if you observe the financial statement for this quarter you can observe that the company able to curtail its expenses to 80cr out of increased sales 200cr. this is a sure indication the management is making good efforts to lead comapny to profits.also we should not forget that comapny made certain business adjustments to keep itself more competetive and divrsified. Even though it could not give dividend this quarter it will surely give dividend next quarter.I stay invested in this company.

Dear Haradip Singh
I think you are following Varunshipping for longtime. What do you think of my comment yesterday,do you agree the management capable of driving the compnay out of present situation.

RK,

Analyse the recent Q2 result properly you will find that if we EXCLUDE OTHER-INCOME of Rs.49 crore from its NP of Rs.13 crore then it is having NET LOSS of Rs.36 crore.

That`s why it had not declared any DIVIDEND.

Its better to SELL on rise and wait for lower levels, bcoz in medium term market will adjust its p/e as per its dividend for FY10, which may be expected to be just around Rs.3 per share.

I congratulate your angle of view.If the company has curtailed its expenditure to make it healthy it should also be appreciated As markets are in upswing i think we loose ground if we depart with the stock instead we can add at low if any to balnce in long run the mangement are capable to steer it to healthy profits. if some one want to sell at this point it is their choice

ICICI DIRECT has come out with its view On Varun Shipping, which is as follows.

In terms of Varun Shipping if you exclude the sale of a tanker, I think the numbers would look pretty bad especially the company would have reported a loss. In terms of its total fleet size, which is about 20, about 10 are LPG carriers and about three are in crude carriers. On a year on year basis, we are not seeing significant improvement in terms of day tanker rates, which is because of increased supply as well as subdued market conditions.

So in that sense we really do not expect really bright earnings going forward for the company. We have an ‘underperformer’ rating on the stock and have a target price of Rs 48 on the counter.

Could you enlighten in view of this report.

You are absolutely correct. Its management has responded very well to the challenges of bad periods for the shipping industry. It could survive despite many global odds and should do well during the ensuing quarters.

Missing one interim dividend should not cause hue and cry. What about the companies, which declare dividends once in a financial year and even scip the same at times. Let us wait and see.

thank you hardipsinghji for words of encouragement.I am holding shares in good no.Today it showed in green despite sensex correction.I wish you throw some light on the sensex future waht are precautions as you are very senior on board!!

dear Guest Actualy I received a report from ICICI desk as I am ivesting through ICICI demat.The report says there are signs of improvement in the LPG section and its offshore platform is also going to work well. Any way as I havealready invested in this company I want to beleive in their leadership and buy at lows to book profit later.
SWOT Analysis
Strength:
§ VSL is an integrated hydrocarbon marine transportation and services company operating in high technology sectors and is also flexible as per customer needs
§ The company is the global leader player in the LPG shipping sector and is also a leading player in the Asian high-end offshore AHTS sector
§ VSL is having a highly experienced and committed management team responsible for all areas of operation
Weakness:
§ Shipping industry being global and cyclical in nature, any softening of the freight rates would
impact the earnings and margins of the VSL
§ The Baltic Dry Index, a measure of shipping costs for commodities, continued with negative
momentum on signs of slowing Chinese raw material demand, it fell 28% m-o-m (August) and is
expected to remain week on account of inventory pile up & a correction in the commodity prices
§ It is predominantly in LPG carriers business which accounts 57.72 percent of overall revenues.
Hence any amendments in government policy, new regulatory compliance would affect the
company adversely
Opportunities:
§ The Energy Information Administration (“EIA”) estimates that non-OECD Asia (including China and
India) will account for 43% of the total increase in global oil use over the next 20 years, thus the
increase in demand for the offshore vessels
§ The company is well poised to reap the benefits of global slowdown as acquisition of vessels
(newly built as well as second hand vessels) would be done at cheaper prices owing to the current economic meltdown coinciding with increased shipping demand in India
§ Growing opportunities will be available in countries such as Indonesia for LPG business and increase business opportunities available in deepwater blocks in Asia, Africa and South America in
the offshore sector
Threats:
§ Global economic slowdown and Baltic Dry index collapse has led to lower charter rates
§ Lower oil prices and difficulty in obtaining credit has meant that some oil companies have
pushed back project plans
§ Shipping industry concern is that it is likely to face with overcapacity in FY10 & FY11and
slowdown in the international trade would lead to potential drop in freight rates

as the baltic index is showing turn around for last few months I think The good days are ahead for shipping sector.

Today is a good day for Shipping cos, so far. SCI is up by 8%. Hope Varun also catches up there.

TODAY VSL MADE GOOD PROGRESS.

Its shareprice is not linked to Sensex or Nifty movements. Tanker rates would go up with the higher demand of Oil & Gas, which should improve not only its topline but bottomline too. We should expect improvement during Q3 and Q4 of FY09. Please hold it for atleast another 6 months for upward move and one year for spectacular move. It shall surely announce dividend once its cashflow improves. We should not expect them to borrow and pay dividend, which would not be in the interest of neither Varun Shipping nor its investors.

Its AHTS vessels are a saving grace, which provide stable cash flows from the offshore Oil Exploration and Production companies.

Sir,

Please see Fitch rating on Varun today and comment. Yours and Slogin comments are too good on Varun and hence the request. Tks.

What is the current rating assigned by them! Is it furter downgraded from `A(ind)`. Thanks

I could not trace the Fitch rating on Varun Shipping. Please reproduce the same.

With due regards for the global rating agencies, my optimism for this company is based upon the anticipated rise in global demand for oil & Gas. The rise in domestic auto sales and the positive signs of revival of our industrial production should contribute to our increased domestic consumption of oil & gas. AHTS vessels would continue to be in demand by the offshore oil exploration and production companies.

Our gas production in KG basin may be short of our domestic demand for quite considerable time and as such we shall continue to depend upon LNG imports.

Cairn Crude is to be shipped from Gujarat Coast to Mangalore and the increased volume of production from Jamnagar refinery of RIL needs tankers. These would certainly increase the overall demand for tankers of Indian Shipping companies.

As such, Varun shipping can hope for the deployment of its fleet of tankers and AHTS Vessels fully with better freight and charter rates and its topline and bottomline should have impressive rise during FY11. The Q3 and Q4 of FY10 should provide positive indicators after poor FY09 and HY ended 30th September, 2009.

Non-payment of interim dividend is a good financial decision under the current circumstances. It would reduce its requirement of raising further debt. The expenses on its debt servicing for the loans taken for acquisition of new ships are being met mostly from its internal accruals even during a bad period for the shipping industry.

Varun shipping with a Price to Book Value of 1.04 is a good BUY for longtime investment of 1 year or more. Any investment for shorter periods may not provide the desired gains.

In my view, the rating released by FITCH during May-2009 but I am unaware if any rating released recently.

However, the rating wont make much difference in present environment bcoz Shipping sector is now on a recovery path and it is also well known fact that generally 2nd half of FY would be better for all shipping companies.

Purely on technical charts basis, its having strong support at 51 and facing stiff resistance near 62, so in short term it can see 70 - 77 levels with stoploss at 50 (which is unlikely to break looking to the present momentum of NIFTY/SENSEX, which are heading towards making ALL TIME HIGHS in next 6 months time).