SEAMEC (NSE:SEAMECLTD) Q1 2027 Earnings Call

0:00 Ladies and gentlemen, good day, and welcome to the Q1 FY 'twenty seven Earnings Conference Call of Seamec Limited. As a reminder, all participant lines will be in a listen only mode. And there will be an opportunity to ask questions after the presentation concludes. Please note that this conference is being recorded. I now hand the conference over to Mr. Balasupramaniam from Aryan Capital Market Limited. Thank you, and over to you, sir. Thank you, Julius. Good morning, everyone. On behalf of Aryan Capital, I welcome you to the earnings of Seamec Limited Q1 FY 'twenty seven conference call. From the management side today, we have Mr. Naveen Gupta, Hold Time Director Mr. Ashu Parma, CFO and Mr. Sunil Gupta, VP, Strategy and Investor Relations.

0:58 We welcome the management of Seamec on this call. Now I invite Mr. Navin Gupta sir to give his opening remarks, following which we will open the floor for Q and A. Over to you, sir. Thank you, Bada. Good afternoon, ladies and gentlemen. On behalf of Seamec, I extend a very warm welcome to all our shareholders, investors, analysts and other participants joining us today for our earnings conference call. Thank you for taking the time to be with us and for your continued confidence in the company. The global offshore energy industry continue to witness healthy structural growth, driven by increasing focus on energy security, offshore exploration and production and investment in offshore infrastructure.

1:43 While the energy transition continues, recent geopolitical development have reinforced the importance of conventional oil and gas, supporting continued investment in domestic exploration and production. Against this backdrop, demand for specialized offshore vessels and marine services remains encouraging. Increasing exploration, brownfield redevelopment, subsea infrastructure and production optimization are creating sustained opportunities for experienced offshore services provider. For Seamec, The Middle East remains a key growth market. The gradual reopening of offshore activities in Iran could support regional vessel demand over the medium to long term, while Saudi Arabia continue to be strategically important. Our operations in the Kingdom have delivered consistent performance, strong safety standards and reliable execution.

2:32 We remain focused on building long term customer relationships and strengthening Seamec's position as a preferred offshore service provider in the region. In India, the recent Andaman And Manadi Basin discovery further highlighted the country's significant offshore potential. As these discoveries progresses toward development and production, they are expected to create opportunities across subsea intervention, diving support, inspection, maintenance and offshore construction area, where Seamec has established capabilities and experience. Industry fundamentals remain supportive with limited availability of quality offshore support vessels. Disciplined fleet addition and increasing offshore activity supporting healthy utilization and a favorable supply demand balance. Charting conditions also remain encouraging and our focus continues to be on the securing contracts that provide sustainable return and long term revenue visibility.

3:25 Operationally, our fleet continue to maintain healthy utilization across domestic and international contracts. We remain focused on operational reliability, safety, proactive maintenance and efficient vessel deployment. Fleet modernization is also an important part of our strategy, and we continue to selectively evaluate opportunities that enhance our capabilities while maintaining disciplined capital allocation. Looking ahead, we remain optimistic about the opportunity pipeline across in India and international market, particularly The Middle East. While geopolitical uncertainties remain our diversified operations, experienced workforce and disciplined execution provide resilience. Our strategy remains clear, maximize fleet utilization, maintain the highest standard of safety and execution, strengthen customer relationship and allocate capital prudently.

4:17 With supportive industry fundamentals and expanding opportunities across key markets, we believe Seamec is well positioned to participate in the next phase of offshore growth and deliver sustainable long term value to our stakeholders. With that, I would like to welcome our new CFO, Mr. Ashok Verma and hand over the call to him, who will take you through the financial performance for the quarter. Ashok Verma? Thank you. Thank you, Navinji, for introduction, and good morning to everyone. I extend a warm welcome to everyone joining us for today's Q1 FY twenty twenty seven earnings call. I'll take you through our financial performance for the quarter. On a consolidated basis, revenue for the quarter stood at INR297 crores as compared to INR211 crores in the corresponding quarter of the previous year.

