Mumbai: A subdued freight market dragged down the net profit of Great Eastern Shipping Co. Ltd, India’s largest privately owned shipping company, by 5.36% to Rs162.59 crore for the quarter ended 30 June, from Rs 171.8 crore in the year ago period.
Revenue gained 5.74% to Rs 727.95 crore in the quarter from a year earlier.
Great Eastern Shipping’s profit figure was much lower than the market estimates of about Rs190 crore, according to Siddhartha Khemka, an analyst with domestic brokerage Centrum Broking.
“Rise in operating costs and slump in freight rates are two things continue to dominate Indian shipping,” Khemka said.
Some of the factors that resulted in weak freight markets were lower Japanese crude imports because of the earthquake, stagnant oil demand from the developed economies and ongoing political crisis in the Middle East and North Africa, said the company in a statement.
The company currently has a total capital expenditure plan of around $55 million. Out of this, $33 million has already been paid to shipyards as stage payments.
The company said steady fleet addition and high fuel costs are expected to drag down freight rates and operating margins of tanker operators. Freight rates for dry bulk ships are expected to remain volatile, it said.
“The outlook for current fiscal is bleak. Industry is expecting to revive in the second half of 2012. But the demand growth may be delayed owing to current recession that is setting in,” said Khemka.