The Hindu Business Line : `We must have a level field to be internationally competitive' — Mr S. Hajara, CMD, Shipping Corporation of India

Mr Sabyasachi Hajara took over as Chairman Managing Director of Shipping Corporation of India in September. A graduate of the Indian Institute of Management, Calcutta, Mr Hajara joined SCI in 1973. "I'm probably one of the handful few IIM graduates who did not believe in job hopping," says Mr Hajara, recounting his 32-year association with SCI. He took over as CMD at a time when the country's largest shipping company was facing several challenges, both from within and outside. Talking to Business Line recently, Mr Hajara discussed various issues facing SCI.

Excerpts from the interview:

What are your priorities?

My top priority is to go for new acquisitions. The details of the acquisition plans have already been published, not once, several times. So I'm not going to repeat them. But I must say that we've wasted a lot of time by not going for acquisitions well in time... We're now paying the price for it.

How?

We recently took delivery of two VLCCs (very large crude carriers) of the capacity of 316,000 DWT each, ordered a few years ago. At that time, each vessel cost $65 million. We've just ordered two more VLCCs of the capacity of 319,000 DWT and each will cost $129 million. The best period of ordering is over.

But SCI is still the No 1 Indian shipping company. Isn't it?

But the gap with No 2 has narrowed. A few years ago, our tonnage was more than thrice that of No 2's, Great Eastern Shipping. Today, Great Eastern Shipping has a total tonnage of close to 3 million DWT and ours is just 5 million DWT.

Why don't you go for second-hand acquisitions?

We do not go for second-hand acquisitions for two reasons. First, in new building, the process of acquisition is transparent. Not so in a second-hand acquisition where it is always one-to-one negotiation.

We, in a government organisation, do not feel comfortable with an arrangement not totally transparent. Second, we have never been in asset management, that is, buying and selling ships to book profits. We acquire a ship, operate it through its life and then scrap it.

What about acquiring a shipping company with a fleet of vessels instead of acquiring one or two vessels second-hand?

It is not that we've not examined the option. We want an en bloc approval from the government for acquiring several ships within a given period and an Empowered Committee, constituting heavy-weights in the Ministries of Shipping, Finance and others, may be constituted to grant approval of the acquisitions.

I believe there is such a committee for ONGC Videsh Ltd and one is likely to be formed soon for Indian Oil Corporation.

How deep is your IT penetration?

Unfortunately, we are lagging behind compared to many of our competitors. We must do something about it, particularly in respect of container services. We're already on the job. The consultant is being appointed and other things will be in place in due course.

Are you planning any new container service?

We are planning to resume our services to the US East Coast. We withdrew from it in June due to non-availability of vessels.

With the same consortium...

Probably not. We've to identify new partners, form a new consortium and also look for suitable vessels.

Any other service...

We're mulling a service to South Africa, again in partnership with some foreign majors. We're also examining the scope of introducing Indafex III, a third service to the Far East.

In today's world of consolidation of major container operators, what is going to be your policy?

With three 1800-TEU capacity vessels of our own, we are nowhere near the world container majors such as Maersk or Mediterranean Shipping Company. True, we are contemplating acquisition of higher capacity vessels — of 4500 TEUs — but container majors are already operating 9,000-TEU ships and placing orders for 12,000-TEU varieties and 16000-TEU types are on the drawing board. In containers, we'll continue to be a small player.

Some shipping lines are also going into terminal management. Do you have any such plan?

Yes. Given an opportunity, we'll perhaps go for terminal management and we've set our eyes on the fourth terminal of the Jawaharlal Nehru Port Trust.

At what stage is it?

The bidding process has not yet started.

There have been reports that SCI is also mulling acquisition of rakes to run Concor-type operation. Is it true?

Yes. We're waiting for the government policy in this regard to crystallise.

What about your participation in LNG transportation?

As you're aware, energy transportation is a thrust area for SCI, and LNG transportation will be part of it. We would, therefore, like to participate in as many India-based LNG transportation venture as possible.

Singly, or in partnerships with others...

In partnership with the same Japanese lines, such as K Line, MOSK and NYK, we had earlier teamed up.

Has shortage of marine officers hit you?

We're not in dire straits. Our policy in this regard has stood us in good stead.

What about crew...

We've problems and we're trying to tackle them through negotiations.

On behalf of INSA, you've approached the government seeking some relief in the forthcoming Budget. How hopeful are you?

We're hopeful. The immediate result of the granting of tonnage tax has been the jump in the country's gross tonnage. Shipping is perhaps the only industry which is truly international.

More than 90 per cent of our assets is floating in international waters and competing with the world majors. We must have a level-playing field to be internationally competitive.

How is the freight market likely to behave in the coming days?

The world economy is buoyant and will continue to grow. This should have positive impact on the world shipping and, therefore, on the world charter and freight markets, which are likely to remain strong though may not be at the same dizzy level as in end 2004 and early 2005.

Any comment on disinvestment?

No comment. The decision on this rests entirely with the major shareholder — the Union Government.

Where do you like to see SCI 10 years from now? Do you have a vision?

I visualise SCI remaining Numero Uno of the Indian shipping for years to come. I also expect SCI to increase its global presence and to be recognised not only as a large and diversified shipping company but also a quality ship-owner employing first class seafarers.

sThe journey, I concede, will not be smooth and easy but I'm confident of achieving it with the support of all.