Great Eastern Shipping Company Ltd (NSE:GESHIP) Q4 FY23 Earnings Concall dated May. 12, 2023.
Corporate Participants:
G. Shivakumar — Chief Financial Officer
Anjali Kumar — Head of Corporate Communications
Analysts:
Abhishek Nigam — B&K Securities — Analyst
Amit Khetan — Laburnum Capital — Analyst
Himanshu Upadhyay — O3 PMS — Analyst
Unidentified Participant — — Analyst
Archan Pathak — Centra Advisors — Analyst
Roshan Nair — B&K Securities — Analyst
Devesh Jhawar — Individual Investor — Analyst
Presentation:
Operator
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 and year ended March 31, 2023. At this moment, all participants are in listen-only mode, later we will conduct a question-and-answer session. At that time if you have a question, please click on raise hand button on the toolbar at the bottom of your screen. I now hand over the conference to Mr. Shivkumar. G, Group CFO at GE Shipping to start the proceedings. Over to you sir.
G. Shivakumar — Chief Financial Officer
Thank you, Thanvi. Good afternoon, everyone, and thank you for joining us for this conference call to discuss the results for Q4 FY23. We will do a quick run-through of the results and after that, we will look at what’s been happening in the markets. Thanvi, I think, I need to have the control for the presentation.
Operator
Yes, sir. I have passed on to you right now.
G. Shivakumar — Chief Financial Officer
Yeah, thank you. So highlights. Highest ever net profit of INR2,575 crores, beating our earlier record which was in 2008-2009[phonetic] which was under INR1,400 crores beating that by a huge margin. Also, our consolidated net asset value has moved up by almost 70% in FY ’23 and we look at the components of that also. Thanks to these results we have also announced our highest-ever dividends four interim dividends totaling to INR28.8 per share. Today we declared the Board declared a fourth interim dividend of INR9. So including that we have announced dividends of INR28.8 per share. Going through the results. We had — we have declared a net profit standalone net profit for the quarter of INR632 crores.
On a consolidated basis, we have made a profit of INR752 crores. Cash flows have been strong, we’ve gone into net cash situation. So let’s go through that numbers in detail. You know, we normally look at — look at what we call the normalized financials which removes the effect of currency on revaluations and the derivatives [technical issue]. So let’s look at that, it’s not very different on a standalone basis, our net profit is higher to the extent of INR30 crores. So we are at INR662 crores. On a consolidated basis, we are at INR699 crores for the quarter.
We mentioned here, what’s happened to the net asset value. The standalone net asset value, which was INR618 per share in March ’22 is now at INR962 per share. So that’s gone up more than 50%. The consolidated entity has also gone up very significantly. We were at a midpoint of about INR678 per share. Now we are at about INR1,160 per share, which is almost 70% increase. I won’t go into the ratios here, these are things that you can work out yourself and we’d our spend our time on more value-adding things. Market commentary, we continued our strong performance. Tankers continued to be very strong as they have been through most of the financial year.
As we had expected and in keeping with seasonality dry-bulk market grew quite weak in the Jan-March Quarter and did recover towards the end of March. Tanker asset prices are now at their highest levels since 2009, even bulk of values, despite having a low spot market have gone up during the quarter, and this is probably due to the optimism caused by the low-level of the order book and we will look at the order book later. The consolidated NAV, I had mentioned it before, has reached INR1,164 per share at the midpoint of the asset values. And this rise is due to both increase in asset values and very strong cash profits. The offshore market has also strengthened during the year and recent contract pricing have been significantly higher levels than the previous contracts. So we are waiting for vessels to come up for repricing and these tenders come up not very frequently.
It’s not like you have a daily pricing like you have in shipping, but recent pricing points, have shown significant increases in pricing. And of course, at the end while we continue to enjoy strong rates in the market, we must keep in mind that recessionary pressures may be building up in some advanced economies. You can see that oil demand, Gas oil demand specifically that is diesel seems to be suffering a little bit and you can see it in the refining margins as well. Just looking at the performance and look at the table at the bottom, which shows you the difference between the earnings in FY22 and FY23. Crude carriers earned about $35,000 per day more than in the previous year.
