Shipping Corporation of India to cut spending next year

With the shipping sector reeling under the global slowdown, the Shipping Corporation of India (SCI) will be spending around 22 per cent less money in 2013-14 compared to the current year. The Union budget estimates that the government-controlled company will total internal and extra budgetary resources at Rs 1,939 crore for the coming financial year compared to Rs 2,497 crore spent in 2012-13.

SCI will be using the money to pay for purchase of vessels during the coming year. Around 17 ships are still to be delivered to SCI, of which delivery of at least four to five are expected in 2013-14.

“We want to consolidate our cash. We have enough deliveries in the pipeline. We are not thinking about placing any new order this year,” said Sunil Thapar, director-bulk and tanker division, SCI.

Given the oversupply situation in the global shipping industry, SCI is not going to place any new orders or acquire any existing vessels from the market this year. The company recently took the delivery of 120 tonne bollard pull capacity Anchor Handling, Towing & Supply (AHTS) vessel “m.v. SCI Urja”. This brought the overall fleet size of country’s largest shipping company to 80 vessels with a capacity of 5.91 million dead weight tonnage.

SCI has taken delivery of eleven vessels during 2012-13 and disposed off five old vessels. As a result of both these activities, the average age of its fleet is now around 10 years.

For the third quarter of financial year 2012-13, the company registered a net loss of Rs 75 crore. However, for the nine month period ending December 2012 the company registered a profit of Rs 167 crore as against a loss of Rs 72 crore for the corresponding period last year.

India has a fleet strength of 1158 ships with gross tonnage of 10.45 million. SCI accounts for 32.60 per cent share of total shipping capacity of the country.

The Baltic Dry Index, which is 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 the Indian shipping companies also faced restricted cash inflows due to very low charter hire and freight rates in all segments of shipping.