ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Deeper into Recession

Deeper into Recession Hansavivek DAMODAR BULK CARRIERS has suffered a bigger net loss of Rs 4.25 crores in 1977-78 as against Rs 2.34 crores in the previous year, despite higher operating earnings of Rs 14.44 crores against Rs 11.72 crores. The accumulated deficit has increased to Rs 6.56 crores to stand against share capital of Rs 2.70 crores and reserves of Rs 3.06 crores. The increase in freight was generated by the addition of 3 vessels to the fleet. Freight earnings were further supplemented by a contract of affreightment entered into by the company for carriage of 550,000 tonnes of iron ore from Mormugao to Italy. This was won by the company against strong competition from other shipping companies. Continuing worldwide recession in shipping forced the company to carry cargoes at considerably lower rates of freight. 'Moreover, it had to charter out vessels at rates below the break even point, which created liquidity problems. Port expenses, bunker prices, etc, increased considerably. The situation was further aggravated by the falling value of dollar in which most of the fixtures were concluded. The directors say that all possible measures have been taken to contain the cost of operations but point out that any attempt to reduce costs in some critical areas is fraught with the danger of delay in the movement of vessels which has to be avoided. The company has entered into an agreement with V M Salgaokar and Brother and Salgaokar Shipping to function as their operating agents on a remuneration of 1.5 per cent on the earnings of vessels owned or chartered by these companies. The passenger-cum-cargo vessel, which the company had originally taken on a bareboat charter and had bought in March 1967, has proved unprofitable. The pas senger traffic, its main source of income, was reduced to a great extent and operation of the vessel resulted in a loss. The company had also to incur large expenditure on repairs and maintenance. It has been decided to scrap the vessel. Commenting on the prospects for the shipping industry, the directors say that the general feeling is that the end of the tunnel is near. They hope that Japan's move to utilise 20 VLCCs (about 5,000,000 DWT) for long-period storage of oil, the increased scrapping activity and the reduction in yard capa- city will help restore the equilibrium between demand for and supply of shipping tonnage.

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