Shipping Corporation more than halves vessel orders

Shipping Corporation of India (SCI), India’s biggest shipping company, has more than halved its fleet expansion plan for the current fiscal and said it would proceed with only those acquisitions where it is confident of gains.

The company and shipping ministry officials, meanwhile, averred that the shipper was financially sound.

The state-run firm would now place orders for only 10 out of the 26 vessels it planned to acquire by the current fiscal-end.

Under the 11th Five Year Plan, the company was scheduled to place orders for close to 62 vessels. Till the last fiscal, the company has placed orders for 36 vessels while it was to place orders for 26 vessels in the current fiscal, which is the also the last year of the 11th Plan.

Less than a month back, the company said it was confident of placing orders for the remaining 26 vessels this year. However, officials now state they are confident of ordering for at least 10 vessels.

The 10 vessels SCI plans to acquire include two bulk carriers, one container vessel, six anchor handling tugs and one Suezmax tanker.

While S Hajara, chairman and managing director, SCI, reiterated that the company’s financial health is sound, he said the approach hereafter would be cautious. “The Board has directed the company to be cautious and proceed with only those acquisitions for which it is confident of both long-term and short-term gains,” he said.

Hajara refused to call it an order restructuring. “The order has not been restructured, it is just we are now sure orders for the entire number (26 vessels) will not be placed this year.”

He admitted that margins for the company were under pressure, but said the entire shipping industry has been hit due to an oversupply situation.

In the past few days, SCI stock had plunged due to reports raising concerns over the company’s financial health and debt raising capacity.

Recently, an internal shipping ministry document had raised serious concerns over SCI’s huge expansion plan. K Mohandas, shipping secretary, said, “Various reports are prepared within the ministry. The report in question was one among them, but was leaked before it could be discussed at the ministry level. The report is not necessarily the ministry’s view.”

“SCI does not need a bailout,” he said.