The Great Eastern Shipping Co Ltd, India’s biggest private ocean carrier, is venturing into third-party ship management and chartering services, a segment dominated globally by the likes of Anglo Eastern, Wallem, Fleet Management, V Group, Synergy Group, among others.
“There seems to be a need for this and therefore we set it up,” G Shivakumar, Chief Financial Officer, The Great Eastern Shipping Co, said during an earnings call.
“It may not come to anything at the end of the day or it could be a big opportunity. So, it is not like we have a consultant’s report which says market size is a billion dollars and you can take advantage of that. It is something which could be an opportunity and we have set up a vehicle to take advantage of the opportunity if it comes up,” Shivakumar said.
On May 30, the Mumbai-based company’s board approved a proposal to incorporate a wholly owned subsidiary – Great Eastern Services Ltd – seeking to extend shipping services such as ship management, chartering etc to third parties.
The company said that the promoter/promoter group members are not part of the planned unit.
The Great Eastern Shipping, which runs a fleet of 69 ships of different types, has built a strong in-house technical and commercial management expertise to run its own ships. It hopes to monetise this expertise.
Globally, ship owners tend to outsource technical, commercial and crew management of their ships to third party service providers.
“In the past, we have had people like lenders who had taken over ships (due to loan defaults), approach us, asking whether we will manage assets on their behalf. So, this is potentially a company which can offer services to third parties,” Shivakumar said.
“We thought, we should not put it into the main entity because it will take away the focus from the main entity. So, there are opportunities which can arise including in commercial management of vessels or operational management of vessels. We do not want it to be a part of the main entity because it will take away the focus and we want that to be a very specific organisation which is focused on third-party management. Because, the mindset required for a third-party management company and for an in-house management company is different. And that is why we said we will keep that separate,” Shivakumar explained the strategy behind the setting up of the subsidiary.
Shipping industry sources said that the new unit could be another avenue for The Great Eastern Shipping to provide employment opportunities to cadets coming out its training institute – The Great Eastern Institute of Maritime Studies (GEIMS) – located at Lonavla, 120 kms from Mumbai.
The company, which employs some 1,000 seafarers, source a part of its fleet personnel requirement from GEIMS. It also places cadets passing out of the institute on board other ships owned by companies in India and overseas, as part of the rules stipulated by the Directorate General of Shipping, for running maritime training institutes.
GEIMS imparts pre-sea and post sea training to seafarers.