Shipping Corporation of India (SCI), the country?s largest government-owned shipping company, is on the cusp of a leadership change. S Hajara, SCI? chairman and managing director, who was at the helm for seven years, will be retiring this month. In an interview with Vaishnavi Bala, Hajara said the company will be looking to expand in the offshore and liquefied natural gas (LNG) transportation business. Edited excerpts:
You have seen the company through its ups and downs. How has the transition been?
I joined SCI straight from campus and have been here for close to 40 years. Shipping has been extremely cyclic and volatile in these years. I took over in 2005 and we saw an unprecedented growth ?from 2004 to 2008. We had profits of over R1,000 crore. But 2008 changed the world, especially shipping. In May 2008, the Baltic dry index was at an all-time high of 11,700 points and in the same year, by December, it collapsed to 660 points. ?
The oversupply seems to have eased. Does that mean 2013 may be good for shipping?
It is going to be another challenging year. There may be some improvements in the tanker business and there could be a turnaround from the end of 2013. But dry bulk is in the most difficult situation. The tonnage on order is still about 20% of the existing fleet, whereas in tanker it?s down to 11-12%. Since the orderbook of drybulk is much larger, it will take much more time for the demand-supply equilibrium to be reached.
Is SCI actively expanding its offshore business to offset the weakness in tanker and dry bulk?
There are only two segments of shipping that are doing well, offshore services and transportation of LNG, and expanding here will give a cushion to our business. Regarding offshore business, we would like to get more exposure in rigs, platforms, which is the upper end of the offshore market.
We are also in discussions with ONGC to set up a venture of offshore activities. On the LNG side, we are co-owners and managers of three ships already. We are trying for a deal, for the fourth ship, with Petronet LNG. We are also hoping for other LNG projects that come up in the country with GAIL and others, where we will be able to participate. ?
After European sanctions on importing crude from Iran, have SCI?s vessels done any voyages?
We have stopped carrying Iranian crude and our last voyage was in June. We found that if we carry Iranian crude, the vessels are not allowed to go to the US and Europe, and will not be accepted by any terminal run by Shell, Exxon Mobil etc. Also, the companies itself are under a lot of pressure from foreign banks, who are our main lenders. They become reluctant to deal with an entity that has a relationship with Iran. ?
Has SCI stopped placing orders for vessels?
At the moment, we are not ordering, but we have 20 vessels on order that will get delivered between now and 2014. We are not going to place an order unless we are very sure that the kind of business will have an immediate effect on our topline and bottomline.
