Shipping Corporation of India: Through turbulent times

Shipping Corporation of India: Through turbulent times

Mumbai: In early 2014, India’s Shipping Ministry surprised many by appointing a marine engineer as chairman and managing director of the country’s largest shipowner, Shipping Corporation of India (SCI), which had been operating with an acting head for over a year.

Perhaps it was Arun Kumar Gupta’s 37-year long service with the national carrier that tilted the scales in his favour for a post normally reserved for those with a background in administrative and financial management. Or perhaps it was the SCI careerist’s performance over the previous three years as director – technical and offshore services, that convinced the ministry about his credentials.

“When I joined SCI, I never expected to reach the chairman’s level,” says Gupta, 58, frankly. “I guess it was just a question of being in the right place at the right time.

Gupta has completed a two-year shipmanagement course that teaches all commercial aspects of shipping .

“In any case,” he muses, “What does a good top manager require? Logic and common sense; it is not rocket science.”

Nevertheless, Gupta has been placed in the hot seat at a time when SCI is going through the most turbulent period in its history. Only twice in its 52-year history has the corporation made losses – in the mid-1980s when there was a worldwide shipping recession, and over the past three consecutive years.

Gupta has exactly two years in which to extricate the national carrier from the tough situation in which it now finds itself. There is no question of an extension beyond the age of 60 in a government job.

“I have a lot to prove in a very short time,” he admits, soberly. “In the main, we have to conserve our cash.”

Looking back he notes that SCI bought ships at high prices, but he cautions no one could have predicted the severity and length of the current shipping downturn.

SCI is saddled with an immense burden of debt that has to be serviced. Although loans were taken between 2010 and 2012 at an attractive rate, there is currently a major cash crunch and a substantial requirement of working capital.

“We are trying to curtail our losses, and exiting from loss-making joint ventures, like Iranohind and SCI Forbes,” says Gupta. “We are looking to restructure the liner division, and we will focus on LNG. In addition to the LNG ships we are running for (state-run) Petronet, we are looking to operate three home-built LNG carriers for (another state-owned) GAIL India Ltd.”

Gupta predicts that even the medium-term future for shipping does not appear rosy. He feels that the current level could be maintained next year, but foresees another major storm coming in 2016 and 2017 with far too many vessels ordered recently.

The SCI chief is adamant that the corporation will not be ordering any vessels in the foreseeable future. Its focus in the recent past has been on energy transportation, but the recent finds of shale gas in the US has turned that country into a net exporter.

“Based on the feeling that India would become a refining hub with export-oriented refineries, we had invested in tankers, and are now stuck with too many of them,” says Gupta. “Earlier, we thought we had a diversified fleet; and yet, we have taken a hit.

“We need to go into shipping-related activities – logistics, terminal management, inland container depots, container freight stations. I am not advocating going into some totally unknown field. We will look at ventures which will give us returns in the smallest gestation period. I have no appetite for taking risk at present.” [14/11/14]

Related Posts