Industry analysts suggest Shipping Corporation of India (SCI) to enter into joint venture agreements with public sector undertakings (PSUs) in order to get assured cargo and revenue stream.
During 2012-13, SCI incurred a net loss of Rs 114 crore while its total revenue stood at Rs 4,152 crore.
At a time when the economy and trade flows are in a downturn, catering to the logistic needs of state-run companies may help SCI weather the slackness in business, experts feel. Owing to excess supply of vessels in the market and low demand, charter rates are very low.
Some reports indicate that SCI is unable to exploit the already signed agreements with state-run peers such as Coal India, ONGC, SAIL and Gail India and its financials continue to be under stress.
For example, SCI has not acquired vessels yet for operation as per a joint venture agreement signed with the Steel Authority of India in 2010. Also, its discussion with National Thermal Power Corporation to transport cargo also did not yield results.
Recently, the shipping company signed an MoU with Gail India to transport gas from the US and experts believe that the move is likely to help SCI improve its financials.
But some experts feel that entering into contracts with state-run firms may not not assure return cargo and that will be a loss for SCI. SCI cannot operate if they only have cargo for one journey, some industry experts argue.