Product tankers earned about $23,000 to $24,000 a day more on average. LPG ships which are typically on-time charter, were about the same and dry-bulk ships were a little lower because the market was weaker. But it just shows you how much impact so just to give you an idea, this increase in crude tanker rates and we are talking of about 25 ships as of — tankers as of date and with $25,000 dollars per day-on average increase means more than $200 million in a year, just 25 ships constitute somewhere between 8,500 and 9,000 operating days in a year and that has huge leverage in terms of the results. And as you all know the cost base remains the same, it’s just operating expenses, because we are measuring this after fuel expenses. So that shows you the power of the operating leverage and changing the P&L.
Now let’s look at how the standalone net asset value has changed. We started at INR618 ended at INR962. INR200 of that change was from cash profits, so that’s actual cash which has come into the year into our bank. It is not mark-to-market increase in value of the assets. That’s INR168 rupees per share. That is a fleet value increase. So, INR200 has actually come into the Bank of course, which has helped us to become net cash from net-debt at the beginning of last year. And of course we have minus 25, which is the dividends, which have been paid out during the last financial year. Which then takes us to INR962 per share of net asset value. The CAGR over the last five years has been 22% in the net asset value. We started at INR357 rupees per share, and this is now at INR962.
Similarly in consolidated net asset value. Cash profit was about, again between the cash profit and fleet value each of them about INR250 per share. And minus the dividend, which takes us from INR692 to INR1,164. Let’s look at the shipping markets and see what they’ve been doing. So the left graph is the Suezmax crude tanker. Obviously, the FY23 graph is much stronger than FY22 graph. And FY24 started out stronger than FY23 started. So this is where we are, we average and this is the market average. These are not our averages. The market which averaged less than $10,000 a day for a Suezmax tanker. This year that’s same measure averaged $57,000 a day. For an MR tanker it went up from $7,500 a day to $36,000 a day.
Again, what led to this. Specifically, let’s look at the quarter. Crude and product tankers spot earnings continue to be elevated. On Q4, year-on year, the trade — the crude trade which is in ton miles grew by about 11% and product trade grew by about 9% year-on year that is Q4 FY23 versus Q4 FY22. At the other end, on the supply side, the crude supply growth was only 4% and the product supply growth was only 2%. The EU embargo on Russian imports for crude, it kicked in from December 5, 2022 and for products it kicked in from February 5, 2023. Further boosted ton mile growth. Asset prices we’ve already mentioned that. We are now at the strongest level in the last 14, 15 years. The critical thing is that the order book for crude tankers is now at 2.5% of the existing fleet, which takes away a lot of rather it’s a big positive because the future supply is very constraint and therefore you need only a very small increase in order to keep the market tight.
In product tankers this also was at a low number probably around 5% when we last met. It’s been building up recently, so it’s now currently at about 8% of the fleet. On dry-bulk we had a softer market in Q4, which again is a typical seasonal pattern which picked up towards the end of March and is at reasonable level, so we are at around — at around the same levels we were last year. For the smaller ships and last year, remember the smaller ships outperformed the larger ships for a large part of fee — for a large part of the year. The smaller ships are doing much worse. So the Supramax is which you can see in the right side graph which were at almost $30,000 a day in April last year, somewhere in the $10,000 $15,000 range in this year.
So basically the COVID-related congestion which unwound[phonetic] released a significant part of the fleet into the market. The demand side was quite strong so Chinese steel production, iron-ore imports were all-up during the quarter. Coal imports into India and China, both continued to increase. So the main factor was that the release of capacity from congestion which weighed down the supply demand balance. LPG continued to be strong, we had a very strong fourth quarter of last year. And I mean, fourth-quarter of 2022 calendar and it came off from those highs, but still at pretty strong levels of about 70,000 again our ships are all on time charter. So we are not exposed to the spot market currently but the markets have been strong. US LPG exports out up 20% year-on year, which is a spectacular number.
In this sector this is the only one-off all the ships types that we have and the VLGC order book is the only order book, which is really a high level in the historical context in excess of 20% order book. So we looked at fleet supply and I mentioned these numbers earlier in the orange, you have the crude tanker order book. The blue is the product tanker order book and green is dry-bulk order book. Looking at asset prices, all asset prices have gone up, I mentioned that even dry bulk went up in value, despite earnings being low. So there is a lot of optimism around shipping market. So asset prices are looking quite elevated. It’s scrapping. There hasn’t been much scrapping because markets have been quite strong. So you’ll see calendar ’22 there is very minimal scrapping here. All of this is of course building up at some point, these ships have to go. Looking at the offshore business and this is almost a repeat of what we had said the last time. The Middle-East is a big driver of incremental demand and it is expected that Saudi Aramco will have 85 to 90 units on term contracts and all the jackup rig on term contracts. And that’s a big number, which is absorbed. And a lot of those contracts have already been awarded, they just waiting to go into the contracts.
