Over a year later, SCI to get a new chairman

Decision to fast-track the selection came after SCI's future as a Navrtana company was threatened by three years of consecutive losses

India’s largest shipping company by fleet size, Shipping Corporation of India (SCI) is set to have a new chairman as the Public Enterprises Selection Board (PESB) has cleared the name of Arun K Gupta, director, offshore services at SCI.

The decision puts to rest, an 18-month long hunt to select a new chairman for the Navratna company, after former chairman S Hajara, who was given a year extension, retired in December last year.

The decision to fast-track the selection also came after SCI’s future as a Navrtana company was threatened by three years of losses. Public enterprises with Navratna status and posting consecutive losses for three years will lose their Navratna tag, which would curb their financial autonomy.

“Arun Gupta’s name will now have to be cleared by the Central Vigilance Commission (CVC),” a senior official at the shipping ministry told Business Standard. Last year, in August, the PESB had selected Sunil Thapar, director for bulk and tanker as the chairman and managing director, but the CVC held back his approval over pending vigilance cases. Following the delay, B K Mandal, director finance, was made interim chairman from January this year after.

Earlier, former chairman Hajara was also given an extension for a year after the ministry could not finalise a successor.

SCI, which owns one-third of the total shipping fleet in India, has been struggling for some past few years largely due to a decline in the freight rates and an oversupply of vessels in the market. The company could also not tap into the lucrative offshore services sector unlike many of its rivals which dented its balance sheet. The company had posted a net loss of Rs 114.3 crore in 2013.

Private companies such as Great Eastern Shipping, Mercator and Varun Shipping had diversified into allied sectors such as offshore drilling services and LPG transportation while SCI was slow in venturing into the sectors. In May this year, a parliamentary standing committee on transport led by Sitaram Yechury had pointed out that the company is expected to go the Air India way unless it cuts costs and is run in a professional manner.

The panel had pointed out that the company acquired a number of vessels when prices were very high, which affected its fortunes.

The company has also struggled to take advantage of the various MoUs it had signed with large public sector companies including ONGC, CIL and SAIL, which could have helped the company with assured cargo and helped through the downturn in the shipping sector. The company is now in talks with ONGC to form a joint venture to tap into the offshore services.

“Shipping Corporation has been struggling financially over the years and they need somebody to anchor their operations, especially in a market like this. It is good that the decision has come at least now, after months of delay,” said Anand Sharma, Director at Mumbai-based Mantrana Maritime Advisory.