SCI on austerity drive to fight slowing business

The company expects to incur savings of 10-15% on its overall cost for the year 2013-14

Even as the maritime sector is bogged by the economic slowdown, India’s largest shipping company, Shipping Corporation of India (SCI), is trying to consolidate its business.

In FY14, SCI expects to incur savings of 10-15 per cent on its overall costs. To begin with, the company has started taking austerity measures at management level to bring down its costs. Senior company executives have cut down on travel costs.

“These measures are voluntary. We cannot share exact details, but we are trying to take some steps in this direction,” said Sunil Thapar, director-bulk and tanker division, SCI.

Thapar is next in line to be the chairman of SCI.

The company is also trying to control the fuel consumption of its vessels, especially the very large crude carriers (VLCCs) and also deploy bulk carriers better.

For instance, the ships come on “slow steam” on the return journey, since cargo is already delivered.

This reduces the bunker consumption.

“With 1 nautical mile increase in the speed, the cost of bunker goes up three times. We have 99 per cent traction on our VLCCs,” said Thapar.

The firm has taken delivery of four VLCCs this year and is expecting two more by early next year.

The Baltic Dry Index, the barometer of merchandise trade as well as shipping services, has been in the red since the global crisis of 2008. The Economic Survey of 2012-13 said that Indian shipping companies also faced restricted cash inflows due to very low charter hire and freight rates in all segments of shipping.

SCI has also been in talks with the public sector companies for providing long-term charter to its vessels, which will insulate the company from untoward market conditions to a great extent.

The company currently has 80 vessels and is likely to add another five to its fleet after the dissolution of the joint venture company, Irano Hind Shipping. Last year, the company incurred a net loss of Rs 428 crore.