Outlook still continues to remain uncertain: Varun Shipping

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Outlook still continues to remain uncertain: Varun Shipping

In an interview with CNBC-TV18, Yudhishthir Khatau, Managing Director of Varun Shipping spoke about the results and his outlook for the company.

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Excerpts from Midcap Radar on CNBC-TV18 Watch the full show » ALSO READ See latest News about Varun Shipping See previous management interviews See what other Experts & Brokerages are saying about Varun Shipping Varun Shipping BSE | NSE 31/05/12 Are Mutual Funds betting on Varun Shipping?

Varun Shipping announced its third quarter results. The company registered a net loss of Rs 90 lakh versus profit of Rs 51 crore. It's total income was down at Rs 239 crore versus Rs 270 crore.

In an interview with CNBC-TV18, Yudhishthir Khatau, Managing Director of Varun Shipping spoke about the results and his outlook for the company.

Below is a verbatim transcript of the interview. Also watch the video.

Q: Could you take us through your numbers?

A: As far as the quarter is concerned, we have posted a marginal loss for the quarter of approximately Rs 90 lakh and that is primarily because of a drop in revenue numbers. Our revenue numbers are lower than the last period because the shipping industry has gone through fairly strong recession compared to the last year.

Q: What is your revenue number?

A: As far as the revenue is concerned, it is down by about 30% compared to last year for the quarter. That has directly affected the bottomline. We do see an improvement in terms of numbers now in the current quarter because there has been slight improvements in the freight rates tanker market, as well as better utilization on the gas fleet.

Q: How about your margins picture and what are the freight rates at this point?

A: Margins have been very much under pressures because when the revenues have dropped by 25-30% the cost in the shipping are very fixed in nature because being an capital intensive industry most of the costs are related to depreciation, interest costs, manning. So margins have been under very strong pressure for the overall industry.

But in terms of the freight rate outlook with the winter coming through there has been a correction in the tanker markets, as well as to a certain extent in the gas and the offshore markets as well. But clearly not as strong as what they were in the preceding year.

The outlook for the shipping sector still continues to remain cloudy until the overall global economy starts a significant pick up.

Q: Could you give us the number of vessels and are they all on charter as we speak and how many are on fixed contracts and how many on variable contracts?

A: We have got 10 gas carriers. We have got 3 tankers and then we have 7 offshore vessels, 5 of which are owned by us and 2 of which are chartered in by us. So the total fleet from that perspective is 20 vessels overall as a company that we operate.

Generally, we operate in three markets. We operate in the time charter, what we call the pool markets and the spot markets.