See shipping demand-supply picking up from 2012: SCI

Shipping Corporation of India (SCI)  posted net profit of Rs 123 crore in the December quarter versus Rs 87.4 crore year on year (YoY), up 41%. Its net sales for quarter three were up 5% at Rs 889 crore against Rs 845 crore, YoY.

''Shipping is passing through a difficult phase and this trend is likely to continue for this year. We are very hopeful that from 2012 onwards, there will be a much better demand-supply equilibrium and the rates and charter hire will get revived,'' says S Hajra, chairman and managing director of SCI.

''We are satisfied with the 40% increase in profit because as shipping is passing through a rather difficult period the numbers under such circumstances, I think, are satisfactory,'' he added.

Below is the verbatim transcript of S Hajra's interview with CNBC TV-18's Latha Venkatesh and Anuj Singhal. Also watch the accompanying video.

Q: Looking at your result, a large part of profit came from other income, what has been the trend in the operational income, especially, freight rates because that is something that poses a risk to the earnings, so freight rates, charter in spot, what has been the trend?

A: As far as freight rates and charter hire are concerned, shipping is passing through a difficult phase. This is because the supply is growing at a higher rate than demand and this trend is likely to continue for this year. We are very hopeful that from 2012 onwards, there will be a much better demand-supply equilibrium and the rates and charter hire will get revived. As of now, 2010 was the historic high for ship deliveries and despite very sound growth of the dry bulk segment, the demand growth was as high as 12%. But unfortunately, the supply growth even surpassed that.

Similarly, in tanker trade, the demand growth was 4% but again supply surpassed that. This is the reason why there have been pressures on the charter hires and freight rates. In 2011 also it is expected that a large number of vessels will be delivered but 2009 was the historic low for ship building orders. Going forward, from 2012, we look at a much better picture regarding demand-supply equilibrium and that is when we hope that shipping will really revive.

Q: When you sold ships worth Rs 574 crore in this quarter, was all of that for scrapping or was some of that for trading also and going forward, would you sell some more ships in next quarter?

A: As far as asset sales are concerned when it comes to SCI, we only sell asset for scrapping we don