Sanmar Shipping Ltd, which operates as part of the Chennai-based Sanmar Group, has inaugurated a business unit in Singapore and has acquired two second hand product tankers registered with the Singapore flag. The company further plans to add more ships. The development demonstrates that Indian ship owners are looking at overseas financing options to buy ships given the constraints in India.
Sanmar Shipping’s move to incorporate ‘Sanmar Shipping SG Pte Ltd’ in the island nation – considered a business-friendly regime for owning and operating ships – comes at a time when India is trying to woo fleet owners to set up units in the International Financial Services Centres Authority (IFSCA), GIFT City, Gujarat by taking advantage of tax incentives and exemptions and boost Indian tonnage.
On 19 October, Finance Minister Nirmala Sitharaman said at the Global Maritime India Summit that the IFSCA “can develop as a haven for ship leasing”, adding that she will “work with the banks and the Shipping Ministry to make sure banks understand the need of the sector and deal with it, not waiting for the categorisation (of infrastructure status to happen)”.
“It’s a kind of baby step we are taking,” said C V Subba Rao, Managing Director, Sanmar Shipping. “We are looking at various options of financing and see how the overseas financing rules are,” he stated.
Sanmar Shipping runs a fleet of ten ships, comprising eight tankers and two LPG carriers, all flagged in India. Rao pointed out that Sanmar Shipping “has not moved any of its Indian flag ships to the Singapore flag.” “Nothing has been transferred from India. Our Indian flag fleet remains the same,” he asserted. Sanmar Shipping “could” expand its Singapore fleet. “We will have to wait and see because shipping assets are highly priced today. We have always been very careful”, Rao said.
The Company said it will also study the IFSC regime ahead of taking a call to open a unit in IFSC. “We are committed to the Indian story and would definitely continue to grow here,” Rao added. A high-level delegation led by K Rajaraman, Chairman, IFSCA, will visit Singapore on 16 November to hold a roundtable on the ship leasing regime in IFSC-GIFT City.
“PricewaterhouseCoopers (PwC) met Sanmar Shipping a couple of times and they seemed to like the idea of setting up a unit in IFSC-GIFT City,” said Amit Oza, who was a member of the Committee that wrote the Ship Acquisition, Financing and Leasing from IFSC in India (SAFAL) report at the behest of IFSCA.
It is hoped that Indian shipowners and operators fully support the initiative and actively engage with authorities to address any issues before they decide on moving out, Oza added.
“I think Singapore is a natural first habitat for any Indian shipping company wanting to go international. Where else is there a national holiday for Diwali and Tamil is one of the national languages,” said Divay Goel, Chief Investment Officer at Prudent Shipping Investments Pte Ltd, a Singapore-based advisory firm focussing on shipping and port financing.
“While the more well-known shipping companies such as Great Eastern Shipping have had a presence here since long, there are now more coming in. Shipping companies such as Sanmar have the in-house technical and commercial strength to compete with the very best of global shipping companies in the international arena, rather than just being constrained to being a domestic player,” Goel said.
“We have had very good pick up in interest for IFSC also. I attended some road shows by PwC here (Singapore), there is another being held on 16 November. The IFSC proposition with a 10-year tax holiday is quite attractive, I think. It’s quite possible that Indian shipping companies might have offices in both IFSC and Dubai and or Singapore for better international reach. Most mid-size, even small international shipping companies generally have offices at major global hubs such as Singapore, Dubai, Greece, Houston, some in Hong Kong and London also,” Goel added.