5:08 This reflects our year on year growth of 41%. At the stand alone level, revenue stood at INR283 crores as against INR201 crores during the same quarter last year. Consolidated EBITDA for the quarter stood at INR124 crores, while stand alone EBITDA stood at Rs. 117 crores. Profit after tax on a console basis stood at Rs. 81 crores compared with Rs. 76 crores in the same quarter last year. Stand alone profit after tax stood at INR81 crores as against INR80 crores during the same quarter at the previous year. The quarter's operational performance continued to benefit from healthy fleet utilization, efficient project execution, disciplined cost management and improved operational efficiency across both domestic and international assignments.

5:59 Our balance sheet continues to remain healthy and provides sufficient flexibility to pursue selective growth opportunity while maintaining financial discipline. We remain committed to improve operational efficiency, optimizing fleet utilization, strengthening profitability and maintaining prudent capital allocation as we continue to build long term shareholder value. With that, I would now request to moderator to open the floor for question and answer session. Thank you. Thank you, sir. We'll now begin the question and answer session. The first question is from the line of Sithad Chohan from three sixty one Capital. Congratulations on good set of numbers. Couple of questions.

7:11 Firstly, if I look at the EBIT margins, the Offshore segment margins are materially better than Onshore. So can you explain the reason for it? So that's basically the margins have improved here because largely the vessel deployment has been higher, okay? And in other segment, because Paladin was not operational. So there was some cost incurred on that, which has pulled down the margins to that segment. Understood. And especially on Paladin, I think it has returned to the Indian shores. So should it be contributing to revenue immediately or it is still pending?

7:58 Yes. So that data, Paladin has already resumed its operation. So you will see the contribution from this quarter itself. Understood. And on Seamec, Anand, I think it is expected to join our fleet by the end of this month. Will it go for dry dock first? Or will be immediately deployed with ONGC? No, there is no drydock due for Seamec Anal, but due to some statutory format that we need to comply with, it may take almost like a month before it resume its contact with the ONGC. We will try to expedite this process as much as possible, but we are hopeful that it will start the operation within this quarter and we will get as much as possible revenue contribution from Seamec and as well.

8:48 Understood. Thank you so much, sir. That was really helpful. And all the best for the future. Thank you. The next question is from the line of Pawel from Choice International Limited. Please go ahead. Thank you for the opportunity. I understand that given the current situation in The Middle East and there is a lot of demand, which is driving the charter rates higher for particularly situation offshore dynamic support vessels. So can you provide some color as in till what extent can we expect these charter rates to remain high? Or how much more work you are able to see in the next fifteen months as compared to past two or three years? Or some color on sustainability of the charter rates?

9:39 So we'll see. As far as the upside on the charter rates are concerned. There is nothing we can specify that, okay, the price will go up to this point or this point. It is always demand and supply. But on demand side, the demand side remains quite strong. And we are quite hopeful once this Iran, this restriction or sanction get lifted, there's going to be much more stronger demand because the number of DSVs available and working are quite less compared to the demand that we foresee is going to happen. So for next three to five years, we remain quite bullish that DSVs are going to get a strong demand. That is really helpful.

10:26 Yes, Adi, and if I may just ask a follow-up on the I have a second question on particularly costs and that is of course as far as INR is concerned the cost is declined but then for EPC the cost is more and of course there is something on the cards but can you provide some color or something that could be also more of a rule of thumb wherein the cost could be tracked effectively? Tracking specific cost may not be possible because, as you know, that EPC works season to season. And it also includes raw material cost, fuel cost. So it changes depending on the geopolitical situation and the current economic cycle.

11:15 Also, the cost of IMO fluctuates because this depend on the on higher and off higher. But we have given you a broad thumb rule, and you would see that our margins have become very stable. So generally, we always guide investors that we should track between 40% to 42% margin, and we should grow our revenues and business, which will help improve the bottom line going forward. Thank you so much. This is really helpful. Thanks. Thank you. The next question is from the line of Aditya Banerjee from an individual investor. So my first question is regarding the SEAMECLTD acquisition.

12:10 Like what is the expected time line for completion Like what I do is mentioned, but this is a MOU only, right? And the second question is that what is the purchase consideration and financing structure? I'd say, this Seamec Anant is going to be acquired sometime during end of this month. We have already disclosed this on exchange filing also, and this is a binding agreement between HCLOfficer and Seamec. So once these formalities prior formalities are completed, then we will execute the sale transaction and vessel will be then owned and in the Seamec name. And this activity is likely to be completed by end of this month. And regarding this consideration, that is also mentioned, it is the US70 million dollars which is the purchase consideration for the vessel.

