The Baltic Dry Index, which tracks global freight rates for ships carrying dry-bulk commodities such as coal, iron ore and grains, has seen a fall of 32 percent. It fell from 1123 to 803 since start of December.
Ak Gupta, CMD, Shipping Corporation of India (SCI) in an interview to CNBC-TV18 spoke about the implications of the fall in the Baltic Dry Index (BDI) over the past 30 days.
The fall in BDI impacts both the company and the industry adversely, says Gupta. No ship owner can make money when the BDI is so low, says Gupta.
The Baltic Dry Index, which tracks global freight rates for ships carrying dry-bulk commodities such as coal, iron ore and grains, has seen a fall of 32 percent. It fell from 1123 to 803 since start of December. The index basically is driven by Capesize vessels, which were unemployed for long a time due to excess supply of these vessels.
Capesize vessels are typically above 150,000 long tonne deadweight (DWT) transporting coal, ore, and other commodity raw materials.
The shipping industry on the whole is also not seeing much stability going forward and this fall in BDI has added to the woes, says Gupta.
However, there are some signs of firming up seen on the tanker side of the business because of fall in crude prices and with winter setting in.
Fall in crude has led to lower bunker expenses, which is a big part of the companies operating expense. Bunker fuel prices make up 40% of operating costs, says Gupta.
Meanwhile, the company currently has a debt of Rs 6900 crore which is a big challenge, says Gupta.
more to come
Shipping Corp stock price
On December 22, 2014, at 14:12 hrs Shipping Corporation of India was quoting at Rs 62.50, down Rs 0.8, or 1.26 percent. The 52-week high of the share was Rs 73.25 and the 52-week low was Rs 35.00.
The company's trailing 12-month (TTM) EPS was at Rs 0.34 per share as per the quarter ended September 2014. The stock's price-to-earnings (P/E) ratio was 183.82. The latest book value of the company is Rs 136.11 per share. At current value, the price-to-book value of the company is 0.46.
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