Income from operations grew 11.8 per cent to Rs 881 crore, compared with around Rs 788 crore the previous year. Operating profit was Rs 420.5 crore (Rs 352.9 crore).

The board of directors, in a meeting held on Friday, has proposed a further dividend of Rs 1.50 per share. The company has paid an interim dividend of Rs 2.50 per share.

The final dividend of Rs 4 per share would result in an outgo of Rs 126.5 crore, against Rs 94.9 crore (Rs 3 per share) in 1996-97. As the company did not acquire many vessels in 1997-98, it decided to distribute the profit, said executive vice-president Ravi Sheth. During the period, the company netted Rs 34 crore from the sale of four vessels. The acquisition, costing Rs 94.4 crore, included three tugs, three supply vessels and two mini-bulk carriers. Total expenditure was Rs 543.5 crore, up 3per cent over the previous year's Rs 525 crore. The tax outgo increased by Rs 2 crore to Rs 27 crore. Provision for depreciation was Rs 155.8 crore (Rs 122.5 crore).

According to Sheth, the company will focus on expanding its offshore supply division and add a few more harbour tugs. The company sees enormous potential for offshore supply vessels owing to a surge in oil-exploration work in India. "We are looking at new ships for the offshore division," Sheth said. The company has not finalised any acquisition plan as the sale and purchase of ships depend upon market conditions, he added.

Despite a sluggish real-estate market, Gesco's property division posted a 16.2 per cent jump in operating profit to Rs 24.8 crore (Rs 21.3 crore). According to Sheth, institutional sales, cost-control measures and acceleration in completion of projects were mainly responsible for the property division's performance. The division, which has seven ongoing projects, was able to reduce construction costs by 15 per cent owingto a reduction in steel and cement prices, and adoption of cost-control measures.

Gesco's shipping division accounts for 70 per cent (Rs 312.8 crore) of the total operating profit. The offshore division represents 13 per cent, property development, 6 per cent, and the remaining, 11 per cent.

INSIGHT
Though the shipping industry has been on a downslide, Gesco has shown impressive results. Operating margins have increased to 47.73 per cent from 44.78 per cent. This is owing to hedging of around 40 per cent of its dry- bulk fleet through a combination of period charters and contracts of affreightments.

Though the dry-bulk freight market crashed further owing to the south-east Asian crisis, Gesco was helped by the tanker segment. The sale of three dry-bulk carriers and one derrick-lay barge have proved lucrative.

Depreciation has significantly increased as the company acquired three tugs, two mini-bulk carriers and three supply vessels in the course of the year. With two idle rigs been given tothe Oil & Natural Gas Corporation on a three-year contract, the company posted good second-half results.

Logically, it has made sense to exit the low margin commodity-trading business. On an earnings per share of Rs 5.7 and a dividend per share of Rs 4, the dividend cover works out to Rs 1.42. This proves that Gesco has duly rewarded its shareholders.