No govt directive to stop vessels buy: SCI
State-run Shipping Corporation of India (SCI) has not got any directive from the central government, its largest shareholder, to stop acquisition of vessels, and in fact is planning to order 10 more vessels in the current fiscal year, a top official said.
Earlier, various media had reported India's largest shipping firm, 64% owned by the government, was in financial distress due to the current global slowdown and the government had asked it to stop acquiring new vessels.
Reacting to the reports, shares of the company had hit a 52-week low on October 3.
The Mumbai-based shipping line has placed orders for 28 vessels, worth around $1.4 billion, ready for delivery by 2013-14, while market price for nine vessels has declined due to global downturn, said Chairman and Managing Director SC Hajara.
In 2008, the company had placed orders for 62 vessels to be delivered by FY12. The 28 vessels are part of this and the delivery of these will be only by 2014.
SCI, which at present owns 81 vessels, plans to order at least another 10 more ships in 2011-12 and plans to float tenders for six offshore vessels with the Indian shipyards, he said.
This was, however, down from an earlier objective of buying 26 vessels during the current fiscal, Hajara said.
"The board has said because of global downturn we should be cautious and go for acquisitions where the company gains both, in the long and short term."
SCI has reported a net loss in the last two consecutive quarters as softer freight rates hit margins.
A flood of new vessels this year has pushed the crude tanker market to unprecedented lows, while a similar situation is expected to hit the dry bulk market over the next few months.
More than half of Shipping Corp's fleet consists of tankers and about a fifth comprises of bulk carriers, while it maintains 11 offshore vessels, the data on its website showed.
"We are among the most vulnerable industry in the world, we are like sitting ducks," Hajara said.
The firm, which has a current market capitalisation of $678 million, has an outstanding debt of Rs 4,715 crore ($957 million) as on financial March 31, and has a debt-equity ratio of 0.66 as on March 31, it said in an exchange filing.
The debt equity ratio for the firm, which has a cash reserves of about Rs 2,500 crore ending March 31, will not exceed 1:1 even if the capital expenditure program earmarked under the 11th Five-Year Plan (2007-2012) is fully implemented, the firm said.
The firm is going slow on its declared plan of diversification into shipbuilding due to slowdown but would acquire a minority stake in a private shipbuilder, he added.
The shares in the firm, that is 16% owned by institutional investors mainly Life Insurance Corp and General Insurance Corp, have lost more than a third in value since March 31, and lost about half of its value so far in 2011.
The company shares closed 0.63% down in a Mumbai market, that ended 0.13% lower on Tuesday.
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