Shipping Corporation of India Q2 FY10 standalone net sales were down at INR 844.94 crore as compared to INR 1,184.65 crore in the same period last year. Standalone net profit was down at INR 33.70 crore as against INR 274.88 crore.
Commenting on the numbers gone by, Mr S Hajra, CMD, Shipping Corporation, says there was pressure on earnings due to dip in the tanker market. "Tanker rates are likely to go up in winter." He says the company reduced losses from INR 107 crore to INR 62 crore quarter on quarter.
Going forward, Hajra sees the overall operating environment challenging. He also clarified that divestment is not on the cards.
Here is a verbatim transcript of the exclusive interview with Mr S Hajra on CNBC-TV18.
Q - 32% dip on the topline and 87% dip on the bottomline, what really happened this quarter, have priced declined so much this quarter or was there any decline in the number of fleets that you had actually deployed, what went wrong?
A - This is nothing unique to SCI. It's the same story with all the other companies like ours in India and same is the case with SCI. There is no reduction in fleet, prices have not reflected at all in P&L. It is not a question of charter hires having severely gone down particularly in the tanker market. We have maximum exposure to tankers, so obviously the tanker market having dipped quite widely it has affected the fortune of all companies globally including us. At least we are not in the red. We have declared a profit as you know of Rs 34 crore. If you analyze even my other competitors, you will see that every shipping company has suffered. Some of them have sold of vessels which helped their results to some extent. We didn't have any sale. If you take that out, then we compare quite favorably.
Q - The tanker market is usually a good period in the winter months, are you expecting charters to increase and what rates are you expecting?
A - We are definitely expecting rates to go up because of the winter effect. There will be quite a big impact, but to what extent is almost impossible to predict. As far as the other segments are concerned, the dry bulk has gone up. We have brought it to less than 30% of its peak in 2008, so bulk carriers have done slightly better versus the previous quarter.
Unfortunately, tankers have done much worse, liners continues to be a cause for concern because the rates continue to be very low. We have reduced our losses from INR 107 crore and have brought it down to INR 62 crore this particular quarter. If you compare with the same quarter of the previous financial year, we have lost about INR 44 crore. I do believe that going forward the liner situation will improve because today's rates are not sustainable. All over the world, liner shipping companies are absolutely bleeding. I do genuinely believe that situation will improve going forward, it wont definitely bring a large profit or anything such but we would surely be able to contain our losses.
Going forward, I don't see much change in bulk carriers and tankers at least in the short-term. There is definitely a likelihood of improvement.
It might need some time because there is unfortunately a huge order book in shipping. The supply pressure is going to be there throughout 2010 and only then it can start to come down from 2011 onwards. Though the economy seems to have bottomed out at the same time international freight has not shown too much of an impact on improved economy, international trade in 2009 is also expected to actually shrink as in 2008, so overall situation for shipping is quite challenging and grim but defiantly you will have to take a lot of measures and keep cutting down costs and see how best we can function. The shipping business is cyclical and we have had a wonderful run in the last few years, so this has to be taken in sight.
Q: Any word from the government on divestment or whether that is in the offing?
A- No
Sourced from CNBC - TV 18
http://www.moneycontrol.com/news/results-boardroom/tanker-rates-may-go-upwinter-sci_422036.html
