MUMBAI: Four directors and the head of finance have quit offshore explorer Great Offshore in the past three months, triggering concerns about the Bharati Shipyard-promoted company's future.
The top-deck exodus has come at a time when the company is grappling with high debt and ageing fleet in a gloomy offshore market. Great Offshore debt has risen by more than 66% to 3,040 crore since Bharati acquired controlling stake in it two years ago.
Among those who have put in their papers include Chetan Mehra, son-in-law of promoter PC Kapoor. Mehra resigned from the board in December, barely four months after being elevated as an executive director.
Analysts say Mehra wanted to distance himself from the exploration firm to protect his own company, Weizmann Group. They said Mehra was finding it difficult to raise funds for Weizmann as banks had become wary because of his association with Offshore.
Mehra told ET: "I would now like to devote more time to Weizmann, a company I have been closely related with. Great Offshore has a professionally managed team, who are competent enough. But, I cannot predict at the moment, when I will return."
Kapoor was not available for comment.
Mehra's resignation followed those of chairman Keki M Elavia and company veteran Rajat Dutta, who was general manager, corporate finance. In January, company secretary Suresh Savaliya and board member Kaiwan Kalyaniwala also put in their papers.
"I do not see a future in the company at the moment. They have mounting debts and their foreign lenders have been pushing them to repay the debt and have raised concerns. The net worth of the company is not more than 900 crore. So it's a serious situation," said a person who had quit.
Great Offshore's net profit has slipped from 211 crore in 2009 to 101 crore in 2011, and a recovery could take more time as it grapples with high interest costs in a sector whose outlook looks dim. "Great Offshore and Bharati are staring at high debts and the interest costs have been significantly high. Substantial portion of their operating profits would go into paying interest on the debt," says Bharat Chhoda, an analyst with ICICIdirect.com.
The departure of the five seniors is seen as a serious blow to Kapoor's plan to revive Great Offshore's fortunes. In an interview to ET earlier this year, Kapoor had admitted that the acquisition of Great offshore cost Bharati a lot of money and that it contributed significantly to its debt. "While the acquisition did cost us a lot of money, Great Offshore is a strategic investment and the real value is far more than the market cap," Kapoor had said.
Another top official who quit said on condition of anonymity that he resigned only after he felt that the company's prospects of staging a recovery appeared bleak. "The problem is the promoters do not seem to know the nuances of the business very well. The assets are ageing and no fresh orders have been placed. And the debt has put the company in a very bad situation."
Shares in Great Offshore slipped 82% last year but the stock has been steadily rising ever since. In January, rating agency CRISIL downgraded the company, saying that there is an increased stress on Offshore's cash flows because of delays in deployment of its 350-foot jack-up rig and moderation in charter rates in the offshore vessel sector.
The top-deck exodus has come at a time when the company is grappling with high debt and ageing fleet in a gloomy offshore market. Great Offshore debt has risen by more than 66% to 3,040 crore since Bharati acquired controlling stake in it two years ago.
Among those who have put in their papers include Chetan Mehra, son-in-law of promoter PC Kapoor. Mehra resigned from the board in December, barely four months after being elevated as an executive director.
Analysts say Mehra wanted to distance himself from the exploration firm to protect his own company, Weizmann Group. They said Mehra was finding it difficult to raise funds for Weizmann as banks had become wary because of his association with Offshore.
Mehra told ET: "I would now like to devote more time to Weizmann, a company I have been closely related with. Great Offshore has a professionally managed team, who are competent enough. But, I cannot predict at the moment, when I will return."
Kapoor was not available for comment.
Mehra's resignation followed those of chairman Keki M Elavia and company veteran Rajat Dutta, who was general manager, corporate finance. In January, company secretary Suresh Savaliya and board member Kaiwan Kalyaniwala also put in their papers.
"I do not see a future in the company at the moment. They have mounting debts and their foreign lenders have been pushing them to repay the debt and have raised concerns. The net worth of the company is not more than 900 crore. So it's a serious situation," said a person who had quit.
Great Offshore's net profit has slipped from 211 crore in 2009 to 101 crore in 2011, and a recovery could take more time as it grapples with high interest costs in a sector whose outlook looks dim. "Great Offshore and Bharati are staring at high debts and the interest costs have been significantly high. Substantial portion of their operating profits would go into paying interest on the debt," says Bharat Chhoda, an analyst with ICICIdirect.com.
The departure of the five seniors is seen as a serious blow to Kapoor's plan to revive Great Offshore's fortunes. In an interview to ET earlier this year, Kapoor had admitted that the acquisition of Great offshore cost Bharati a lot of money and that it contributed significantly to its debt. "While the acquisition did cost us a lot of money, Great Offshore is a strategic investment and the real value is far more than the market cap," Kapoor had said.
Another top official who quit said on condition of anonymity that he resigned only after he felt that the company's prospects of staging a recovery appeared bleak. "The problem is the promoters do not seem to know the nuances of the business very well. The assets are ageing and no fresh orders have been placed. And the debt has put the company in a very bad situation."
Shares in Great Offshore slipped 82% last year but the stock has been steadily rising ever since. In January, rating agency CRISIL downgraded the company, saying that there is an increased stress on Offshore's cash flows because of delays in deployment of its 350-foot jack-up rig and moderation in charter rates in the offshore vessel sector.
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