Coming from an allied sector to become the first women Chairperson and Managing Director, Director(Finance)(Additional Charge) of Shipping Corporation of India was not a cake walk for Ms. HK Joshi, but she has proven her mettle in this male dominated industry and the financials of this 60 years old PSU speak more about capabilities of this lady who has successfully steered this largest and most diversified shipping company to reach new horizons.
Starting out as a marginal liner shipping company with just 19 vessels in 1961, the SCI has today evolved into the largest Indian shipping Company. The SCI also has substantial interests in various segments of the shipping trade. Sailing through for six decades, SCI today has a significant presence on the global maritime map. As the country’s premier shipping line, the SCI owns and operates around one-third of the Indian tonnage, and has operating interests in practically all areas of the shipping business; servicing both national and international trades.
Mrs. Joshi, let me begin by asking you Shipping Corporation of India is into 3 key segments of the business, Containers, Bulk and LNG. So, tell me, in the post-pandemic scenario where market started looking up and business seems to be back to usual, how do you see these three key segments of business outlook for Shipping Corporation of India?
SCI is the most diversified shipping company in India and we work in all the segments of shipping. In fact, we are the only Indian shipping company which has a presence in all the segments of shipping. So, with respect to tankers, I will start because that is by far the largest segment of the Shipping Corporation of India. However, the tanker rates, freight rates yields are not looking very attractive currently and the freight rates are at an all-time low because of which even our operating costs are currently not getting covered and like as we all know that in April and May of 2020, there was such an upsurge in the tanker freight rates and the markets had gone up so much that the rates were in 6 digits, $174000 was going rate at that time and today, we are down to about $1700, $1800.
So, that is the complete downswing that has happened in the freight market on the tankers because of that we see that the tanker will continue to be at this low level for some time because the substantial floating storage which was created, there is still a lot of floating which is being used to get the delivery to the refineries because of which the demand and supply on the tanker front is not at all looking very optimistic and we don’t consider these rates to really move or improve in the next quarter. On the bulk side, we are finding that bulk rates have firmed up substantially well because the economy is opening up and as you know that the bulk rate is primarily what feeds the infrastructure and the economic growth and after the pandemic, economies have been hit so badly that economies, once they started opening up, we see a demand for the bulk going up, primarily of course, China has always been a driver for the bulk rate because of the manufacturing activity filling up in China, also because of the grain trade, we have seen that the bulk market is substantially stable and we expect that with the revival of the economies, the bulk will continue to do well in the time to come.
The rosy picture is on the container side where the liner has actually taken all of us by complete surprise. In October 2020, we were seeing that there was substantial blanking of voyages and port calls were being missed and suddenly there was such an upsurge in the demand from the West side that we had all the vessels going full, containers shortages being seen everywhere, freight markets hitting the sky. So we consider that as far as the container shipping is concerned, the rates are a little unsustainable but of course, these are likely to continue in the same way for at least some time more. We consider that at least for the next 3 to 6 months, these freight rates will continue. Of course, a lot depends on how economies will handle the second and the third waves of the pandemic, how the vaccination rollouts are going to happen, what is going to happen to the economic policies because basically shipping is greatly integrated with economy and trade. So, with these changes, how everybody is going to cope up will impact the shipping and the freight rates in all these segments.
In the offshore segment also SCI is a player and because of the crude prices not being very attractive and because of the pandemic, there was a substantial dampening in the E&P sector. With the crude prices going up, things are improving and the offshore market ship pickup is currently not at all very attractive.
I think strategically that has been advantageous to Shipping Corporation, having a right mix of verticals in the trade.
You are absolutely right. In fact, we benefit from this diversified field and we have seen that invariably when on segment is doing not too good, we somehow get support from another segment which is doing well. When the tanker segment was doing very well, the container market was an all-time low. Now the tanker has gone down but the container segment, we are seeing a substantial upswing. So, we do benefit from being a diversified company.
Let me bring you to another segment which is coastal shipping. Shipping Corporation of India has some arrangements with a couple of shipping companies in coastal shipping. So, can you give me some insight into that?
Currently we are having slot sharing arrangements with Simatech. We were earlier having some slot sharing arrangement with Shreyas after which, once the ownership changed, so there was a change and we had to change our partnership. So, currently we are with Simatech but going forward, we would like if we can get some more partners to share because we would like to increase our presence in the coastal trade. The Indian economy is actually supposed to be the bright spot in 2021 and going forward, considering that it is going to be the fastest growing economy and it is slated to grow at about 11.5% which is going by our GDP, will be the highest amongst all other economies. So I consider the Indian subcontinent is going to be a primary hub of activity and coastal trade will be a very attractive business for all of us. So, I would look forward to more partnerships in the coastal trade.
Any idea on foraying into inland waterways or tying up with multimodal transportation or something like that?
