Shipping Corporation of India Sinks into Loss

Shipping Corporation of India - Latest Results

(in Cr.)
Sep-11
Jun-11
FY10-11
Revenue
1,037.50
984.96
3,543.42
Net Profit
-140.6
-5.86
567.35
EPS
-3.02
-0.13
13.01
Cash EPS
0.1
2.93
22.17
OPM %
16.37
18.86
33.47
NPM %
-13.55
-0.59
16.01
 
 
 
 

Shipping Corporation of India share price movement

 
 
 
Weekly H/L
62.8
56.1
Monthly H/L
72
56.1
52 Weeks H/L
142.9
56.1
 
( 9 Dec 10 )
( 9 Dec 11 )
Delivery / Var+ELM %
48.01
13.43
 
 
 

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Shipping Corporation of India - Share price movement

Shipping Corporation of India - Share price movement
Shipping Corporation of India - Share price movement | Source
shipping industry is in recession now
shipping industry is in recession now | Source

Shipping Corporation of India


Q2 results bad

Shipping Corporation of India has slipped deeper into red for the quarter ended 30.09.11 as compared to the quarter ended 30.06.11. Revenue increased from Rs.984.96 crore to Rs.1037.50 crore. Revenue for the whole year 2010-11 was at Rs.3543.42 crore. Net loss increased from Rs.5.86 crore to Rs.140.60 crore. For the year 2010-11, net profit was at Rs.567.35 crore. The year 2011 is not a good year for the shipping companies as they are suffering due to freight decline and fuel cost increase. Demand is also declining. The government of India has asked Shipping Corporation of India to go slow on its expansion plans. The shares of Shipping Corporation of India are traded in the Indian Stock Exchanges at Rs.56.70 now (Bombay Stock Exchange 09.12.11). The highest price recorded by the shares of the company in the last one year is at Rs.142.90 (09.12.10) and the lowest price is the present price. The Registered Office of Shipping Corporation of India is located at “Shipping House”, 245, Madame Cama Road, Mumbai 400021. The company’s website is shipindia.com. The company’s paid up capital stands at Rs.465.80 crore. Free reserves amount to Rs.6702.33 crore as on 31.03.11.

Pruning the expansion

Following the decision taken by the Indian Prime Minister and President of Maldives at the SAARC summit for launching a ferry service between Kochi and Male, discussions are being held to arrange for such a ferry service. Shipping Corporation of India has decided to invite EoIs from operators for the service. Shipping Corporation of India is planning to restrict orders for acquisition of fleet in the current year due to depressed scenario of the shipping industry. In the current fiscal year, the company may go for only five or six vessels as against the earlier plans of acquiring 25 vessels. The company estimates that oversupply in the industry is to the extent of 30% in dry bulk carriers and container tonnage and the oversupply in oil tankers is to the extent of 20%. The company sees no prospects of revival in the shipping industry before the first half of the next year.

World economy is not doing well

The company is in a position to avoid falling into a debt trap. Its fundamentals are strong as it has large free reserves. But at times of depressing scenario as is being witnessed by the shipping industry now, the company needs to be more cautious. The global economy is declining with the debt crisis looming large on the European countries. USA is also not doing well. There may be more upsets in cargo and trade projections in the coming months. Shipping Corporation of India cannot prosper when the entire shipping industry is in doldrums. Though the chances for Shipping Corporation of India becoming another Air India are very slim, nevertheless, the company needs to pay attention to prudence as nobody knows when the shipping industry will get out of the present recession.

Iranian joint venture experiences difficulty

Shipping Corporation of India is negotiating to buy a 10-15% stake in an Indian shipbuilding company. Shipping Corporation of India has a joint venture with Islamic Republic of Iran Shipping Line called as Irano-Hind Shipping Company. This joint venture company faced problems in the beginning of the year while making payment to South Korean Shipyard for taking deliver of the ships due to international sanctions against Iran.

Do not buy the shares now

At the current market price, investors are advised not to buy the shares of Shipping Corporation of India for the following reasons:

  • Shipping industry is experiencing worst possible times in the last three decades
  • Freight rates are very low and unprofitable
  • Demand for cargo is declining
  • Fuel costs have increased appreciably
  • Shipping Corporation of India has slipped into loss
  • Shipping Corporation of India has postponed its plans to acquire vessels

World economy is not doing well which will affect shipping industry

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