As the shipping industry globally reinvents itself once again, where does it find India’s position—and why is the answer ‘dismal’ when in reality it should be ‘brilliant’?
The recent ‘Golden Jubilee’ celebrations at the Shipping Corporation of India (SCI) couldn’t have come at a worse time for what should have been India’s proud flag-bearer of a shipping heritage, way beyond just balance sheets and cyclical episodes impacting issues.
Simply put, SCI, or ‘Corps’ as it used to be called, is not even a pale shadow in the global perspective of what it used to be, about 25-30 years ago. And Indian shipping, or shipping from the complete Indian Ocean catchment area, has never seen worse days—not even after the advent of the Europeans put an end to what could be called the glories of shipping and the Indian Ocean economies from the advent of the Islamic era till around 1750.
Size of fleet, age of fleet, type of ships in fleet and more—the reality can be called dismal at best, pathetic is more like it. The container revolution seems to have passed us by, dry bulk is not the powerhouse it should have been and tanker trade is due to protection—and all mostly on ships which would easily be on their last legs elsewhere. Don’t even mention passenger ships, speciality ships and coastal shipping—the state of affairs there is enough to make grown men cry. The Indian Ocean now belongs to ‘Mickey Mouse’ flag shipping companies.
Certainly, there have been great steps taken by the oil-rich Arab countries in shoring up their fleets, but it remains to be seen how sustainable these can and will be in their ever-increasing internal race to increase fleet sizes and multiple infrastructures. It also remains to be seen how the Chinese, in their hurry to influence matters maritime in the Indian Ocean arena along Asia and Africa, proceed with what appears to be a massive attempt to recreate past glories and future power-plays. Pakistan and Bangladesh lost their edge when BCCI and Gulf-East went under. And of African shipping, the true navigators of the world even before the Islamic Arabs came on to the scene, there is hardly any trace anymore.
In the midst of all this, however, we are expected to celebrate the increasingly puny status in the world of shipping of SCI as it stands today. A great time was had by all reportedly, presents and gifts exchanged, and then obviously nothing is complete without grand galas and parties once the PM and his troupe are away. Ironically, many of those present at the ‘Celebrations’ were certainly part of the reason why what was once upon a time amongst the largest shipping fleets in the world, is now not just bleeding and depleting, but has been and is being sucked dry, worse than what any group of vampires could have managed, and that is the simple truth.
Shipping is, in India, simply put—an industry based on steel. Surrounded and hemmed in by people willing to literally steal whatever they could, where there are no benchmarks or “standard” pricelists, an industry which has traditionally been used by crony capitalists in India to pervert the system in league with conniving banks and financial institutions, and is protected by the fact that “security” considerations prevent any sort of reasonable reconfirmations or credible external audits of what is really going on. Leave alone visiting a merchant ship, very often, seafarers are not allowed ashore, and any personal communication with anybody is frowned at as well as technically forbidden.
Besides, they will also deny accepting realities about the real heritage and history of shipping in the Indian Ocean economies prior to the arrival of the Europeans, because that is the history that has been force-fed into our heads as seafarers. (See box). Vasco de Gama “discovered” the route around the Cape to India, never mind that the Arabs and Malabaris had done the reverse route centuries ago, and doctrines on navigating during the monsoons in the Indian Ocean and the weather patterns as well as gyres of the Pacific Ocean were already available in Europe—but banned by the leading religious lights of that unenlightened day and age.
Because, it is those who are onboard who really know what is going on, and therefore are sought to be kept away from the rest of the world by any means possible. Fear of next employment, ancient rules designed more to prevent the natives from getting restless against the mai-baap Company, and similar stipulations. All this worked well in a protected environment, of the sort that we saw in India prior to “liberalisation”, but now falls flat increasingly as global standards of survival take over. No longer can the old googlies of getting away with tricks like three separate mortgages for the same ship, overvaluing of assets afloat, and using standard rerouting of pre-purchase capital as well as working capital for other purposes be resorted to. Or kept secret.
Likewise, unlike in aviation, there are as many shipyards as there are ships and designs, so it is not like buying a standardised Boeing or Airbus product off a pricelist. Friends in the shipping industry are not averse to joking that a ship which should cost, say, $10 million, can be priced at $5 million or even $25 million, depending on what the buyer wants it to cost—and who wants what sort of a kickback where.
But all this is changing. When S Hajara, the head of SCI, said in an interview to a TV channel earlier today that he does not comment on media reports, then one can figure out all that is wrong, and more. Why was he on a television show if he has such contempt for the media is not explained. But when he talks about things like present positions and conditions of ships, valuations, charter-hires, orders pending and more—what he doesn’t realise is that not just the media, but even rookie bloggers can now catch the lies and expose truths. The media does not need to ask anymore to find out what is really happening in shipping.