So the utilization of rigs, which went down to low 60s in 2016-17 is probably close to 90% on an effective utilization basis which we have seen reflecting the pricing. We had a very significant increase in the pricing in the last tender that we priced in India. So let’s see how the next tender prices from now. And of course, supply-side, nobody has been ordering rigs or supply vessels for the last six or seven years ever since the price of oil dropped from around 100 to around the 30s in 2015. So it’s unlikely, a lot of the yards have gone out of business and so it’s unlikely that there will be significant capacity coming into the market.
Looking at just the fleet supply, the current fleet is just under 400 of jack up rigs. The fleet under contract is 344 and we have — so of these rigs basically out of 430 rigs are actively marketed. The others are more or less stacked or unlikely to be marketed. Off those — so out-of-the rig fleet which is existing 344 are already under contract and about 40 to 45 have contracts and are due to go into contract. So that means that you will have 385 to 390 rigs working out of an effective total of 430 rigs, which means about 90% utilization of the rig fleet. In the vessels, it’s not as tight, but a lot of the vessels have been stacked for a significant amount of time and are unlikely to come back into the operating fleet.
This is the utilization and utilization has been pretty strong, have been strengthening over the past couple of years. We have repricing coming up which is good because all the repricings are happening at higher levels than previous contracts. So the previous contracts were fixed in 2017-19, which was at rough of the market. So in the first-half of this year, we have five vessels to be repriced. In the second-half of this financial year, we have four vessels to be repriced. Then in the first-half of FY25 we have six vessels to be repriced and we have one rig which comes off contract around this time next year. And then in H2 of FY25 we have one more vessel, and we have one rig which needs to be repriced. We had bought a vessel at 80 ton anchor handler.
In the month of February, we took delivery in March. That vessel has already been delivered to us. And is already working and has also got three-year contract in India. Looking at broad financials again. We levered up in 2000 between 2016 and 2019 and then strong cash flows enabled us to reduce our leverage. In fact, we had a net cash. This is share price to consolidate and we are at about 0.5 to 0.6. That brings me to the end-of-the presentation. We are happy to take any questions.
Questions and Answers:
Operator
Thank you very much. We will now begin the question-and-answer session. [Operator Instructions] The first question is from the line of Abhishek Nigam from B&K Securities. Please go-ahead.
Abhishek Nigam — B&K Securities — Analyst
Hello, yeah, hi. Sir, just two questions from me. Number one, what is driving the sharp improvement in profitability in the fourth-quarter.
G. Shivakumar — Chief Financial Officer
Okay. Hi, Abhishek. So are you referring to the Shipping business or the offshore business.
Abhishek Nigam — B&K Securities — Analyst
Sorry, the offshore business.
G. Shivakumar — Chief Financial Officer
So the offshore business basically had a tax — had a tax write-back. We won that case, an appeal. And so there was a tax write-back for the — for the offshore business. That’s one of the largest factors, there was a INR45 crore write-back of tax.
Abhishek Nigam — B&K Securities — Analyst
Okay, okay, fair enough. But that impact comes before the operating profit line, is it?
G. Shivakumar — Chief Financial Officer
So you’re talking about PBIT levels.
Abhishek Nigam — B&K Securities — Analyst
Yes, yes.
G. Shivakumar — Chief Financial Officer
So the increase in profitability will be just that we just repricing because we went — we were off-contract and then we went on to the contract. We had rigs off-hire days which has now got removed, the rig was working through the quarter, we had all our four rigs working through the quarter. We had a rig which was not working upto October, November. And we’ve had so in the international market, we’ve had improvements in pricing as well. But that’s three or four vessels. So it will not really move the needle much.
Abhishek Nigam — B&K Securities — Analyst
Fair enough. So this kind of EBIT run-rate for offshore. This is kind of sustainable over the next few quarters right?
G. Shivakumar — Chief Financial Officer
Yes we have. Okay. I don’t want to make a forecast. But yes, we should be in a position to maintain whatever we are doing on an operating level.
Abhishek Nigam — B&K Securities — Analyst
Okay, fair enough that is very useful. And on the OSV fleet is it possible to give us a sense of whether the rates are. So for example if I look at Tidewater, then I think they are closer to the $10,000 to $13,000 or so range in Asia-Pacific. Is that where we are or are we on a slight discount or if you can just give us a sense, not exact number.
