SCI's disinvestment will be completed by Q1FY22: HK Joshi, CMD

HK Joshi, Chairman and Managing Director (CMD), the Shipping Corporation of India Ltd, talks about global shipping demand, the impact of the surge in crude prices on the business, disinvestment and demerger process as well as fleet addition plans during an exclusive interview with Swati Khandelwal, Zee Business. Edited Excerpts:

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Q: According to you, what are the qualities that should be present in a women leader? Also, summarize your journey at Shipping Corporation of India? 

A: First of all, leaders do not have a gender, so, there is no such thing as a women leader. There is only a leader and to which position you are taking yourself and how do you fulfil your leadership duty is the only thing on which it is decided whether you are a successful leader or not. Because I had never read or seen a female leader and a male leader separately in my education. So, I would like to tell to all aspiring ladies that you will have to remove the matter of your gender from your mind and that can make you successful. Because as long as you see yourself only as a woman then you will find it difficult to match as the beholder always see you as a woman. So, you have to do your work and perform your duties via your mind in which there is no gender. 

Q: But there are challenges for women as it is expected from them that they should handle to home as well as perform well as a professional. How easy or hard is it to tackle these challenges and also please share your experiences in terms of how you are managing your home as well as the office as a leader of both the spaces?

A: An organisation's work cannot be successful without a team, if anyone says that I have succeeded alone then that would be wrong as many people have their contribution to your success. The same happens in the success of an organisation, i.e., the leader alone is not successful but the entire team works and they turn successful together. In the same way, my family - my husband, children, my extended family in terms of my in-laws and my parents during my childhood - have contributed a lot to my success. Everyone has a contribution, as many a drop makes an ocean (बूँद-बूँद से सागर बनता है), in the same manner, everyone's contribution has been there in my success. On this occasion of Women's Day, I would like to thank everyone who has contributed to my success. Everybody helped me and you will succeed only by working together, I would never have been successful being alone and I have been supported by everyone. 

Q: What is the global shipping demand currently and are you witnessing some disruptions due to the geopolitical tensions in any specific category/ies? 

A: I would reply to it in two parts. (i) Whether the Russia-Ukraine crises have impacted SCI's business then there has been no impact on us because none of our ships was on a voyage in the black sea when the crisis occurred or after that. So, we do not have any direct relation from that area but whenever such an incident occurs in the world then it has an indirect impact on everyone. And, we have seen the way markets are performing now, the rupee has depreciated a lot and has weakened a lot, crude prices were rising anyway but now based on the news what impact it will have on Russia's energy and crude and what will be the situation of sanctions. However, it has balanced a bit due to Iran in which, whether Iran will join in the supply of the crude. But amid OPEC's control on the production of crude and the rise in the crude prices will have a direct impact on every shipping company, including ours because the Bunker cost is a direct input cost for us and it will have an impact on us in the third quarter. There are predictions on crude across the world that it will reach the mark of $180 per barrel, $185 per barrel and it is also being said that it will also touch a mark of $200 per barrel. It will have a huge impact on shipping and the freight rates are not rising in the proportion in which the bunkers are rising. So, it will have an impact on every shipping company including the Shipping Corporation.

Q: Can it be estimated right now how much impact can be seen as the prices are increasing and it is projected to increase further in the next three months will you increase the shipping rates or how will you tackle this problem?

A: I would like to tell you that Shipping Corporation does not increase the prices directly, we are totally market-driven. So, whatever the market indices indicate, our voyages are booked only on the basis of the market indicator. So, a rise in crude prices will increase the input cost and expenses will go up. As far as freight is concerned, we have seen a slight dip in the World Container Index, which was doing quite well. The world container index which was running above 10,000 has reached near 9,000. So, the freight indices cannot be based directly on the input cost as it is a matter of demand and supply of the ships. The freight market depends more on the demand of ships and its supply and in the tanker market we have seen that the supply of tankers has been more than its demand, primarily because the economies, which were shut due to COVID led to less consumption and demand of the energy but the supply of the tankers have been more while the demand was less. Plus, last year, several of the ships went to floating storage when the crude prices went quite low but when there was a surge in prices, many of the refineries thought of liquidating their existing inventories due to which the tankers were not demanded because the inventories were getting liquidated. The liquidation of inventories will have a negative effect that the ships will return to the market, which means ship supply will increase. But despite all of these factors, we have seen a slight upsurge in the tanker market. For instance, the TD3 market in which the world scale stood above 158 in April and in February the average 33 world-scale was running but in March we saw that it has jumped to 56. Similarly, TD20, the West Africa to the UK sector, in October 2019 when the tanker market was doing quite well and world-scale stood at 75, we saw that in February on an average it was at 64 and in March it has now bounced to 99. So, it is not at the old prices but it is picking up.

Q: What is the progress on SCI divestment and what is an update on the demerger of the non-core assets?  

A: The disinvestment and divestment process are being done by the DIPAM. So, I do not have any update about the bidding because that is a part that is looked at by the government and the transaction advisor. But we know that our data room is open yet and a lot of due diligence is being carried out in the data room by the prospective bidders. And how much interest the bidders have can be ascertained by knowing the fact that the limit of 10GB for the data room has exceeded and still there is a requirement of data and we are increasing the capacity of the data room. So, this is on the disinvestment side. On the demerger side, possibly you are aware that in November 2021, we incorporated a subsidiary Shipping Corporation of India Land and Asset Limited in the company and have also set up a board for it. The company is being managed separately and in this company, we propose to demerge all the non-core assets and we have also received approval for the scheme of arrangement. The further process is lying with the Ministry of Corporate Affairs and will  be able to demerge it after it is cleared there.

Q: Will the process end by the end of this financial year or it can spill over to the next year? 

A: It will not happen in this financial year because we are already on the 8th of March. So, in the regulatory process of the Ministry of Corporate Affairs, it has to call a public meeting. So, now in the process, the Ministry of Corporate Affairs will have to provide a specified notice period and it has to be done in a very transparent manner. So, it will take time. Thus, it will not happen in this financial year but we are hopeful that it will happen by the first quarter of the next financial year.

Q: Any plans to add to your fleet currently looking at the global situation?

A: Being a national shipping company, so far, we run with a national agenda in which we think about increasing the assets of the nation. So for that purpose, we are already in the market for two tanker ships and we have also called for the bids for the purpose and the technical evaluation of the same has been completed. We are progressing on that front. We have to retender the tender as it faced some technical glitches. Going ahead for two tankers and we are also buying a ship in the offshore segment and we are quite ahead in the tender process for acquisition of that vessel.