Shipping Corporation to go slow on vessel buys

Jayanta Mallick
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S. Hajara
S. Hajara

Stressed cash flow has forced Shipping Corporation of India (SCI) to go slow on its vessel acquisition plan. Chairman and Managing Director S. Hajara told Business Line that SCI was not “aggressively” perusing its proposed new acquisitions.

“The asset prices have come down sharply. It should have been an ideal time for acquisition. But we are not being able to take advantage of the situation as economic slowdown has stressed our cash flow severely.”

This year margins have come down even lower than the previous fiscal (2011-12) in which SCI reported a loss of Rs 428.21 crore, its first in 28 years, against a profit of Rs 567.35 crore in 2010-11.

“The 2012-13 margin trends suggest 10 per cent dip from the last financial year and more than 50 per cent from SCI’s historic peak margin,” Hajara said. He said bigger fleet in a depressed freight market could be a further drag on the bottomline.

SCI was ticked off by the auditor for missing its acquisition target in 2011-12.

The national carrier current fleet strength is 81 vessels of 5.855 million DWT (deadweight tonnes). It was to increase by another 26 last year.

SCI has now 21 vessels on order, which would be delivered by 2014, SCI CMD said. The State-owned company has tightened its belt on all-round expenses and capital expenditure.

SCI’s operating profit margin this fiscal stood at 6.31 per cent and 19.01 per cent in June and September quarters, respectively. The net profit margins, however, were placed at 27.29 per cent in Q2 and -4.34 per cent in Q1 of FY13. The SCI stock at Rs 54.75 is floating above its 52-week low of Rs 46.60 recorded in January this year.

(This article was published on December 10, 2012)
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