G. Shivakumar — Chief Financial Officer
So it’s very difficult to compare these things. Because the operating expenses in different regions are so different. But recent pricing even in India 10,000 and above for supply vessels and again I don’t know what kind of vessels you’re referring to with Tidewater whether it is just a blended of all their vessels because they also have some high-spec vessels. But recent pricing for term contracts in India have been around 10,000 or higher.
Abhishek Nigam — B&K Securities — Analyst
Fair enough. Last question for me. So you know don’t there is an order book of twenty jack up rigs in your presentation in offshore segment. I’m just wondering if these are credible orders or are these really orders which you know.
G. Shivakumar — Chief Financial Officer
These are all intend[phonetic] orders. So these are rigs which are half built almost waiting for delivery. I don’t know — we don’t know if they will ever come into the market, but a lot of them got reactivated last year some people went and bought them to put them into the — put them into Saudi Aramco and ADNOC contracts.
Abhishek Nigam — B&K Securities — Analyst
Fair enough. I remember Keppel has placed a couple of these with customers globally. So okay, so these may or may not come through eventually.
G. Shivakumar — Chief Financial Officer
No, no, yeah correct. See these will typically be from Chinese rate I suspect. I think Keppel is more or less out of all the rigs.
Abhishek Nigam — B&K Securities — Analyst
Yes, okay. Fair enough. That’s it from me.
G. Shivakumar — Chief Financial Officer
But just on the segment results I think it does include that tax write back. So you shouldn’t take this as the run-rate going-forward.
Abhishek Nigam — B&K Securities — Analyst
Okay, okay, perfect. Thank you so much.
G. Shivakumar — Chief Financial Officer
Thanks. Thank you. The next question is from the line of Amit Khetan from Laburnum Capital. Please go-ahead.
Amit Khetan — Laburnum Capital — Analyst
Hi, good evening and thank you for the opportunity.
G. Shivakumar — Chief Financial Officer
Good evening.
Amit Khetan — Laburnum Capital — Analyst
So I had a very industry-related question. Just wanted your perspective on our TL[phonetic] event. So there is a very large and growing dock fleet which is transporting Russian oil. These are mostly on very old tankers which would ideally have been scrapped, right. Now the risk of a major oil spill, which would have been miniscule earlier has probably increased exponentially. How do you guys think about this risk and based on historical experience what’s your sense of how the industry might be impacted if there is a major oil spill in the high seas.
G. Shivakumar — Chief Financial Officer
So. Typically, if there is a significant oil spil by the way, there was an accident. Luckily, not on our laid-in[Phonetic] tanker of Singapore, Malaysia last week on a tanker, which there was an explosion on it. But typically, if you have an oil spill, it leads to much more regulation. Now, these ships are already outside regulation the dock fleet. So I don’t know-how it will impact, but maybe yes, there will be a lot more urgency with regard to the dock fleet. And maybe there will be a clampdown on those ships — on those ships going-forward. It’s tough to see what could happen if there is an incident. But yes, certainly, if there is because that oil spill is such a public thing and which really affects a lot of people there will be a regulatory clampdown potentially if there is an oil spill from one of these ships.
Amit Khetan — Laburnum Capital — Analyst
Understood. So it’s fair to assume there would be an acceleration in scrapping. If that happens?
G. Shivakumar — Chief Financial Officer
If that happens, then there is a clampdown on the dock fleet, yes. But I know then lot of things that can happen then because it’s not going to happen by itself. If the dock fleet is removed, then that oil gets — how do that oil get transported. The Russian oil, just removed from the market, because then if that’s removed from the market then what happens to the oil supply-demand balance for oil itself. So there are lot of things that go into that equation that we have to consider.
Amit Khetan — Laburnum Capital — Analyst
Got it. Secondly, again, you know, I have asked this before as well. Are you seeing any opportunities for capital allocation right now.
G. Shivakumar — Chief Financial Officer
Unfortunately, in terms of ships, no. As I mentioned at the dry-bulk market was weak. But asset prices did not come off, they went up a little bit. In fact, they’ve gone up a little bit even after March 31st. Little further. So no, prices have — are not yet at attractive levels and tankers of course are 14, 15 year highest. Not yet the opportunities for capital allocation, unfortunately.
