekay Corporation provides international transportation for crude oil and petroleum products, and operates approximately evenly in the charter and spot markets. They have a total capacity of 4.2 million dwt[12][13].
  • Tsakos Energy Navigation is a Bermuda-based tanker company that maintains a fleet that is diverse and largely capable of traveling through icy waters.[14]

General Maritime Corporation pursues a strategy of utilizing only mid-size Aframax and Suezmax vessels while other competitors focus on larger carriers (like FRO) or a mixture of carriers (like OSG or TNP). While they are a smaller tanker company, they thrive on the relationships they've built with their customers.

  1. GMR 10-K 2009 Item 1 Pg. 2
  2. GMR Business Strategy
  3. GMR Tanker Industry Overview
  4. 4.0 4.1 GMR 10-K 2009 Item 6 Pg. 35
  5. GMR 2006 Annual Report, Page 38
  6. MarketWatch article on Oil-Tanker stocks
  7. Google Finance: GMR Overview
  8. FRO 2006 10-K, page 26
  9. Frontline website
  10. OSG 2006 10-K, Page 9
  11. Overseas Shipholding Group Inc
  12. TK 2006 10-K, Page 17
  13. Teekay Corporation
  14. Tsakos Energy Navigation Ltd
  15. Tidewater Inc website
  16. Horizon Lines Inc website
  17. Aegean Marine Petroleum Network Inc website
  18. Alexander & Baldwin Inc website
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