Shipping Corp Profit Slides 20.63% To Rs 256.6 Crore

Indias premier shipping line, Shipping Corporation of Indias (SCI) net profit has fallen by 20.63 per cent in 1996-97 primarily due to a tax liability of Rs 45 crore. The company had paid no tax in the previous year. The corporations net profit slid to Rs 256.66 crore in 1996-97 from a record Rs 323.40 crore in 1995-96 as per the unaudited financial results announced by it. The corporations tax liability exceeds the provision under MAT. The company would have paid Rs 39 crore if it had paid only MAT. The profit before tax fell to Rs 301.66 crore from Rs 323.40 crore.

 

SCIs income from operations, however, rose by 7.40 per cent to Rs 2270.45 crore in 1996-97 from Rs 2113.97 crore in 1995-96. Total expenditure increased by 11.89 per cent to Rs 1712.69 crore from Rs 1530.69 crore. Interest costs moved up to Rs 166.20 crore from Rs 161.86 crore. Depreciation charges decreased slightly to Rs 229.72 crore from Rs 232.40 crore.

SCIs performance comes in the face of globally depressed freight rates in the bulk and container sectors. Although its exposure in the container sector is limited as it operates services only in trade between India and Europe, the corporation has a substantial exposure in the bulk sector. Freight rates in the India-UK sector are currently ruling at $800-$900 per TEU (twenty feet equivalent unit) in sharp contrast to $1200\ TEU two years back.

The corporations bottomline has been considerably buoyed by the surge in freight rates in the tanker market. It has gained as it is the primary carrier of crude and POL products to India. According to the company press release, it has been able to pare down costs on the liner sector which too has boosted its profits.

SCI is the only Indian shipping company which has an exposure to all three sectors namely bulk, tanker and container. Consequently, it is best placed amongst all Indian shipping firms to withstand the vagaries of the freight market. It has a fleet of over 120 ships, and owns nearly half the Indian fleet.

The corporations results, however, have to be audited by the comptroller and auditor general (CAG) as it is a public sector undertaking. Last year, CAG had objected to various provisions in its balance sheet.

The objections as well SCIs detailed reply constituted a part of the balance sheet.

The G V Ramakrishna committee has put SCI on the list of PSUs in which the government is going to offload its shareholding. The government holds about 80 per cent of the equity and one per cent rests with the public. The balance is distributed between various financial institutions and mutual funds.