13:10 And this will be financed through internal equity and loans, which will be around 5050%. Okay, sir. Got it. Got it. And my other question is that, like, what is the current status of the vessel? Like, is it on higher or in contract immediately? Or will it require downtime for recertification or dry docking before it can generate revenue? The vessel already has got a contract with the parent company and ONGC. So after the acquisition, that same contract will resume. So there will be a fully booked period for completing the statutory formalities that may be somewhere around a month's time after the acquisition. And after that, immediately, it will resume the contract.

13:58 Okay. And sir, the Palazin vessel is mentioned as not operating due to shade of almost. Can you elaborate on this risk? No. It is not nonoperational. The vessel was quite ready. It has gone for a dry dock to Dubai. And by the time it could return back, this conflict started in The Middle East, and so it couldn't sail back. So now that position is over, vessel has already come back to India, and it has already resumed its contract. Okay. Okay. And sir, like what is the financial impact of this on a 0.75 basis? And when do you expect it to resume operations? It has already resumed operations.

14:44 And in Q1, there was a financial impact because while the vessel has not incurred any revenue, we had to we have the cost of it, okay? And in Q2, it is operational, and we'll start seeing the results in Q2. Okay. Okay, fine, sir. Thank you so much. Thank you. Thank you. The next question is from the line of Tejas from TNJ Investment. Please go ahead. Yes, yes. Good afternoon. Thank you for the opportunity. So a couple of questions. First, if I'm not wrong, Seamec Premium Princess is currently off hire? And when are they likely to be on hire again? See, Seamec, Princess, as you already knowing that it works on the EPC contract.

15:33 And EPC contract that typically run from October to May. And May to October period being a monsoon period, these vessels which are operating in EPC contracts remain idle. So this is a non idle period for the vessel. And we are utilizing this period for dry docking the vessel thinning bridges. So that there is no revenue load when that vessel start working. So anything on the lead, sir, for Steelmec three ms printers currently or nothing on the horizon for October because it's one months point from now? No, no, the costs are going on. I did quite advance this. So once it is finalized, we will be filing with the exchange so everybody is aware about the contracts. Okay. And sir, during this monsoon period apart from these two, which other vessels will be off hire?

16:22 Seamec Glorious, the barge is there, which remains off hire. And that's how these are the three vessels, which remains off hire during the monsoon period. And the contract of the Samudra Seva and Prabha, they will continue, right? And that's not going to stop? Yes, that's continued. Okay. Sir, we had also mentioned previously that, you know, Seamec two when it gets higher, post office will be at a higher rate. So is that getting materialized or is it going to continue at the same rate? I do not think we have ever conveyed that kind of impression that Seamec two will get higher rate. It will be completing its charter sometime in August then. And after that, we intend to use the vessel again for the EPC kind of work from instead of IMR work. So we again, the stocks are going on for deployment of SEAMECLTD also.

17:14 So as and when something is finalized, we will be filing with the stock exchanges. Okay. And sir, Gallant, what is the time line for I think we are waiting for the shareholders' approval, right, to sell it off? So what are the time lines? When are we expecting that to get completed? So post shareholder approval, I don't think so there'll be much formalities. And in the coming months, which is September, we should be able to complete. Sir, one last question. So we had I think last year, somewhere we were having that Grand Totten related some audit internally to see what is the kind of hefty royalty that we are paying to the parent.

18:00 What is the status message? What is the report that has come out? If I might have missed it, it was announced in the stock exchanges. No, there was no inquiry or something. It was some kind of that reassurance that independent directors and they have asked duty to examine these things holistically. So that has been done. And they have submitted a satisfactory report, which is being under consideration from the independent directors. So that report will be shared or because it was expected to be shared, I think, last quarter or the last to last quarter we had mentioned that? There is no requirement for sharing the inquiry board.

18:45 If there is any kind of adverse something is there, then only that further action will be taken, but there is no requirement for sharing and I don't think it will be shared. It is because it is an internal document. So that 4% of the revenue still continues as it is. Is that the understanding Correct. Okay, Thank you. That's all from my side. Thank you. The next question is from the line of Mahesh Kumar from MU Investment. Please go ahead. Hello? Yes, please go ahead. Thanks for the opportunity, sir. So I just have two questions from my side. So first on fleet utilization and growth. So with higher vessel deployment driving the strong revenue growth in Q1 and with an expected to be added in Q2, how should we think about the fleet utilization and revenue growth trajectory for the rest of FY 'twenty seven and into FY 'twenty eight?

