Project Report on Financial Analysis of Aban Offshore Limited
Dissertation Writing Help- Ratio Analysis Project Report on Aban Offshore Limited
Working Capital Management-Profitability and Liquidity Analysis-Project Report on Aban Offshore Limited
Company Profile
The ABAN Group was born as a small engineering firm in Chennai, Aban Constructions, established by late Mr. M. A. Abraham in 1986. A visionary, Mr. M. A. Abraham began his career as an engineering professional in the Construction Industry with illustrious names like the Tata Group and Saipem. The Group took giant strides into newer arenas of operation like the execution of high-pressure systems and cross-country pipelines for refineries and fertilizer and petrochemical industries. Inevitably, Aban ventured into the high-powered domains of drilling, power generation and IT Enabled Services (ITES).
Aban Offshore Limited (AOL) was established in 1986 when Indian entrepreneurs were encouraged to provide offshore drilling services to the Oil and Natural Gas Corporation Ltd. (ONGC) to meet the growing needs of a vibrant economy. AOL launched its first contract drilling service to the ONGC in 1987 with two modern jack-up drilling rigs acquired from the USA.
ALLIANCES
The company has strategic alliances with the following customers:
• Oil & Natural Gas Corporation Ltd. (ONGC)
• Hardy Exploration & Production (India) Inc.
• Oriental Oil Co., Dubai
• Shell Brunei
• Shell Malaysia
• Gujarat State Petroleum Corporation Ltd. (GSPC)
• Hindustan Oil Exploration Co. Ltd.
• Cairn Energy
• Petronas Carigali
• ROC Oil
• Shell (South East Asia)
• Prize Petroleum Limited.
Aban Offshore Limited possesses twenty offshore assets including fifteen jack-up offshore drilling rigs, two drill ships, one floating production platform and a jack-up rig and drill ship each on bareboat charter.
Services
Aban Offshore Limited knows no boundaries when it comes to drilling. Whether the waters are 250 feet deep or 6000 feet, drilling is what they do best. AOL owns and operates several offshore drilling rigs, drill ships, and a floating production facility, 'Tahara'. This array of drilling assets allows them to take on a wide range of challenging projects of varied capacities. The rigs are fitted with a state-of-the-art top drive system, which increases productivity and reduces operational costs.
Aban Offshore Limited offers a diverse range of offshore drilling services to clients in India and abroad.
• Exploratory services
• Drilling services
• Production of hydrocarbons
• Manning and management
The Aban fleet has proven its successful trait in drilling operations, production and exploratory blocks at Bombay High, and off the Godavari and Pondicherry coasts, for reputed clients like ONGC, Cairn Energy and Hardy Oil. Company services and state-of-the-art technology ensure a leading edge in the competitive
field of offshore drilling. The company fulfills all the stringent international standards, undertakes effective risk assessment and maintains strict safety standards in all its offshore operations. A powerful team of world-class specialists, a well-equipped maintenance team and excellent fabrication facilities reinforce the company’s essence.
Company has also gone beyond their core competence in their response to maintaining a culture of excellence and innovation. This was demonstrated when AOL successfully executed manning and management contracts for ONGC's jack-up rigs, which included training its personnel in operational and management methods.
Key Concerns
• Lower crude prices might lead to a drop in E&P capex: A fall in crude oil prices and offshore exploration spending might slow down demand for offshore rigs.
• High debt to equity ratio.
• Lower day rates for Jackup rigs.
• Sluggishness in the oil exploration sector might impact the Company’s profitability.
• All the Aban rigs were employed by global and domestic oil exploration companies.
• The Company’s realizations might be affected by technology obsolescence.
• Increasing global and domestic competition could hamper realizations and growth.
• The international nature of its business exposes it to several risks.
Industry Overview
The shipping industry is among the most competitive of international businesses, owing to its cyclical nature. This cyclicality arises from the interplay of international trade volumes and the supply of shipping tonnage. Since there is no opportunity cost for shipping services, which cannot be stored like commodities, freight rates drop even if there is a marginal fall in demand. This makes it a high-risk business for players as well as for investors.
Being a highly cyclical business, the timely acquisition of ships crucially determines the viability of shipping operations. However, the amendment to Sec.51 of the Merchant Shipping Act is likely to give domestic shipowners the necessary flexibility to profitably time acquisitions and disposals in the international market.
The shipping industry is divided into several categories--liner services, tramp shipping, industrial services, and tanker operations -, all of which operate on well-established routes.
POLICY RELATED DEVELOPMENTS
Economic liberalisation has led to the widening of Indian markets, permitting Indian shipowners to raise funds abroad, allowing for the privatisation of ports, and improving ship repair facilities, thus giving Indian shipowners better operational flexibility.
Automatic approval is now given for:
• Acquisition of all categories of ships, except crude tankers and offshore supply vessels (OSV), by private shipowning companies.
• Sale of ships for further trading / scrapping to a company within India and abroad.
• Acquisition of ship from an Indian shipyard; and
• Acquisition for replacement tonnage.
Shipping companies have been allowed to retain the sale proceeds of their ships abroad and utilise them for fresh acquisition.
• Shipping companies are now free to time-charter Indian ships to foreign shipping companies.
• Shipping companies can acquire vessels through bare-boat-charter-cum-demise method.
• The Quarterly Block Allocation Scheme for repair of ships has been dispensed with entirely and the Reserve Bank of India now releases foreign exchange for ship repair /dry docking, and spares for imported capital goods, without any value limit.
• Freight charges on account of movement of fertiliser and petroleum products are not allowed to be paid in convertible currency on par with other commodities.
In order to attract foreign capital for acquisition of ships, the government has relaxed the minimum percentage of share capital to be held by Indian citizens in an Indian company, from 60% to 49%.
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