SEAMEC Ltd Q4 FY2025 Concall Summary

Key Takeaways

• Challenging FY25, confident FY26 tone: Revenue fell 12% YoY in Q4 and 10% for the full year, driven by unscheduled vessel breakdowns and idle time. Management calls FY26 "a year of results, year of delivery and a year of performance," citing full fleet deployment and a new vessel acquisition.
• Fleet fully deployed entering FY26: All 6 operational vessels are now on charter, including the newly secured 2-year Swordfish contract with Aramco and the \$23M acquisition of MSV NPP Nusantara, removing the idle-time overhang that hurt FY25.
• Balance sheet absorbing growth capex: Debt is declining, not rising, and the company will use cash reserves to minimize debt further while financing the Nusantara acquisition through a mix of debt and internal resources.
• Earnings quality marred by subsidiary losses and tax volatility: UK subsidiary depreciation and interest costs, plus a ₹15 cr tax impact on the non-tonnage-tax Barge Glorious, drove a 27% consolidated PAT decline for FY25. Management aims to close the standalone-to-consolidated gap over 2 years.
• What to watch next quarter: Whether the Seamec Barge secures a post-monsoon contract by October, the pace of UK loss reduction, and any progress on transferring HAL Anant and ONGC-operated vessels into Seamec.

Fleet Deployment & Contract Status

• All operational vessels working: As of May 28, 2025, all 6 vessels excluding the barge are deployed. The barge operates only in the non-monsoon period and went off-hire May 15, expected back around October/November with no order currently in hand.
• Swordfish idle period resolved: The vessel was idle from March through May 21, 2025 after its old contract closed at a reduced rate. Saudi Arabia's visa halt for South Asian nationals due to Haj in June caused the April gap; the company secured an embassy exemption and the vessel went on charter May 21 on a 730-day contract with Aramco.
• Seamec Barge monsoon off-hire: Completed its 2-year long-term contract on May 15 and will remain off-hire until October 15 due to the monsoon season.
• Seamec 3 on spot deployment: Deployed with Hardy Oil on the East Coast since February at a spot rate; last extension granted May 14 through May 31, with another 15-day extension expected if work is not completed.
• Seamec Princess 2-year contract: Deployed with L&T on a 2-year contract, laid up during monsoons.
• L&T \$101M consortium contract completed: Won in consortium with Porsche Subsea Singapore; Seamec's share was approximately \$30-31M, extended over two working seasons, successfully completed with all revenue booked.
• No vessel availability for 2-3 years: All vessels except the barge are on long-term charters with ONGC (3-4 years) or Aramco (2 years), leaving no free vessels to pursue available Gulf opportunities from Aramco and ADNOC unless new vessels are purchased.

Rajeev Goel: "I would have been very happy to have more favorable contracts, but this vessel is now chartered for the next 2 years. And my other vessels are all chartered with ONGC for at least 3 to 4 years. So as such, I don't have availability of vessels for next 2 to 3 years."

FY25 Performance Drivers

• Revenue decline concentrated in two vessels: The unscheduled breakdown of Seamec II during Q3 and lesser deployment of Seamec Swordfish during FY25 drove the 12% YoY consolidated revenue decline in Q4 and 10% for the full year.
• EBITDA held relatively steady: Consolidated Q4 EBITDA was nearly flat YoY at ₹91 cr vs ₹90 cr, while full-year consolidated EBITDA fell 10% to ₹244 cr, suggesting operating leverage held up better than the topline.
• PAT decline amplified by tax and subsidiary drag: Consolidated PAT fell 23% in Q4 and 27% for the full year. Standalone PAT fell more sharply (22% in Q4, 38% full year) due to a ₹15 cr tax impact in Q4 FY25 versus carried-forward tax losses available in FY24. The Barge Glorious, the only vessel not under the tonnage tax scheme, drove the tax volatility.
• UK subsidiary losses persist but are narrowing: The INR 67 crore consolidated-to-standalone gap last year has come down substantially. Losses are primarily non-cash depreciation and interest provision on capex incurred, as the UK business remains in the development stage. Management's endeavor is to nullify the gap over the next 2 years.
• Dubai subsidiary turned profitable: The Dubai subsidiary was already profitable in FY25, and the company sold some loss-making assets there.
• Swordfish contract rate reduced mid-charter: The original \$3.46M contract with Mermaid Subsea was reduced after a crane technical snag prevented the vessel from performing saturation diving required by the end client Saudi Aramco. The rate was shifted to air diving, and only actual days worked were billed.

Fleet Expansion & Consolidation

• MSV NPP Nusantara acquisition approved: The Board approved purchase of the 2010-built vessel at \$23 million. Seamec International FZE (wholly owned subsidiary) holds the acquisition rights and will nominate the vessel in favor of Seamec. Financing will be a mix of debt and internal resources.
• Gift City JV incorporated for vessel leasing: Seamec International FZE incorporated Searete India IFSC Private Limited in Gift City, Ahmedabad, with joint venture partner Arete Shipping DMCC (UAE-based). The primary object is leasing, buying and sale of vessels. The JV is acquiring a cargo vessel to be put on time charter, with the partner bringing the vessel identification, the contract, and 50% equity.
• Vessel consolidation underway: All vessels and businesses will eventually merge with Seamec. HAL Anant is the only vessel not yet in Seamec; its charter with ONGC through HAL Offshore will continue for some time, and upon renewal it will be taken directly under Seamec. Two additional contracts where vessels are owned by ONGC but operated by HAL Offshore are also targeted for transfer to Seamec upon renewal.
• Fleet replacement planned over 3-5 years: Older vessels (Seamec 2, 3, Princess) will be replaced with better new vessels over the next 3-5 years, following the pattern set with Paladin and Swordfish. As vessels age, maintenance costs increase while charter hire remains the same; the decision to continue depends on whether the spread between charter hire and expenses remains attractive.
• No further acquisitions immediately planned: Management stated there are no immediate plans to acquire more assets beyond Nusantara, and no diversification into other marine service sectors.

Sunil Gupta: "There are a few details which are still under working, so I can't divulge a lot of details, but the endeavor is that all the vessels and the businesses will eventually get merged with the Seamec."

Charter Rate Economics

• Rates benchmarked to field life, not oil prices: Charter rates are determined by the reservoir left in the oilfield (amount of oil producible over the next 4-5 years of the tender period) and the present cost of production, which increases yearly due to inflation. Oil prices are not a direct factor.
• Vessel age creates a margin squeeze: As vessels get older, maintenance costs rise while charter hire stays flat. The decision to keep an older vessel operating depends on whether the difference between charter hire and expenses remains good. Seamec 2 is still on charter with ONGC, and management would happily offer it for renewal if a tender opportunity arises, potentially securing another 3-5 years.
• No industry benchmark available: Management stated the company is the only one in India operating multi-support vessels in oilfields, whether private or public sector, so there is no industry benchmark for charter rates. Management declined to provide a ballpark quarterly revenue run rate, directing analysts to research reports instead.

Rajeev Goel: "We are the owners of very special and technical vessels which are quite huge in capex and these are the lifelines of any oil field."

Guidance & Commitments

Key Metrics