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The Mumbai-based Varun Shipping Company could lose its licence to operate ships in the next two weeks, if it fails to honour its financial commitments, including payment of wages.
The maritime regulator, Director General of Shipping, issued a notice to the company on Tuesday with a warning that it would withdraw its Documents of Compliance if it continued to operate ships without paying wages to seafarers and not adhering to statutory provisions that threatens safety of its ships.
According to officials, Varun Shipping, a listed company, has not been paying wages to employees for six to eight months. Its financial position is so precarious that it defaulted on payments to surveyors of classification societies and suppliers of spares and provisions.
“We have given the company enough time to honour its commitments. We cannot allow a situation that threatens the safety of ships and seafarers’ lives,” said an official at the Directorate General of Shipping.
“We have issued a show-cause notice-cum-advisory to the company, asking why its DOC cannot be withdrawn and also advising it to lay up those vessels which are not in a position to honour its commitments,’ he added. Given the company’s financial position, the show-cause notice could result in laying up most of its vessels, said a shipping analyst. Varun has about 20 ships, including LPG tankers, crude carriers and offshore supply vessels.
Once the company loses its DOC, it will also lose its insurance cover. This will be a dangerous situation, he said.
Abdulgani Sarang, General Secretary of National Union of Seafarers of India, said the company had failed to honour an agreement it signed with the union three moths ago on payment of dues. Seamen on some vessels were not paid for more than ten months, he said.
Hit by the prolonged recession and the management’s inability to raise resources, Varun has been facing financial difficulties for the past couple of years.
A few months ago, two of its independents directors quit on personal reasons. This was followed by the resignation of the company secretary.
The company, which has been reporting losses for several quarters, ended the first quarter with a marginal profit of Rs 2 crore.
Shares of the company, which has been ruling below par for quite sometime now, ended at Rs 7.86 on BSE on Wednesday.
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