19:49 Already mentioned that with newer vessels coming in and higher deployment, FY 'twenty seven will see growth and FY 'twenty eight also. And the idea is that how we should grow between 15% to 20% CAGR in next three to five years. Management is committed for that number, and we are planning to do every bit in our scope to see that we achieve that growth. Okay, sir. And second question on the margins, So revenue grew approx 41% and EBITDA margin was around 42%. So as the newer vessels ramp up and utilization improves, should we expect margins to move back towards the mid-forty range? Or should we consider the current level as the more sustainable going forward?

20:37 See, right now, we would maintain 40% to 42% because at times, there are periods when the vessels may go on off hire or drydock. And we have always maintained that quarterly, we would not like to comment, but annualized basis, 40% to 42% margins are sustainable. Okay, sir. Okay. Thank you so much for the opportunity and all the best. Thank you. Thank you. The next question is from the line of Param Agarwal from Parem Capital. Please go ahead. Hi, sir. Thank you for the opportunity. Am I audible? Yes, Just wanted to understand the impact of Samudramanthan going forward and the next steps to that. Please, Samudur Mantani is a policy initiative, which has been taken by the government of India to push for this oil exploration activities.

21:32 From this recent incident of this geopolitical risk due to this Middle East crisis, government is now more focused on pushing for the oil approach and so that we can become as much possible as independent on this oil import. So it is a push toward a right direction. And this activity or this push is going to help all the companies in the value chain. So from the oil explorer perspective to the service provider, everybody is going to get the benefit from this. So government has laid down the policy and the fruit of this will be visible maybe after three to five years, but it is a very commendable effort from the government of India to start supporting this oil and liquid activity. Got it, sir. And so will we see an impact in the next two years from this?

22:26 No, two years will be too shorter time because it is going to take, as I told you, it is three to five years to get a visible impact for Seamec because the oil explosion activity is a long gestation kind of activity. It takes a lot of time to start the commercial production and then start the then the work for the Seamec will come for the maintenance and all these activities. So it is going to take time, but definitely it is going it is in a right direction and Seamec will definitely get benefited. Got it. Thanks, Sush. That's all from my side. Thank you. The next question is from the line of, an individual investor. Please go ahead. Hello. Thank you for this opportunity.

23:12 So, sir, I had a question. How do you see the opportunity pipeline developing in Saudi Arabia? See, Middle East as a whole is a very good opportunity. Saudi Arabia is a hotspot, then Qatar is a hotspot, then Abu Dhabi is also an output. So there are a lot of opportunity in these three countries. And maybe once sanctions are lifted from Iran, there will be another new border that will be opening up. So all these countries are going to be quite hotspot for the future requirement for these kind of vessels. Okay, sir. Thank you so much. Thank you. The next question is from the line of Rohit Mehra from SK Securities.

23:59 Please go ahead. Yeah. Hi, sir. Good morning. Thank you for this opportunity. Sorry to interrupt, Rohit, sir. Could you please use your answer? Yeah. I'm using answer only. Is it clear now? Yes. Better. Yeah. Thank you. So I'm... I joined later. So pardon me if I'm repeating the question. So just what is the expected given the contribution from our ONGCN, O and operational and maintenance contracts from Samudra seven and Samudra five hundred and thousand? We don't disclose vessel wise contribution. However, we have maintained that because here, there is no capital employed in terms of fixed costs.

24:45 So these will contribute higher in terms of the return on capital employed. And together, we should be able to maintain 40% to 42% margins for this year and next year. Fair enough, sir. My second question is, how long do you expect this current tangible supply demand environment for the specialized offshore vessels to continue? And our customers increasingly looking for long term contracts for the change companies approach to take deployment and the capital allocation. Can you please repeat your question? Yes. I'm asking about how long do you expect that current favorable supply demand environment for specialized offshore business to continue? We see a strong demand for this sector for the next three to five years.

25:37 Okay. Got it. Got it. And I'll touch on the liquidity looking for long term contract or how is it? So we are having a mix of long term as well as EPC contract, which are on seasonal basis. So some of our vessels are in long term contract for three to five years, while we are also having vessels contract where we are taking EPC job on a seasonal basis from October to May. Okay. Could you please give me just proportion of the current rate is covered by long term and versus the vessel exposed to spot or short term duration opportunity, if possible? See, around 35% to 40% contracts are short term and balance are on long term. Basically, the EPC contracts that Naveenji mentioned are short term and IMRR generally mid- to long term.

