Mumbai: Great Eastern Shipping Co Ltd on Thursday called off a plan to spin off its offshore services business into a separate company, citing the lapse of a legal deadline.
The cargo mover said in a statement it would examine ‘new possibilities’ for restructuring the business, but at least one analyst said revisiting the demerger option was unlikely to be one of them.
"Based on our interaction with the management we believe that GES is unlikely to visit the demerger option again," SSKI Securities Ltd said in a report as soon as the company's announcement came.
In August 2005, deciding to separate the offshore unit to form Great Offshore Ltd the company said, "given the current growth momentum in the offshore oil services industry, the new company would be able to harness the potential of the business."
The plan, which obtained a mandatory court approval in January, must have been completed within six months but had been delayed by objections from a large client, explorer Oil and Natural Gas Corp ONGC later cleared the spin-off.
"We believe that the key reason behind the inability to proceed with the demerger is GES' discomfort with conditions stipulated by one of its material contractors for the demerger of the offshore division," SSKI said.
The brokerage also said it would now review its ‘out performer’ rating on the stock. However, analysts said they expected Great Eastern to reward shareholders with a dividend or share buyback.
Shares in the company fell 1.5 per cent to Rs 220.05 in a firm Mumbai market.
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