SCI to fight for it's Navratna status

Shipping Corporation of India will soon have to lobby with the department of public enterprises for retaining its Navratna status in spite of the losses incurred for two consecutive years.
Country’s largest shipping company registered a loss of Rs 428.2 crore in 2011-12 after a net loss of Rs 114.3 crore in 2012-13. According to guidelines laid down by the department of public enterprises for government owned companies, Navratna status is taken away if a company posts losses on its books for three consecutive years.
Losing the coveted title would mean that SCI could lose the financial autonomy it has enjoyed for so many years. Currently, SCI can take its own decision for projects costing up to Rs 1,000 crore.
SCI would present its case to the government after its annual general meeting expected to be held between August-September. The company is expected to retain the Navratna tag citing the cyclical nature of the shipping business and the global crisis in the sector. Shipping industry is grappling with a situation of oversupply in the market coupled with a severe drop in the freight rates.
 A senior company executive of SCI who did not wish to be quoted said that the company is hoping that market will improve in the second quarter. Besides, the company is also expanding its LNG business, he added. SCI has acquired 29 per cent stake GAIL (India) LNG shipping ventures to haul cargo from the US.
 SCI is part of a ship-owning consortium that leased three LNG vessels to Petronet LNG to transport LNG from Qatar to its Dahej facility in Gujarat. The company overall fleet size comprises 80 vessels.
 “SCI is suffering because of its decision to place huge number of orders for new building back in 2007 when the market was at its peak. It is still receiving vessels, not knowing what to do with them,” a senior shipping ministry official said. Besides, the company has not managed to diversify well into other areas like offshore drilling.
 SCI’s counterparts like private companies including Essar Shipping which has a fleet size of 27 vessels has managed to make the most of the situation by expanding into oilfield businesses. Essar Shipping’s consolidated net profit declined by 2.80 per cent at Rs 35.80 crore for financial year ending 2012-13 compared to Rs 36.83 crore in the previous year.
Source: Business Standard