SCI to revive joint venture with Iran shipping firm

The JV, which currently holds three bulk carriers and one tanker vessel, could charter a container vessel soon

The Shipping Corporation of India (SCI), the country's largest shipping company, is in talks with its 40-year-old Iranian joint venture partner Islamic Republic of Iran Shipping Lines to work out a business model that can open new geographies for trade for the former.

The joint venture, which remained dormant for many years due to sanctions imposed on Iran, is now getting active to explore business opportunities in the region.

“There are several plans such as best tanker route between India and Iran, container trade from India to Iran. Since our JV partner has strong ties with other central Asian countries, SCI, too, is looking to get trade entry into these markets,” said B B Sinha, chairman and managing director of SCI.

The state-owned shipping company posted dismal earnings in the quarter ended June due owing to grim business climate across globe.

“Iran itself is a huge economy as it is the second largest exporter of oil. Trade opportunities with Iran are very high for SCI. Apart from this, Iran’s ties with countries such as Kazakhstan, Turkmenistan and Azerbaijan, among others, are strong and we can tap these markets as this joint venture,” Sinha added.

The joint venture, which currently holds three bulk carriers and one tanker vessel, could charter a container vessel in the near future.

“It is too early to give any projections in terms of revenue for any of the segments as we are only at discussion stage at present. It will take two or three years for the joint venture to become profitable,” said Sinha. SCI and Islamic Republic of Iran Shipping Lines had in 2012 decided to dissolve the joint venture, after years of sanctions against Iran over its disputed nuclear programme. Those restrictions began easing in January 2016.

The share price of SCI rose seven per cent on Friday to end at Rs 70 apiece on the BSE. Intra-day, the company had made a high of Rs 73 on the exchange.

Meanwhile, analysts were of the view that the business opportunities SCI was looking to tap would not move the needle much.

“With Iran opening up for trade, other global players will also have the opportunity to tap trade business in the region. It is just that SCI might have some advantage thanks to the joint venture. Overall gains, however, might not be significant from this venture,” said an analyst with a local brokerage who did not wish to be named.