26:35 Got it. Got it. You. That's it from my side and all the best. Thank you. The next question is from the line of Tejas from T and J Investment. Please go ahead. Thank you for the follow-up. So we have mentioned that that we are looking to really share growth area, and we've almost completed one year with the. So do we have anything with this in the Python already closed? Is the market response, or are we still exploring that area? See, as we have mentioned all through this earlier phone calls also as well as in this phone call also, we continue to evaluate selectively for the suitable tonnage. As in when we find that, okay, there is something which is going to add value for all the stakeholders, we will definitely go for the acquisition.

27:36 And it is an ongoing process. So there is nothing we can confirm at this point of time that, okay, this acquisition is going to take place. No, sir. Actually, was not asking and pertaining to giving me a heads up. Was just saying that from them really savvy getting more orders since we have... Now we've... See, if I understand correctly, qualifying for Aramco is, like, it takes about two, three years or four years. And now that you have qualified, will have some reputation in the market. So is that helping us getting more inquiry and that's what I was just trying to get some color on that. Yes, yes. That is definitely there and that's why we have been telling that Middle East and particularly Saudi Arabia remains our key growth area and we continue to look for opportunity for working with OZEA over there. But since all the vessels are currently deployed, any growth for that, we need to do a growth CapEx to get incremental business in that area.

28:29 Got it. Got it. And sir, in the PPT, you have mentioned Pearl, but correct me if I'm wrong, wasn't the Pearl already sold off or is still there in an asset? No, no. Pearl, if we are going through that earlier documentation and the filing, it is a disputed case. So arbitration is going for that vessel. So that is the current status for the vessel. This is a different vessel than what you mentioned. So this is a bulk carrier in our Dubai subsidiary. Correct. Yes. Okay. And that was the OSV that we were about to purchase in Seamec. Okay. So that is disputed currently. So okay. So after the application, do we continue to still want to purchase it or we've given up on that part? No, no. Have given up on that because anyway, that was a small supply vessel.

29:22 That doesn't contribute much to the top line as well as bottom line. So that is not something which is of a focus area. Okay. And in the last call, sir, you had mentioned to me that we are trying to get out of the bulk carrier. So the business the JV is going to be dilutive. So I believe we are on track of that change or we continue We to maintain have already done one agreement to liquidate one of the vessels. Correct. So that is our progress in that currently. And so we had mentioned that we were having a demo with DG Shipping and where we were planning to do INR 1,000 crore acquisition in next two years. Any progress on that, sir? Or that is currently wait and watch?

30:08 So see, you look at it that we are acquiring the Seamec, Ananda is there. Then we as I told you, we continue to look for suitable opportunities, and we definitely intend to grow the fleet in coming two years. So definitely, this is an MOU that we have signed knowing well our growth plans. Okay. Okay, sir. That's all from my side. Thank you. Thank you. Thank you. The next question is from the line of Muskaan Patel from JK Investment. Please go ahead. Hi. Thank you for your opportunity. You just mentioned about Seamec Finance. My question is around that only. Can you elaborate more on the current status in the time line with proposed acquisition?

30:56 See, as we mentioned just now that the acquisition of the vessel and the completion of formalities should get completed by end of this quarter. And in the coming quarter, which is Q3, we expect to get it deployed in the existing contract, which it is currently due for. Okay. So then how is the expected utilization and the revenue contribution from the announced once we require it post the Q3? So see, typically, since it's an IMR contract, we would like to say that it should give us almost 95% to 98% utilization from the day it starts rolling in the waters. Okay.

31:43 Got it. That answers my question. Thank you. Thank you. Thank you. Thank you. As there are no further questions from the participants, I would now like to hand the conference to the management for the closing comments. We have taken out time to participate in today's earnings call. As we have mentioned at the beginning also, we are committed to deliver value to our stakeholders. And currently, the economic cycle is going towards oil and gas. So we would like to take all the opportunities, which can add more value for the company and its stakeholders.

32:34 Thank you and see you for the next quarter. Thank you, sir. On behalf of Aryan Capital Market Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.