The state-run Shipping Corporation of India (SCI) has called off plans to buy three new containerships from Cochin Shipyard in response to its price and the downturn in the global shipping industry, reports Livemint, India's Wall Street Journal affiliate.
"Our ship acquisition committee decided not to pursue the purchase of three containerships from Cochin Shipyard because of the high price," said SCI liner/passenger director JN Das.
"Cochin Shipyard was asking for $15 million more for each ship, plus value added tax (VAT), compared to the $48 million quoted by the Chinese yard. Why should I take it?" Mr Das said.
Protesting, a Cochin Shipyard spokesman said: "Nobody can match Chinese prices. We are collaborating with a Japanese firm on technology to build the containerships; this requires import of lot of equipment. Naturally, the ship prices will be higher."
Said SCI financial director BK Mandal: "If the price quoted by Cochin Shipyard is not the market price, how can it fit into our strategy?"
SCI, 63.75 per cent owned by the central government, has reported losses in the past two quarters. "What appears to be a large cash reserve [US$377.5 million] suddenly looks fragile because everything is happening in the reverse direction-higher depreciation on new ships inducted into the fleet, lower freight rates and higher interest rates," said a shipping ministry official who sits on the SCI board.