Amit Khetan — Laburnum Capital — Analyst
Got it. That’s it from my side. Thank you.
G. Shivakumar — Chief Financial Officer
Thank you.
Operator
Thank you. The next question is from the line of Himanshu Upadhyay from O3 PMS. Please go-ahead.
Himanshu Upadhyay — O3 PMS — Analyst
Hello, am I audible.
Operator
Yes.
G. Shivakumar — Chief Financial Officer
Yes, you are.
Himanshu Upadhyay — O3 PMS — Analyst
Hi. Congrats on a great set of numbers. I have a question. Historically, our thought process has been that whenever we are around 50% or around but anyway, we would like to do a buyback for those things okay. That means around 500 and 550 used to be the NAV and the stock used to be around 300. You would do buybacks, okay. Currently, the NAV is around INR1,200. The stock is around 650, 660. Do you think you will use the same metrics or you seek[phonetic] a stock is expensive or how do you think about it, because a lot of things have changed. But the discount rate remained similar, so will it make sense to buy more shares or.
G. Shivakumar — Chief Financial Officer
So a couple of things is one is, if it is 650, the price is not 650. The price to us is 800 because of the tax. So that changes the equation significantly because of the buyback tax rate, which is 23%.
Himanshu Upadhyay — O3 PMS — Analyst
But that was a INR300 the last [multiple speakers]
G. Shivakumar — Chief Financial Officer
So, yes, correct but you will have to think of it so it was there the last time that we did it, it was not there the previous time that we did a buyback, which was in 2019. So this is a factor to keep in mind. So when we were looking at 50%, 55%, which you mentioned you had 50%, 55% without any additional costs and now you have a 23% transacting cost. So that’s one. The second is you will have to see it versus what opportunities you have to deploy capital in ships. That’s the other opportunity that we have. If you think that you can get potentially opportunities to deploy capital in ships at reasonable prices then we would like to do it. Again see NAV by itself you need to look at NAV in the context of what are the ship values that have gone below. So we will look at that also when we decide on — when we have to think about whether to buy the paper or not. That 23% cost is a very significant factor here. Just like to emphasize that.
Himanshu Upadhyay — O3 PMS — Analyst
Secondly, my question would be, we are seeing a lot of offshore companies or vessel companies, also going for offshore wind farm type of servicing contract and all those things are, is it a viable business for us. Also in Canada[phonetic] where ships also go into that business or what is your thought because you keep on evaluating, various other opportunity, how do you look at these type of services, which are coming up globally.
G. Shivakumar — Chief Financial Officer
So one of our vessels is — one of our M Class vessels which is the two most advanced vessels in our fleet which are operated out of Singapore. One of those vessels actually operates doing wind farm support. Helping in wind farm installation work. Again, it’s not a wind turbine installation, but it works supporting the wind farm project. So but the typical vessel for that — for the wind farm work is very different from ours. Maybe you can do some modifications. I’ll check with our people. What the situation is. I know that there are purpose-built vessels which are for servicing wind farms. But I don’t think you can use the standard AHTSV[phonetic] PSVs in that.
Himanshu Upadhyay — O3 PMS — Analyst
Is this something which hinders us from entering this business over a period of time instead we just buy an asset and start servicing in that market or there is some qualification required for that business? What would be the [multiple speakers]
G. Shivakumar — Chief Financial Officer
Yeah, we haven’t looked at those numbers at all, Himanshu so I just won’t be able to reply. See the thing — but on the qualification. I think that the fact that we have a track-record of operating internationally with different kind of vessels including some advanced vessels. We even operate well-stimulation diving support vessels, they are pretty advanced vessels. I don’t think we have a problem qualifying necessarily. But I don’t know what kind of IRRs can be made on this, because I just don’t know what that market is.
Himanshu Upadhyay — O3 PMS — Analyst
Okay, okay. Just interesting. One thing the crude tanker what we sold so the prices have gone up, okay. But the proportion of our assets on the crude side is pretty low. Okay, and so it means currently I think only seven ships are now remaining. So how are we thinking on that side because the order book, the lowest, it seems to be on the crude side which effectively means oversupply in that space will take further time or it may take much longer. And hence, the segment can do well much for longer period of time. And we have the lowest percentage [technical issue]. We sold one of the ship. Just some thoughts on that or how are we evaluating the market? Yeah, it’s it’s possible and not seven is what we have today, it’s going to go down to six after we deliver the ship. So because they sold Jag Lavanya which is due for delivery by June. So, we’d be down to six crude carriers. Obviously, we are not very happy with that situation. We would like to rebuild that fleet. But we’ll wait for an opportunity as we would have liked to have more. I think five years ago, we probably had 12 crude tankers. Now we’re down to six. But yes, we would like to rebuild that fleet at an opportune time and we are hoping we get that opportunity soon. And last question on cash on-balance sheet earlier when our balance sheet had debt okay. So we used to keep some cash means principal and interest payment and all those things so we will have cash for that. With net cash on-balance sheet, do we really require some amount of debt.