And not just with SCI ships, but any ships, any flag. With minimal effort, everything about a ship’s past and present, as well as an indication about its future, can be obtained at low or even no cost. However, it seems that the bigger focus of the questions and answers was more about numbers, so there one has to read between the lines at the various tricks that are currently being played out in the shipping industry.
Here are some tricks currently playing out. Obviously names are withheld to protect identities. Obviously some apply to SCI, some to other private ship-owners in India and around, and some are what is called “Standard Operating Procedures”, which means, by customary practice, they have become like law.
1) Claiming orders placed on shipyards for example—Google Maps and satellite pictures give people a good idea on this, especially when it can be seen clearly that the shipyard itself does not exist as yet, leave alone keel being laid or ship being under construction. Oh yes, this happens, as a private shipbuilder from India who has taken orders from a related Singapore-based ship-owning company with loans from a consortium of Indian and foreign banks is discovering, when presented with satellite images of the holes in the ground where the ships are supposed to be under construction, with over 40%-50% of the loans already having been disbursed to the shipyard through the ship-owner—which is yet another $2 suitcase in a tax-haven kind of company somewhere.
2) Taking multiple mortgages on the same ship, which has been under-declared as depreciation has been claimed, and then showing the money thus collected as cash surplus in the books. Cannot be done? Look carefully at the balance sheets, drill down, and that’s what comes out. The multiple mortgages themselves are underwritten one against the other, so yet some more transactional costs by way of commissions to be spread around, and meanwhile, the ship itself is run into the ground, literally, badly maintained so that when time comes—a big fat repair bill is the next action in sequence. Why repair something that is down to zero in the books, is not functional, will have a real value below the repair costs when it returns, when you can get something for it if you sell it?
3) Over paying for substandard ships, especially from Chinese shipyards which have acquired a reputation for ships that are not along the lines of what has been ordered. The ships they are building for themselves are falling off the blocks while being built, or developing holes in them at launch, this is the buzz for example with the latest huge container ships they are building on the Cosco Japan series of super box-movers. This is a huge big fraud waiting to be played out, especially now that the shipping market has crashed, and it is apparent that the same ships can be had at a fraction of the price on renegotiations. Even forfeiting the advances paid and re-entering would be cheaper, and quality control as well as eventual product would be way superior, but would SCI do so? Good question—and the answer depends on whether the kickbacks reportedly paid have already been digested or not. Of course, there is always the chance that there were no kickbacks, and SCI is not renegotiating out of the goodness of their hearts...
4) Working capital loans are becoming bigger and bigger, with fuel prices shooting upwards, and insurance premiums for Indian Ocean areas are beginning to look like the cost of the vessel itself. Against this, freight rates are headed down, so earnings do not pay their way. In such cases, funds borrowed for working capital are diverted and deployed elsewhere, while the ship often waits it out at anchor somewhere, fudging reports with skeleton crews onboard keeping costs to a bare minimum—but then again, satellite and AIS tracking are giving that game away.
5) Ship-owners like SCI have huge big fleet-personnel departments. If you look at things, this is a core competency, taking care of your own employees is essential in any business venture. But not at SCI, which actually started the “trend” of outsourcing this vital skill-set—and now it is a total mess. There is no dearth of grapevine talk on the way this is used to make the complete employment on-board issue a big scam— today, even if a person wants to join SCI directly, she or he will be re-directed to any of half-a-dozen or more “agents”, from where they have to join. There are fees and costs and taxation and service tax issues galore —each one represents yet another possible income stream.
6) Likewise, shipping companies tend to farm out technical management to selected nears and dears. Things had come to such a point that the bankers and those who financed the ships started insisting the crewing and technical management were given to their selected ship-management agencies. Here again, a ship-owner pays for an ‘AAA+’ level of service, and in return actually gets a ‘D-’ product, and the difference is for happy times all around. Ship-management agencies in India are supposed to operate under the guidelines set for them by the office of the Directorate of Shipping, which itself operates under the Merchant Shipping Act of 1858.
There is all this, and more—which is why, when Mr Hajara of SCI says openly that he does not comment on press reports in the media, then it is time to stand up and take notice. Things must actually be much worse than what they appear to be.
And that, in their Golden Jubilee year, is putting things mildly. In this day and age, if a commercial or other entity does not provide rational responses or explanations to the media, then the media just goes right ahead and gets its facts.
(For the record, this correspondent left over half-a-dozen messages with SCI/New Delhi, seeking a response, but never got past the receptionist.)
