The economic downturn has hit the Indian shipping companies hard and that is clear in their first quarter results, as most of the domestic shippers have shown a decline in their net profit.

The global meltdown, lower demand for moving commodities and excess capacity in the system pulled down earnings from dry bulk and oil tankers by as much as 80% compared with the same period last year, according to analysts. However, industry experts feel that in the coming months the outlook will remain weak.

??Majority of the shipping lines operates in the dry or wet bulk market. The dry bulk market is not doing well. Moreover the tanker market continues to be challenging as well. Shipping is globally oriented, hence it is expected that the condition will remain weak in the coming months. A supply overhang in both dry and wet bulk segments will continue to be worrisome in the coming 12-18 months,?? an analyst said on conditions of anonymity. ??Moreover the freight rate is also expected to remain under pressure during the same period,?? added the analyst Shipping Corporation of India (SCI) posted a 57% drop in net profit for the quarter from the year-ago period. Its net profit rose to Rs119.92 crore from Rs 279.60 crore a year earlier.

Great Eastern Shipping Company, a private sector shipping and offshore oil field services provider, also reported a fall of 64% in the consolidated net profit for the quarter ended June 2009. During the quarter, the company reported a consolidated profit of Rs 154.1 crore as against profit of Rs 427.9 crore for the quarter ended June 30, 2008. The total income registered 25.97% decline at Rs 885.6 crore against the corresponding period last year.

??Our results reflect the circumstances under which we are operating,?? said G Shivakumar, CFO, during an earnings conference call after the results.

??The dramatic change in the global economy over the last twelve months has started taking its toll on our results,?? he added.

Moreover, Income from freight and charter hire fell by a third in the quarter to Rs 468 crore from Rs 700 crore last year.

??Average spot rates were down between 65-75% in various segments of dry bulk and tankers during the quarter,?? commented Shivakumar.

However, Bharati Shipyard has reported an increase of 25.49% in its net profit to Rs 37.25 crore during the quarter as against Rs 29.68 crore during the corresponding period last year, whereas ABG Shipyard posted an increase of 1.94% in its net profit to Rs 47.92 crore for the quarter.

The offshore firm Great Offshore, for which the a bidding war is going on between Bharati Shipyard and ABG Shipyard, posted a net profit of Rs 22.2 crore for the quarter against Rs12.01 crore for the corresponding period last year, posing an increase of 84%. The company?s revenue rose 21.88% to Rs 247.04 crore against Rs202.68 crore. However, Great Offshore?s net profit came from capitalising Rs 19.54 crore of expenditure incurred from five-yearly special surveys.

Taking the hit was oil and gas carrier Varun Shipping who reported a 91% fall in profits for the quarter to Rs1.84 crore from Rs 21.33 crore last year. The firm?s first quarter revenues declined to Rs 176.67 crore from Rs 206.49 crore during last year. The company’s average freight earnings from crude tankers declined to $15,000 a day during the quarter from about $45,000-50,000 a day in the last quarter.