| Varun's competitive advantage lies in the fact that it is the largest Indian player in the liquefied petroleum gas (LPG) sector with five such vessels accounting for 65 per cent of the country's fleet in this category. The LPG sector offers steady earnings and globally too there are few players in this sector. |
| According to Yudhishthir D Khatau, managing director of Varun Shipping, the company is planning a major push in the hydrocarbon sector and has chalked out a $250 million expansion plan. It is also planning to tap the capital markets in Singapore. |
| Excerpts from an interview with Business Standard. |
| What is the logic behind going for a Singapore float when Indian firms are floating American depositary receipts and global depository receipts? |
| Singapore is a maritime state and port town where people are familiar with shipping and also with Varun Shipping because we have our subsidiary operating there. |
| In our preliminary discussions with merchant bankers and some of the potential investors, we got lot of encouragement to go in for a Singapore depository receipt issue and listing on the Singapore Stock Exchange. |
| Why is the company focusing on the hydrocarbon sector and not on the bulk carrier sector? Also, what are the reasons for the company's plan to foray into crude transportation? |
| In our opinion the hydrocarbon sector, which includes product tankers, crude tankers and LPG carriers, has great scope for growth in India. As such a lot of crude import is at present coming in from foreign flagships. India is also likely to start exports of petroleum products in a fairly large way. There is potential for ships to transport hydrocarbon products in the coming years. |
| Does Varun has any plan to get into LNG transportation? Is it looking at picking up stake in LNG terminal firms? |
| Varun had made a detailed study for LNG transportation for some of the Indian LNG projects. We are always ready to enter into this field at a short notice. We are watching new LNG projects which are likely to come up in India and if the right opportunity arises, we will strike deals. |
| What is the status of the memorandum of understanding (MoU) the company signed with Sterlite Industries for advising it on the SCI divestment? |
| For the time being the SCI divestment plan has been postponed indefinitely and therefore the question of the MoU with Sterlite is no more relevant. |
| How long do you expect the booming freight markets to last? What is driving it and what can bring about a correction? |
| The present boom in the freight market has been driven by a demand-supply mismatch for ships. We feel this is likely to continue for the next few years because while world trade and gross domestic product are growing, the supply of ships is declining. This is because of the phasing out of older ships as also those ships which are not complying with the safety and environment regulations of the International Maritime Organisation. |
| A correction will happen in the long-term when supply of ships is sufficient to catch up with the demand. This will take time because most of the shipyards are at present fully booked and are taking new orders for deliveries beyond three-four years. |
| What is the reason for the rise in shipping stocks? How long do you expect this to last? |
| There is better appreciation of the shipping industry by investors and the sentiment has improved because of good results declared by all the shipping firm. Naturally this sentiment will last for some time. |
| What are the steps being take by Varun to be international ship and port facility security (ISPS) compliant? |
| We have taken appropriate steps to become ISPS compliance and all our ships will be ISPS compliant before the deadline prescribed by the authorities. |
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