The bunker cost of SCI went up by 15% for quarter ended March 31
Shipping Corporation of India (SCI) is witnessing pressure on its margins with rising bunker (fuel oil) rates. However, it is not in a position, due to low demand, to increase freight rates.
The bunker cost of SCI went up a sharp 15 per cent for the quarter ended March 31 to Rs 243 crore over the previous quarter ending December 2010. Overall during 2010-11, bunker cost went up 11 per cent to Rs 817 crore over the previous year.
The company's net income went up by two per cent to Rs 3,543 crore in 2010-11. “Our costs are going up and we are not in a position to dictate the freight rates,” Sunil Thapar, director of the bulk carrier and tanker division, told Business Standard. The combined effect of increased bunker prices and insurance costs are likely to squeeze the company's margins.
Bunker cost accounts for 25 per cent of the total voyage cost for SCI and with global crude oil prices rising significantly, “it has pushed our cost upwards by around 15 per cent,” Thapar said.
| FUELLING WOES | ||
| Time period | Net Profit | Bunker Cost |
| Q4 2010-11 | -6.17 | 243 |
| Q4 2009-10 | 135 | 174 |
| FY 2011-10 | 567 | 817 |
| FY 2009-10 | 376 | 735 |
| Figures in Crore Source: Bombay Stock Exchang | ||
The company reported a net loss of Rs 6.2 crore for the quarter ended March, compared to a profit of Rs 123 crore for the third quarter ended December 2010. For 2010-11, net profit increased 50 per cent to Rs 567 crore over last year.
SCI is going to add 17 vessels to its fleet during this financial year. “We are expecting demand-supply to balance by 2013. The markets should get better by then,” Thapar said.