Shipping Corp. of India won’t order ships this fiscal
Shipping Corp. of India Ltd (SCI), India’s biggest ocean carrier, said it will not order any new ships this fiscal after reporting a Rs. 428.21 crore loss, its first in 28 years, in the year ended March, Live Mint reports.
The Mumbai-based firm also plans to merge some of its container shipping services and return two hired container ships by September as part of a plan to cut costs and return to profitability. Globally, rates for transporting cargo has been hit by waning demand, excess supply of ships and rising costs. SCI last reported a loss in 1983-84.
“We are not planning any new ship acquisitions in 2012-13,” the state-owned firm’s finance director B.K. Mandal said in a phone interview. “Unless the freight market improves, we are not going for any new acquisitions.”
Mandal, however, said the firm plans to raise $700 million this fiscal to pay for some of the 25 ships it has ordered. These 25 ships will cost a combined $1.1 billion.
In fiscal 2012, SCI was hit by a Rs. 297 crore mark-to-market loss on account of loan revaluation. Depreciation costs rose to Rs. 608.72 crore from Rs. 465.10 crore a year ago as it added several new ships to its fleet.
Ship fuel costs doubled to Rs. 1,560.34 crore from Rs. 817.07 crore a year ago as fuel prices rose to $750 per tonne from $480 a tonne a year earlier.
SCI’s liner and passenger services division reported an operating loss of Rs. 311.66 crore, accounting for the largest chunk of the total loss. This division, which is India’s only mainline container ship operator, earned a profit of Rs. 62.46 crore a year ago. It runs container shipping services with five of its own ships and another four hired from the market.
The liner business, comprising mainly container carriers, has been incurring huge losses for owners worldwide, a company official said.
J.N. Das, the director heading the liner and passenger services division at SCI, said the firm was scaling down operations by merging services it was running separately to Europe and the Mediterranean, and China due to low freight rates. “We have already merged the two Europe/Mediterranean services from April and will be doing the same shortly with the two services we operate to China,” Das said.
By merging the services, SCI will reduce its exposure to the sector, resulting in a reduction in the number of ships required to run the services. “Consequently, we’ll return one ship by July and another by September—hired from the market—back to their owners,” Das said.
“Besides, we have decided to carry container cargo originating from and destined for main ports only. This means we will be stopping most of the feeder services required to cart the containers from smaller ports to these main ports,” he added. “All these are done to reduce our exposure, cut costs and reduce losses.”
In the year ended March, the firm sold 14 older ships for scrapping, earning Rs. 275.18 crore, compared with the Rs. 200.98 crore it generated last year through this route.