Promoters of the troubled Varun Shipping, which is trying to revive its gas carrier business under a new company, have promised to bring its overseas fleet of LPG carriers under the Indian flag.

This was one of the commitments made by them while applying for a fresh operating licence, Director General of Shipping Gautam Chaterjee, said.

The Mumbai-based listed company, the largest Liquefied Petroleum Gas carrier in the country, lost its operating licences (in technical terms Document of Compliance or DoC) following its failure to honour its financial commitments, including payment of wages to seafarers.

According to the company website, Varun operates four foreign-flag LPG carriers registered in Singapore, Indonesia, Cyprus and Marshall Islands. The company now proposes to register these vessels in India.

Fresh licence The company also has subsidiaries and group entities in Singapore, Cyprus and Indonesia, operating offshore vessels and crude tankers.

Varun has applied for a fresh licence under a new name Varun Global, a ship management company that was constituted after a restructuring of the group companies.

Yudhishthir Khatau, Chairman and Managing Director of Varun Shipping told the maritime regulator that the company has already paid most of the wage arrears to seafarers and dues to dry-docks.

Varun recently sold one of its large gas carriers reportedly for $30 million and plans to sell one more to tide over the financial difficulties. Besides, the company also managed to get a fresh loan from one of its lenders.

Evaluating application The Director General of Shipping is currently evaluating Varun’s application for a fresh licence (DoC) and indications are that an interim DoC may be granted to the company for six months to one year.

According to a shipping analyst, this could enable the company to first get back its ships’ insurance cover that became invalid following the withdrawal of its DoC by DG Shipping. It is risky to sail without a valid P&I cover. An interim DoC also enables the company to do normal trading operations.

Before it lost its DoC, Varun had a fleet of 18 ships comprising 10 LPG carriers, three crude oil tankers and five anchor handling, towing and supply vessels — of which it sold one gas carrier recently and is planning to sell one more.

Unlike other types of ships, which have been hit hard by the prolonged slump in freight rates, LPG carriers have been earning stable returns and the rates are expected to go up in future.

Yet, Varun, despite being the largest LPG carrier in the country, failed to keep its vessels afloat, said an analyst.

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