Mumbai: India’s state-run Shipping Corp expects supply pressures in the global markets to keep freight rates subdued, while the challenging business environment makes diversifying infeasible for now, its chairman and managing director told Reuters on Wednesday.

“We don’t see a chance of any immediate recovery," S. Hajara said on the sidelines of a conference organized by the Bombay Chamber of Commerce & Industry.

In November, global oil tanker firm General Maritime Corp filed for bankruptcy protection and Denmark’s Torm said it was in talks with creditors as both fell victim to a glut of ships and gathering global economic gloom.

“Shipping companies all over the world are looking at a somewhat uncertain scenario going forward, so anyone having cash wants to conserve the cash," Hajara said.

The firm had reported net loss for three consecutive quarters hurt by a slowdown in the sector that hit freight rates. Its net loss had widened during the September quarter to Rs140.6 million from Rs5.9 million in June and Rs6.2 million in March.

Earlier in October, talks about the Shipping Corp’s financial health were rife in the market forcing secretary of shipping to step in and clarify that the firm had the capacity to withstand the global economic crisis.

Diversification, JV on hold

The rough weather in the shipping industry has forced SCI to postpone plans to diversify into related businesses such as shipbuilding.

The company had been in talks with almost all the major shipbuilders in India including ABG Shipyard, Bharati Shipyard and Pipavav Defence and Offshore.

“The plan has not been shelved but at the same time, when in the core business the generation of funds is under some pressure, you won’t normally find that this is the ideal time to diversify."

Last year SCI had signed an initial pact with state-run miner Coal India and was in talks to form a joint venture to import coal. Hajara said that project has been deferred for some more time.

“The business plan, appointment of consultants for feasibility studies takes time," Hajara said, but did not give a clear timeline.

Shares in the firm, valued by the market at $558.05 million, nearly halved in 2011 and were up 1.2% to Rs62.15 at 1:05 pm in a Mumbai market that was up 0.9%.