Mumbai, May 21 Varun Shipping Company reported a 51 per cent rise in net profit at Rs 122.8 crore for the year ended March 31, 2009, against Rs 81.5 crore in the preceding fiscal.
The figure for 2007-08 did not include foreign exchange gain due to revision in Accounting Standard 11 (AS-11) by the Ministry of Corporate Affairs.
Under the earlier accounting format, companies were required to account for forex gains/losses.
Income from freight and charter hire rose 7.5 per cent to Rs 914.6 crore from Rs 850.8 crore in the previous year.
“It’s been a challenging year. Banks were tightening credit, charterers were looking at renegotiation. Utilisation rates have also fallen because of the downturn,” said Mr Yudhisthir Khatau, Vice-Chairman and Managing Director, at a press conference here on Thursday.
The current year has started with a “recessionary tendency”, said Mr Arun Mehta, Chairman and Managing Director. “Our profit margins may be hit in the near term as we have entered into fresh contracts at lower freight rates,” he added.
The company has also reduced its capital expenditure plan to Rs 400-500 crore for this fiscal from Rs 2,000 crore last year. “In the current economic environment, we want to constantly review and relook our plans every quarter,” Mr Khatau said.
Varun plans to use its entire capex on acquisition of offshore vessels. “There is a tremendous opportunity in this market and we want to increase our business exposure in offshore,” he said.
The company has five anchor handling tug supply (AHTS) vessels used to support oil rigs as well as tow and anchor them. Of these, three are operating in the North Sea and plans are now underway to deploy them in Africa, the Gulf of Mexico, Brazil and the Krishna-Godavari basin.
This is a result of rates in the North Sea collapsing by 70 per cent from 2008 levels.
Varun Shipping’s share price closed at Rs 58.95 on the BSE on Thursday.