Monday, 21 November 2011

SCI to sell thirteen old ships

Reports say that Shipping Corp. of India Ltd will sell thirteen of its oldest ships in the next four months- and up to 17 vessels in the current financial year, as operating them under present market conditions is becoming increasingly unviable. Each ship is around twenty-five years old.

 “Our plan is to sell 15–17 ships this fiscal, out of which we have sold four ships so far,” Arun Kumar Gupta, Director of SCI's technical and offshore division, is quoted saying in Live Mint.

The industry is finding it tough to put old vessels in service in the present abysmal market conditions; charterers are showing little interest in ageing vessels, a fact that has seen a spurt in ship breaking activity this year. A report by Clarkson UK says that about 33 million DWT of tonnage has been disposed off already; two thirds higher than in the corresponding period last year, although the number of vessels scrapped has increased at a lesser pace- 786 this year vs. 732 last year.

SCI, which has 26 vessels under construction, obviously plans to continue its plans to replace an ageing fleet- perhaps at a slower rate than initially envisaged. It had sold eight ships in the previous fiscal year. The company's bottom-line has been under pressure this year, though, so it probably hopes to raise some cash with the sale of unproductive or loss making assets. Gupta indicated as much when he said, “It is not viable to operate 25-year-old ships because charterers do not want vintage vessels."We have to spend more on repairs and maintenance of older ships. Besides, the acceptability of such ships at ports is less".

"When freight rates are under pressure, there is no point running older ships and keep sustaining losses.”

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