G. Shivakumar — Chief Financial Officer
Yeah, you need to do it, because the net cash, you still have debt repayments every year. So you still have to keep the risk capital to ensure that you keep that. You are able to meet those repayments, even in a bad market.
Himanshu Upadhyay — O3 PMS — Analyst
If we repay the debt. So there will be a net cash.
G. Shivakumar — Chief Financial Officer
No so, but you are not be repaying the debt, right. We are not repaying the debt that is so let’s say the $370 million of debt as of March 31st. And $510 million of cash. But the debt exists and it’s due to be repaid next year or the year-after that and the year-after that, and so on and so forth. So you need to be the reserves for out of your cash, it’s only carving out a part of your cash notionally as risk capital. So out of the 510 part of it is carved-out as risk capital. [Multiple speakers] sorry.
Himanshu Upadhyay — O3 PMS — Analyst
But will we be still raising debt in the market?
G. Shivakumar — Chief Financial Officer
We are not raising debt currently there is no reason to raise debt. So there is no reason to raise debt, but we have repayments next year. And if there could be a shortfall in cash flows in a risk case if there could be a shortfall in cash flows that amount of cash, will have to be kept in the bank without investing it, without being available for investment. So it is just a notion. It’s just that you can’t invest that money in any case, we are not investing currently and it is out of $500, you will call out say $100 million say this is for risk capital. It doesn’t change our actions.
Himanshu Upadhyay — O3 PMS — Analyst
And are we doing any chartering activity from our Gulf subsidiary.
G. Shivakumar — Chief Financial Officer
Currently nothing. We did one transaction last year, but currently nothing. There are no opportunities in fact.
Himanshu Upadhyay — O3 PMS — Analyst
Okay, thank you from my side.
G. Shivakumar — Chief Financial Officer
Thank you, thank you much.
Operator
Thank you. The next question is from the line of Chris Narula[phonetic] shareholder. Please go-ahead.
Unidentified Participant — — Analyst
Good evening. My name is [Indecipherable]. I just love to get your thoughts on the capital allocation process. It’s just not a, I am talking to you in the perspective as a shareholder. Is this a good time. Do you think I’d like to get your thoughts on issuing bonus shares, because after looking at I know the 28%, 29% dividend, but after tax and inflation and currency, where I’m — where I’m talking from the yield is pretty low. So is this not a good time to think about an ore perhaps, I’ll ask you to give your thoughts on issuing bonus shares where the shareholders could acquire paper instead of steel.
G. Shivakumar — Chief Financial Officer
I don’t get the logic of that because the bonus share is simply an accounting entry which splits shares into — the one share into more than one share. So how does it really adds value. Dividend adds real value by putting cash in the shareholders audio hands or we are just talking on the tax arbitrage of capital loss.
Unidentified Participant — — Analyst
Not necessarily. I’m assuming that the company is going to develop over the next five years. So those bonus shares will also grow in value.
G. Shivakumar — Chief Financial Officer
But it’s just an accounting entry, we have 14.3 crores shares today and let’s say, hypothetically we double it to 28.6 crores shares. It is the same amount of net-worth, it is the same amount of cash. It’s the same number of ships. How does it really help. I haven’t understood how it helps and it’s not even a capital allocation that INR28 rupees per share, which we are paying out is real cash, which has gone out, which is almost INR400 crores. Which has gone to the shareholders. So I have not got the thing. I know that a lot of companies like to issue bonus shares. But I don’t know-how it adds real value and maybe it trades better liquidity et cetera. But it’s not a capital allocation thing as such.
Unidentified Participant — — Analyst
Well, in terms of I’m talking about what your options are right now in terms of capital allocation. Cost of, as we have been discussing over the past few minutes the cost of acquiring new ships is fairly high. So your capital allocation is not efficient. The shareholders whilst we accept the 29% dividend. After tax and inflation it doesn’t work-out in terms to a very great yield. So we are working on the basis that these additional shares, which you give to shareholders will over time create additional value.
