Flaying Shipping Corporation of India for “lack of foresightedness”, a Parliamentary panel has said the company’s ambitious plans of acquiring of vessels has got it into a deep financial trouble.
“The Committee finds the lack of foresightedness on the part of SCI as it could not sense the steep decline in the ship prices in the international markets thereby throwing SCI into deep trouble and huge financial losses in the form of ship purchase order,” the Parliamentary Standing Committee on Transport has said in its latest report.
Demanding to know “under what circumstances such an ambitious project was initiated,” the Committee, headed by Sitaram Yechury, has said it has led the company into a financial crisis.
The country’s largest shipping company has set the target of acquiring 62 vessels in 11th Five Year Plan (2007-12) at an investment of Rs 13,135 crore. However, it could barely acquire over two dozen vessels.
“The Committee is concerned about the financial status of SCI especially connected with the ship acquisition programme ... acquisition plan during 11th Plan could not materialise...it has even affected adversely its revenue generation and SCI is in depletion of reserve,” the Committee said recommending immediate corrective measures.
It also expressed surprise on seeing “nil” new proposals during 2012-13 even though the targeted acquisitions are incomplete and agreed with the findings of CAG audit that SCI did not pursue acquisition plan to augment and modernise fleet.
The CAG last year had said shortfall in acquisition not only resulted in Rs 2,100 crore cost overruns, but also adversely impacted SCI’s business growth and delayed modernisation of the navratna company’s fleet capacity at a time when country’s seaborne trade was growing at a pace of 8.5 per cent annually, preventing it to capitalise on it.
The government, however, said SCI had taken the decision to put acquisition plans on hold as international shipping market is faced with the problem of oversupply of tonnage and Indian shipping industry is also not insulated from the same.
The government also admitted that the company’s revenue generation has been severely affected at present and the primary reason was the prevailing depressed market.
However, the Committee said SCI has not been able to expand its tonnage particularly at a time when the Ministry/Ports are projecting an upward trend in the import and export volume of cargo.
Noting that it has not been able to meet even 10 per cent vessel requirement of the all PSUs taken together, the Committee said, “SCI should make efforts to ensure that at least the PSU orders should not slip from their hands” due to lack of its business-oriented approach.