Varun Shipping to exit offshore biz by Sept

Sale of offshore business to bring down debt by Rs 700-750 cr

To cut its debt by Rs 700-750 crore, Varun Shipping, India’s largest liquefied petroleum gas (LPG) tanker operator, will exit its offshore business by September.

“We have appointed merchant bankers to look at various options. We are certainly looking to exit the offshore segment by September 2014,” Chairman and Managing Director Yudhishthir Khatau told Business Standard on Tuesday.

As on September 30, 2012, the company’s consolidated debt stood at Rs 2,769 crore, according to Capitaline Plus data.

Last week, city-based Varun Shipping sold a large 1992-built gas carrier, Maharshi Vishwamitra, to Mercator for $30 million. It has also put Maharshi Bhardwaj, another large gas carrier, on the block.

Khatau said Varun Shipping ran its offshore business through subsidiary Varun Cyprus, under which there were three anchor-handling tug supply vessels. “Offshore is a niche segment and so, buyers are few. The asset price in the offshore segment is strong, but since it is a niche market, entering and exiting this market is difficult,” he said. “We are in the market and are engaged in talks. Let’s see,” he said.

After the sale of its offshore business, Varun Shipping will absorb the subsidiary’s office staff, but as offshore contracts will expire, the company will do away with the floating staff. “At the time of contract expiry, we will pay the employees up to date and settle all dues,” said Khatau.

Varun Shipping has been paying all employees with a lag of three months. Between November 2013 and March 2014, it has disbursed Rs 44 crore towards wage bills. The company has 400-500 floating employees and about 80 office staff.

Of its revenue stream, the company’s offshore segment contributes about 15 per cent.

Earlier, the company had sealed four-year time charter agreements with Brazilian oil and gas major Petrobras; the agreements are due for renewal next year. On Tuesday, the Varun Shipping stock closed at Rs 7.11 on BSE, down 1.8 per cent.