SCI plans to buy stake in shipyard, diversify biz

MUMBAI: The Shipping Corporation of India, the nation’s largest sea carrier, plans to purchase a stake in a shipyard to diversify its business after profit and sales slumped last year.

The state-owned company has asked shipbuilders to submit proposals, said chairman and managing director S Hajara in a phone interview on Tuesday without elaborating.

“Without shipyards, there will be no shipping companies,” said Mr Hajara. “It’s a backward integration for any shipping company.”

The Shipping Corporation’s (SCI) net income plunged 60% in the year ended March to the lowest in seven years, after the global recession cut trade. AP Moeller-Maersk A/S, South Korea’s Hanjin Group and STX Group, and China Ocean Shipping Group are among the companies that own both liners and shipyards.

“It’s a good long-term move for SCI to acquire a stake in a shipyard, as the shipping industry has stabilised from the downturn in the last few months,” said Param Desai, an analyst with Mumbai-based Angel Broking.

“They may get a stake at a low price, as shipyards are faced with no order inflows for over a year, as well as deferrals and cancellations for existing orders.”

The shipping line rose as much as 2.1% to Rs 169.5 and changed hands at Rs 168.6 as of 12:37 pm in Mumbai. The stock has gained 14% this year, compared with a 6.5% advance for the benchmark Sensitive Index.

SCI’s profit declined to `380 crore ($81 million) last year after revenue for the Mumbai-based company slumped 17%.