Shipping Corporation of India (SCI) has said that although its vessels were fully deployed, it was not getting good freight rates as there is a huge over supply of vessels in the market.
In the market dominated by recessionary environment, "We're witnessing plenty of ships chasing little cargo," said AK Gupta, chairman and managing director of SCI, who was present here for a three-day IPE orientation programme for the officers of public sector enterprises last week.
According to him, the public sector enterprise has not performed well this year due to weak demand and low freight rates.
"The recession has gone a bit too long," he said. This is the case world over for those involved in core shipping business, he added.
For the half-year period ended on September 30, 2013, SCI clocked a total income of Rs 2,012.46 crore, which was 16.4% lower than Rs 2,407.42 crore it posted for the same period in 2012. Net loss for the six-month period this fiscal came at Rs 222.23 crore as against a loss of Rs 242.39 crore in the previous year.
For the fiscal 2012-13, while the total income stood at Rs 4,360.60 crore, the net loss was at Rs 114.31 crore. It is yet to announce its third quarter results this fiscal.
Internationally, in shipping business, freight rates are governed by the benchmark London-based Baltic Dry Index (BDI). It provides an assessment of the price of moving the raw materials by sea. On May 2008, BDI reached its record high level since 1985, reaching 11,793 points. On February 2012, it had dropped to 647 points, the lowest since 1986. It closed at 1,091 on Friday last week.
However, Gupta said some of the shipping players, including Mercator Lines, Essar Shipping have been able to weather the recessionary impact by diversifying into non-core shipping segments like coal, dredgers, mobile offshore protection unit, captive cargo. In the case of SCI, it has a huge presence in core shipping business---bulk carriers and tankers.
SCI, which has 74 vessels with a dead weight tonnage (DWT) of 5.85 MT, has placed orders for 14 vessels, including Kamsarmax Bulk carriers (1), VLCCs (2), anchor handling, towing and supply vessels (7) totaling 986,800 DWT at shipyards located abroad and domestic.
It received the 81,696 DWT Kamsarmax, rechristened as MV Vishva Uday from Jiangsu Eastern Heavy Industries Co. Ltd, China, in November 2013.
No new orders for vessels
Gupta said the PSU has no plans to place new orders for vessels as it was dependant on improvement in cash flows. "It depends on our cash flows. Whatever cash flows we have were able to meet the working capital needs," he said.