G. Shivakumar — Chief Financial Officer
But it is just an accounting entry. I come back to it, it’s just an accounting entry of letting shares. Maybe we can take this discussion offline because I think we might be boring some people. Sorry, did you have another question on the.
Unidentified Participant — — Analyst
No.
Operator
Thank you. The next question is from the line of Archan Pathak from Centra Advisors. Please go-ahead.
Archan Pathak — Centra Advisors — Analyst
Good evening, sir, congrats on great set of numbers. I just wanted to know, would it be — would it be possible for you to share the selling price of the Jag Lavanya.
G. Shivakumar — Chief Financial Officer
No, we don’t share. As in sale and purchase transaction price. These are generally bound by confidentiality clauses.
Archan Pathak — Centra Advisors — Analyst
No worries. Another question would be as we are witnessing the higher [Indecipherable] for the product and the crude carriers, because of the change in macro factor in the crude industry going forward can you just throw some light on the crude demand, and how do we see that panning out in next one year or so. I read somewhere the refineries are experiencing a downgrade on the margins that could lead to a subdued demand for crude, so can you throw light on there.
G. Shivakumar — Chief Financial Officer
So what you have read, is sort of correct and the conclusion is also correct, so again, it’s led by poor demand for the end-product which in this case is gas-oil or diesel. So there has been the demand for gas-oil and diesel has been quite poor. The demand growth which is probably a reflection of industrial activity, because these are less more than industrial commodity like gasoline, which is more a retail commodity. And because of that the refining margins are poor, if refining margins are poor as you have said refineries are less likely to increase their crude inputs, which means less demand for crude tankers. And if they are producing less refined products, there is less demand for product tankers as well. Yes, that is the situation currently, we are also in the middle of a little bit of a refinery maintenance season so may add this in any case, this period is traditionally the lull period for tankers.
Typically Q4 and Q1 of the calendar year which is H2 of our financial year tend to be stronger for tankers. So that’s when you really see tankers strength. So yes the fact that demand is not picking-up, is a little bit of a worry. It’s a micro worry. As you can see it in oil prices what the crude oil prices were. So we hope that this will pick-up. We have seen the high-frequency data that you’ll see coming out of places like China. With regard to flight resumption the data which you see coming out of OECD countries with regard to inventories which are quite low all of it seems to point in the direction that activity has to go up. Crude oil demand has to go up. Refined products demand has to go up. However, it’s not yet happening. But still tanker rates are pretty strong as we speak. So let’s see what happens and it’s very difficult to call this. Because you don’t know what’s happening necessarily in some of these economies. But if the economies come back, then you should have pretty strong growth in the demand, end-user demand, which means that you will definitely have movement by ship.
Archan Pathak — Centra Advisors — Analyst
Okay, that’s it from my side. Thank you and all the best.
G. Shivakumar — Chief Financial Officer
Thank you.
Operator
Thank you. The next question is from the line of Roshan Nair from B&K Securities, please go-ahead.
Roshan Nair — B&K Securities — Analyst
Yeah, thank you for the opportunity. So just wanted to understand when are the gas carriers coming off-contract.
G. Shivakumar — Chief Financial Officer
All right. Yeah, we have one coming up towards the end-of-the year, we have mid size gas carrier which is coming up for repricing in end of May, or June within the next one month. So we have bid for a contract in India. And yeah, hopefully we’ll get that, wherein one that’s just going through the process. The other ships are going to come out between H2 of FY24 and early FY25. So basically after September the VLCCs will come out.
Roshan Nair — B&K Securities — Analyst
Okay, and does the buyer have the option to renew at the same rates?
G. Shivakumar — Chief Financial Officer
Sorry, does the charter you mean. The charter of these vessels. No this is after the exercise of all options.
Roshan Nair — B&K Securities — Analyst
Okay, and where are the time-charter rates currently versus the contracted rates for gas carriers?
G. Shivakumar — Chief Financial Officer
So, time-charter rates are probably a little higher than the current contracted rates. $3000 to $4,000 maybe, again, it depends on tender to tender. Some tenders, it depends on how many people are bidding in a particular inquiry. But probably slightly higher than their current contract rates. Maybe $5000 to $8,000 also on the VLGCs am referring to. In the [indecipherable] we’re actually seeing improved pricing from the previous contract.
