The Hindu Business Line : `Why can't Indian ships have foreign crew?'

We are not asking for concessions from the government. We are only seeking a level-playing field. We have to compete with global players who enjoy very low level of taxes. — K. M. SHETH, CHAIRMAN, GREAT EASTERN SHIPPING

Mr K. M. Sheth

He commands the largest private sector shipping fleet in the country. At 74, Mr K. M. Sheth is full of energy as he reorganises the business of Great Eastern Shipping Company, which he has been managing for 35 years. He could not demerge the company's offshore business into a separate entity within the court-stipulated six-month deadline that ended August 2. But Mr Sheth, who has weathered many a storm in his 54 years in shipping, got a three-month extension from the Court and is now quite confident of getting the job done.

"I am confident of getting all approvals in a week," Mr Sheth says. "The company's board approved the reworked plans last month. The demerger of the offshore business — though projected as an effort to unlock shareholder value, analysts have seen it as a move to avert an ownerships dispute in the Sheth family — has been pending for more than seven months, thanks to the delay in getting the approvalof ONGC, the company's main client. ONGC put a condition that it would accept the service of the demerged company only if the parent GE shipping provides a performance guarantee. The board of GE Shipping did not agree to that." ONGC has agreed to waive the guarantee from GE Shipping. So, now, there is no issue.

At his spacious office at Ocean House, Worli, the company's headquarters in Mumbai, from where Mr Sheth, along with his sons and nephew, runs the Rs 2,100-crore company, was in an unusually relaxed mood as he talked about the issues facing the Indian shipping industry.

"How do we operate our ships without enough qualified seamen on board? We can't afford to take risk with inexperienced hands as ships carry cargoes worth millions of dollars," says Mr Sheth, whose proposal to hire foreign crew to man Indian ships to tide over the current shortage of trained seamen, was rejected by the government, following opposition from the unions.

The tax burden

"If domestic airlines can hire foreign pilots, why can't Indian ships have foreign crew? We will certainly give first preference to Indian nationals.If they are not available, why not allow as to recruit people from elsewhere at least on temporary basis? Everyone knows it is the tax burden here that forces seafarers to seek job on foreign ships. There is not much difference in the salary. In fact, we offer more long-term benefit to seamen."

In most maritime countries, seafarers are not taxed. The assumption is that seamen earn their income from international waters. Somehow, the Government in India cannot appreciate this view, points out Mr Sheth.

"Worse still, we spend money training people, and foreign companies hire them. How long can this continue? We should work out a system to make foreign ships hiring trained Indian men pay part of the training cost," says the Great Eastern chairman.

The boss is the quintessential shipping man. At any given time, he knows clearly the movement of every one of his company's 75 vessels sailing around the globe. An expert in foreign exchange transactions, Mr Sheth closely tracks international politics and economics and assesses how they affect forex and freight markets. He loves reading economic literature; his favourite read is The Economist. Mr Sheth, who started his business life at an early age, is a no-nonsense man. At 19, he had to interrupt his studies to supervise construction of two ships Great Eastern had ordered with Mitsubishi Shipyard at Kobe, in Japan. Back in India in 1951, he was taken as a trainee (without pay) with the company, jointly floated by his father and uncle in 1948. Since then, he shouldered several responsibilities at various levels in the company.

Mr Sheth is known for his bold views. He has been a votary of free trade. As president of the Indian Shipowners Association, he fought various government restrictions, including those on purchase and sale of ships by Indian companies. "We are not asking for any concession from the government. We are only seeking a level-playing field. Shipping is an international business, and we have to compete with global players who enjoy very low level of taxes," he says.

The tonnage tax was introduced in 2004 to ease the tax burden of shipping lines and make them internationally competitive. This helped the industry to build a reserve of Rs 635 crore for buying ships. But, now, the industry is subject to more than a dozen other taxes, which nullify the entire benefit of tonnage tax, complains Mr Sheth.

Great Eastern is a story of tramping to success. In the 1950s, when it was difficult to enter liner shipping (regular port-to-port service), which was controlled by powerful European lines, Great Eastern started tramp shipping, picking up cargo (mainly dry bulk) from wherever it was available and delivering them at the desired destination. His cousin, Mr Vasant Sheth, who steered the company in its early years, was a doyen in this line of business thanks to his family's experience in commodity business.

Peace of mind

Mr Sheth, an early bird in office, has an office cabin fitted with the latest communication facilities, apart from TV, fax, laptop, etc., so that he is fully connected to the outside world.

But, says Mr Sheth: "Personally I like the old style of life (that assures) peace of mind. Those days, communication was only by telegram. There were three types of telegram: LT, ordinary and urgent. An urgent telegram from Mumbai took two hours to reach London, the ordinary 24 hours, and the LT two days. So, having sent a message, one has peace of mind at least for two hours. Today, everything is instant and that keeps you busy and tense."

Today's lightning speed communication has its advantages, but Mr Sheth rues that "there is no peace of mind. Ok, you may be making more money, but you will not be taking money with you when you leave this world..."

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