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Shipping Corp. of India denies plans to close liner business

2012/8/21      view:

Shipping Corp. of India has denied that it is planning to shutter its liner division, but did say it was reviewing the segment’s performance and eyeing ways to increase its profitability.

“It is clarified that the rumor of closing down the liner segment is incorrect. However, SCI has been continuously monitoring the performance of liner division and has been looking at ways and means of enhancing the profitability of the division,” the state-owned shipping line said in a statement.

SCI further stated that it may drop services, noting that it has done so in the past. It said it is exploring restructuring other services and launching new ones as well.

In an statement earlier this week as reported by the India business media Mint, SCI chairman and managing director Arum Kumar Gupta said: “We are examining it [the container shipping business] very minutely with a microscope”. “If pushed to the wall and if we think there is no way we can turn around the loss-making container shipping business, we might as well close it down.”

The carrier’s container division has experienced three consecutive years of losses.

SCI’s quarterly operating loss from liner business, which primarily comprises container shipping, swelled more than sevenfold to $1.25 million in its first fiscal quarter from $171,485 in the first quarter of fiscal 2013-14, even as income inched up 1 percent to $40.9 million.

SCI posted a net profit of Rs. 49.5 crore (about $8.1 million) for the first quarter, which ended on June 30, compared with a $16 million loss a year earlier.

The state-owned carrier’s quarterly revenue surged 12 percent year-over-year to $178 million. Its operating profit in the April-June quarter was $11 million, improving from a $13.5 million loss in the same period last year.

The national carrier narrowed its core bulk shipping segment loss to $5.1 million from $16 million in the same period of 2013-14 on a 15 percent year-over-year jump in revenue to $118.5 million.

Operating expenses for the first quarter were estimated at $176 million, up from $169 million a year earlier.

SCI, which lost $46.4 million in fiscal year 2013-14, which ended in March, versus a $19.3 million loss in the prior year, currently has a fleet of 72 vessels with a total cargo-carrying capacity of around 5.8 million deadweight tons. The company has been directed by the Shipping Ministry to put on hold its fleet expansion plans in the face of sluggish trade demand and continued overcapacity on major trade lanes.