Roshan Nair — B&K Securities — Analyst
Okay and for product tankers, the order book to fleet ratio is currently 8% which is a very — at very low levels. So at what level would you think that the outlook for day rates will be negatively impacted by order book to fleet being high.
G. Shivakumar — Chief Financial Officer
Yeah, definitely not at 8%, but remember that day rate thing is a very short-term thing, while the order book is in the long-term. So the reason why we always keep looking at the order book is that that is the only thing that you really know. But the day rates are affected by what happens literally on a day-to day basis. How many ships are available today to load a particular cargo and therefore what price can they demand. So that is very short-term and very position driven and doesn’t get affected by the order book, you know, and you’ve been following us for some time. You know that for the last three years, we have been talking about the low order book. And it’s been 10% around 10% for quite some time for tankers, but nothing happened for 1.5 years between middle 2020 till early 2022. Though the order book was really low. It only happened because something happened and trade — the market strengthened becomes some event happened and trade took off. The demand for tankers took off. So the order book in the long-term it’s comfort factor but in the short-term not really, it doesn’t make a difference really.
[indecipherable] six months down the road. It doesn’t make a difference. Unless there is a big, big deliveries. So for instance in VLGC you have a 10% fleet delivery within the next 12 months. But otherwise, it doesn’t really make a difference.
Roshan Nair — B&K Securities — Analyst
Okay, that was quite quite helpful. That’s all from my side. Thank you.
G. Shivakumar — Chief Financial Officer
Thank you Roshan.
Operator
The next question is from the line of Devesh Jhawar, individual investor. Please go-ahead.
Devesh Jhawar — Individual Investor — Analyst
Congratulations sir, on a good set of numbers. Sir, I just want to ask that we have a lot of cash on the books. Are we planning to foray into different business verticals like if we are interested in entering the dredging business.
G. Shivakumar — Chief Financial Officer
Yeah, thank you. No we are not. We are content with the businesses that we do, which is the shipping business. And the oilfield services business. Within the shipping business itself, there is a lot that we can do and we will stick to those, those places where we think we can — we have some competitive advantage. We have some knowledge that helps us to do well. So that’s what we focus on.
Devesh Jhawar — Individual Investor — Analyst
Thanks sir. That’s all from my side.
G. Shivakumar — Chief Financial Officer
Thank you.
Operator
Thank you. Sir we have one text question from Ashish Gautham[phonetic], individual investor. The question is, can you tell us about the outlook on the shipping cycle for the financial year ahead and what are you going to do with the cash proceeds from the sale of ship in this quarter.
G. Shivakumar — Chief Financial Officer
Yeah, so first, the outlook is really difficult because we don’t know. And that’s the honest answer, we don’t know what the market is going to do. The market happens to be — the tanker market happens to be reasonably strong now, continues to be strong. Dry-bulk markets are okay. Gas Carrier markets are also very strong. We don’t know if that will stay true for next month or next quarter. Always says that it depends on what happens to oil demand, are the world economies going to go into a recession or are we going to see a quicker recovery in the economies, which then will have a corresponding recovery in commodity demand. So that’s [technical issue] one thing is that the supply-side is not a worry. So all we need is for demand to do its job. And then we can have strong markets.
Coming to the second question on what we’re doing with the cash — the sales proceeds of Jag Lavanya it will come into the treasury and it will be invested in safe instruments as always, it will just sit in the bank otherwise. Waiting to be invested in the business.
Operator
Thank you sir. There is one more text question from [indecipherable] Financial Services. Can we prepay debt to reduce interest burden as we are cash surplus.
G. Shivakumar — Chief Financial Officer
Yes, we did do that. Good question. We did do that last year, we prepaid almost $50 million in debt in the last financial year to reduce our interest burden, we saved a couple of million dollars by doing that. Wherever possible, we will look to do it. There are regulations with regard to this. So wherever possible under the regulations we will look to prepay debt. It’s a good idea and we will look to do that, where we can.
Operator
Thank you. [Operator Instructions] As there are no further questions, I now hand the conference over to Ms. Anjali Kumar for closing comments.
Anjali Kumar — Head of Corporate Communications
Thank you everybody for joining in today and all these interesting questions. As usual, the transcript of the call will be on the website. The audio transcript will be thereby tonight and the written transcript will be there in a couple of days. Also, please feel free to reach out for any queries. Our team is always there to help you. Thank you so much. [Operator Closing Remarks]