SCI outlook very stable in medium term: MD

How are you assessing the performance of the quarter gone by? What is the visibility that you have on margins being stabilised any time soon?
With respect to the margins having contracted, I would say that is not completely true because if you compare it with the corresponding quarter of the previous year, yes it has contracted. But if you compare it with the immediately preceding quarter, then we have almost tripled our operating profit from the March quarter. So, that way the company has done better and the margins have not contracted over the previous quarter. If you are talking about comparing it with the corresponding quarter of the previous year, then I would draw your attention to the skyrocketing tanker prices at that time due to the contango effect because of which a lot of floating storage was created.

If you compare our segment results, you would clearly see that in the previous year corresponding quarter the tanker had a made a profit of Rs 406 crore and in the current quarter it is at a loss of Rs 63 crore. That clearly gives an indication of the market impact of the freight rates on the company’s performance. The company is largely driven by the market indices and in this context, I would also like to share with you that the Baltic Clean Tanker Index which was in April ‘20 at 1305 is currently at 473 level.

So, the results that you are seeing are not unique to the Shipping Corporation of India. This would be the phenomena for all companies which largely have a very strong tanker fleet. And with respect to the prospects going forward, we consider we would remain stable considering that we are a very diversified company. We operate in all segments of shipping and as you would see that in the corresponding quarter of the previous year, the liner segment had a double-digit loss, but in this quarter the liner has a triple-digit profit. This sort of balances out the company’s performance and it gives a stable outlook to the company.

What are the noncore assets that you have on your books? What is their broad business and revenue contribution?
I will not be able to give you complete details because this constitutes to a certain extent UPSI and in May 2020 SEBI LODR has come out with very clear regulations saying that I cannot disclose more than what I have already disclosed on the stock exchanges. It is there already in the public domain, but I cannot give you information you are seeking in terms of the earnings and the contribution because I have not still disclosed that to the stock exchange either.

On the divestment front have you heard anything?
On the divestment front, the virtual data room is open. We had opened that in July 2021. The virtual data room is being managed by DIPAM. While the data is uploaded by Shipping Corporation of India, the data room is exclusively managed by the transaction advisor engaged by the DIPAM and the data room is currently still on for due diligence by the prospective bidders. Once the due diligence process is completed DIPAM would float an RFP calling for the financial bids. As of now with the information that I have, the transaction is scheduled to be completed in FY22.

What are the medium-term prospects for the business?
As I had just given in my opening remarks, the company’s outlook even in the medium term looks very stable because we are primarily a diversified company. Even if one segment does not do well, we have always seen that it gets offset by the performance of a different segment. The liner segment is currently doing extremely well and throughout FY22 we consider that the liner segment will continue to boom in profits and even the bulk segment is currently giving a very stable outlook.

We anticipate that the same trend is going to continue in the entire FY22. With respect to the tanker segment, we are not very optimistic. We consider it is not going to be really a game changer until and unless the winter demand picks up or something dramatically happens to the Covid protocols, and the demand and supply equation changes. Until then we do not see the tanker segment as a very optimistic segment as of now.


We understand that there is this shortage seen of containers. Do you see any repercussions or impact of that?

As far as Shipping Corporation of India is concerned, we are not facing any shortages. We have got a good inventory of containers and we are ensuring a proper turnaround. That is what is giving the company good yields on the

segment. But you are right, as far as the global phenomena, goes there is a tremendous container shortage. That is what has actually boomed up the container prices.

As of now, the container segment continues to sky rocket in prices at unforeseen levels as of any visible time in the past. But the container inventory position has improved in the recent months. It is not as bad as it was about three months back. Things are improving. The turnaround at the ports is also improving with most countries having completed the double vaccination. Things at the ports are much better than what they were about two to three months back.