The Hindu Business Line : Varun Shipping to spend $90 m on buying tankers

VARUN Shipping Co Ltd has put up on its drawing board an $80-90-million vessel acquisition proposal that will be implemented in the next six to eight months. The company will be looking for double-hull and relatively young tankers.

In the last four months, the company invested about $100 million for acquiring two vessels, with its current fleet strength being 15, including eight LPG tankers and one bulk carrier.

"Within the next three weeks, we will be taking delivery of our second aframax tanker. We intend to continue to focus on the tanker market," Mr Arun Mehta, Vice-Chairman and Managing Director of the company, told Business Line.

After the acquisition of its eighth LPG carrier in the last quarter, the company now owns 71 per cent of the total LPG tonnage under the Indian flag.

Mr Mehta said the company would not be making new acquisitions in the bulk segment in the near future, as LPG freight rates continue to remain firm in the wake of the surge in demand for the product globally. He also said the company was not looking for VLCCs (Very Large Crude Carriers) or container ships at the moment.

In another shift in operations, the company for the first time joined a global shipping pool.

It placed its recently acquired Aframax tanker in the Sigma shipping pool and will follow it up with its second Aframax.

"Joining the shipping pool gets us better freight rates as the pool has strong contacts with the global oil majors. Moreover, by efficiently deploying the vessels in the pool, it gets operational advantages like minimum ballast (or idle) time," he pointed out.

The Sigma shipping pool operates its ships in "profitable geographical areas" such as the Caribbean, Atlantic and the UK.

On the softening of freight rates, Mr Mehta said the dip in rates was sharp in certain segments like VLCC rates, which fell from a peak of $2,00,000 per day in November-December last year to a current level of about $35,000 per day. In fact, in the LPG sector, the freight rates for medium-size vessels have risen by 30-35 per cent in May this year as compared to May last year. "We have not been affected by the dip in freight rates, as the market was buoyant in sectors where we operate," he said.

Varun Shipping has also initiated foray into LNG transportation by picking up stake in a consortium led by Exmar NV of Belgium, with Indian Oil Corporation as another partner, to bid for Petronet LNG's project.

Petronet will require two to four vessels to transport five million tonnes of LNG per annum for its Dahej terminal and another 2.5 million tonnes for its Kochi terminal.

Q1 net up by 268 pc: The company has reported a 268 per cent jump in its net profit for the quarter ended June 30 to touch Rs 26.8 crore, as against Rs 7.2 crore for the same quarter of last fiscal.

The total freight revenue during the quarter has gone up to Rs 117.3 crore from Rs 79.8 crore in the corresponding quarter of last fiscal.

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