We are already into inland waterways. In January 2021, we have got into a memorandum of understanding with the IWAI and we have taken over two vessels already and both these vessels are currently plying on a regular service on national waterways 1 and this is a regular service between Varanasi, Patna and Kolkata. So, we already deployed two vessels so both these vessels are running and we are getting good cargo even though people were quite pessimistic about the fact that whether this business would be sustainable or not. I was always very optimistic that this is a sustainable business. In fact, I feel this is going to be the future business in India considering that we have been underutilizing our navigable waterways and considering the government’s focus on Sagarmala and development of inland waterways, I think this is going to be again another sunrise sector going forward and SCI is operating in inland waterways through our Inland & Coastal Shipping Limited company which is a wholly owned subsidiary of the Shipping Corporation located out of Kolkata.
Will it be a kind of slot arrangement, partnership or will you be buying any new ships or old ships for increasing the fleet?
As far as the tonnage is concerned, SCI had very recently, till about 2 years back, about 70 vessels and we had touched the 6 DWT mark and because of the aging of the vessels, we had to scrap certain vessels and we are currently down to about 59 vessels with a 5.31 DWT. So, if we need to upscale our services, the only way to do it is by adding onto tonnage. So, we do have plans to add on to tonnage and like you very rightly said, we are open to all the 3 mechanisms which is either by owning tonnage or by owning tonnage through maybe a second-hand arrangement or in chartering or through slot sharing, either ways. We are open to it because we are in the service industry and we have to grow and that’s the only way to grow.
As the largest Indian ship operator, what is your perspective on Indian shipping because always Indian ships or Indian shipping companies are not given the level playing field that has been the concern. Now with lot of proactive policy changes that are coming from Government of India, how do you see it evolving?
The honourable finance minister in her budget speech last month talked about a subsidy of 1624 crores to the shipping industry for the Indian flag vessels and the government has already been giving the right of first refusal to the Indian flag vessels. However, I consider that probably the maritime sector did not get the due importance it should have got considering that we have a 7500 km long coastline. In fact, India is the only country after which an ocean is named. So, that itself brings out the importance that the maritime industry or the sector should have in the Indian economy and I think the government is now realizing that and there are positive changes which are coming in the mindset and with respect to the reforms I consider that for the Indian economy having an increase in the Indian flag is a necessity, is going to be a priority and if the Indian cargo is going to be transported on Indian flags, it is going to really boost the Indian economy and I am sure the government is working on that.
There seem to be 7 to 8 expressions of interest already for acquiring SCI. What is the glamour that SCI has?
Shipping is a good buy in terms of the company’s fundamentals. Everybody is seeing the substantial amount of potential that is available in the Shipping Corporation of India in terms of our value systems, we are a 60-year-old company, we are the largest and the biggest shipping company, the most diversified shipping company. You started out with that question and said that being a diversified shipping company it has its own inherent advantages. So, I think all the fundamentals relating to the company are so positive that obviously we will have many suitors wanting to come and acquire the company.
From being a lecturer to now leading the largest shipping company as Chairman and Managing Director, you have crossed several milestones, key positions, and strong in finance and accounts and administration. So, how was the journey at least in the 5,6 years as the CMD of the largest public sector undertaking?
See being candid about it, as we all know that shipping is primarily a very male dominated industry and the very fact that I happen to be the first woman chairperson of the Shipping Corporation of India, obviously it wasn’t a cakewalk. So, I will not like to mince words and say that there wasn’t a challenge; there was a challenge, the challenge was multifold; Number 1, I was the first woman, so being the first in anything is always more challenging and more difficult because you don’t have a precedent so there is an immense amount of question mark and doubt about your capability. That question mark and doubt about your capability increases multifold when you don’t happen to have been inbred and grown in the industry and when you happen to have come from industry which is totally outside; of course, it’s an ancillary related industry but definitely you are an outsider. So, the acceptance for an outsider is always a little less than somebody who was one of your own self. So, having said that, I think I have put it nicely even though I don’t feel bad about it, it’s absolutely fine, there are hostilities and there are reservations. But I think that is where the challenge comes, that is where I got an opportunity amongst the hostility and amongst the doubt. I could prove myself. I think that is where my achievement lies. So, it wasn’t an easy journey. Acceptance was a big question mark. But here I am today going strong and the company is doing extremely well and I also feel that eventually for an organization and considering that Shipping Corporation of India is a commercial entity, your commercial and your business acumen and your ability to strategize with respect to the business opportunities of the company matter a lot. So, I think whether it is shipping or it is oil and gas from where I come or any other manufacturing industry, the fundamentals of the business remain the same that we have to give value to the shareholders and I think I was driven by that. So, the path for me was very clear and I never got lost and I have been going strong since the time I joined Shipping Corporation of India. The company has done financially extremely well.