INDIA’S REAL SHIPPING HERITAGE, AS NOT EXPLAINED BEFORE
Since we joined the TS Rajendra in 1973, and at most functions for cadets before and thereafter, we were given the standard spiel about India's maritime history. This, therefore, is what you see in the media too.
* All training of Indian merchant navy officers began with the TS Dufferin, which was already an ageing hospital ship, for which we were to be eternally thankful to a bunch of well-meaning Brits who could not have in their wildest dreams imagined that this would further lead to a bunch of wannabe colonials messing up our young minds under the one and only Captain Superintendant Inderjeet Singh Plaan.
* All Indian shipping began with the SS Loyalty which the Scindias bought and sailed in the face of fierce opposition, and subsequently gave birth to Scindia Steam Navigation which had an inverted swastika on the bow and also a bunch of colonial remnants who eventually ran the company to the ground with their corrupt ways.
* All ship-construction skill-sets vested in Europe and so we had to preferably buy ships from the UK even if nobody else including the Brits themselves were doing so. (They were buying their ships from Japan by then). Along with these ships, we also got Westland helicopters. Oh yes, we also got a lot of ships from USSR and their friends. Meanwhile, the oldest ship afloat in the world today was built by the Wadias in Bombay in 1817, (See: http://www.hms-trincomalee.co.uk) and Indian shipbuilding skills were way superior to anything the Europeans had seen. So, in due course, they killed our skill-sets.
*Vasco da Gama had a dream and “discovered” a route to India. Captain Cook had a related dream and discovered a route to Australia. Columbus had yet another dream and discovered a route to America. The sailors from the Indian subcontinent and their Arab friends who had well and truly done these routes in the opposite direction centuries ago were not worthy of a place in the history we were taught.
*Never was it explained to us that there was a rich heritage of navigational and shipbuilding skills in the Indian Ocean between the economies of the glorious Islamic era, something which was way ahead of anything the rest of the flat-earthers had seen till then, up until around 1750, when the Europeans “discovered” India. It was inconvenient to bring this aspect of India’s shipping heritage out, since it would go against the British-inspired view of India’s history, where everything was “given” to the natives.
End of Box
And also, as is the nature of truth, it was inconvenient. It actually provided a clear answer on who the original inhabitants of America were, where they came from, and how they got there. Leave aside the other inconvenient truths—that the sailors from the Indian Ocean had navigational skills well in advance of anything that the Europeans had—a truth now being revealed, incidentally, at the Nautical Museum off Greenwich.
But here in India, we will still not accept this reality—that our maritime heritage existed and very well too, seagoing as well as inland, well before the advent of the Europeans. To put things in perspective, Chappra, now a decrepit town in Bihar, was a great river port, with oceangoing sailing vessels reaching it, under sail. And continued to be one, till the opium trade came to an end—while the Brits figured out that the way to control the country was by controlling movement, and therefore we got the railways.
India’s maritime heritage and history was not just an inconvenience, but also a threat to European control and rule over the world, and so it simply could not be allowed to prosper. At any cost. Including showing it as being non-existent, or if it was existing, then being of inferior quality.
Meanwhile, the HMS Trincomalee in London is still available for charter.
For more on this, you might like to read these references:
Tata Motors will be developing 1,000 Tata Manzas, incorporating design inputs from Rajesh
Tata Motors has associated with the world-renowned fashion designer, Rajesh Pratap for Tata Manza. Rajesh Pratap will partner with Tata Motors’ styling team which operates from its state-of-the-art styling studio, at the Pune facility. He will be helping the team to further enhance the design and stylise the interiors and exteriors of the Tata Manza.
Rajesh Pratap’s attempt in the Tata Manza design project is to achieve equilibrium between handmade and high-tech, where one enhances the other, providing real solutions, a pure aesthetic. Tata Motors will be developing 1,000 Tata Manzas (a limited edition range), incorporating design inputs from Rajesh.
In February 2011, Tata Motors introduced the newly refined Tata Manza series. The Tata Manza has been given a fresh new look with refined premium dual tone interiors & fabric seats and exterior make over, delivering class apart driving experience in the sedan market. Rajesh Pratap’s rich experience in the fashion industry and thorough knowledge about design aesthetics will further help Tata Motors in enhancing the Tata Manza’s design.
Tata Motors has associated with the Wills India Fashion Week and Rajesh Pratap Singh has designed an exclusive theme-based collection which will be showcased at the Wills India Fashion Week. The collection theme is inspired by a road trip which Rajesh undertook in the villages of Orissa. Focusing on Ikat and handloom textile weaves, some of the experiments are part of this collection. The show attempts to initiate a dialogue and thought process on what is the relevance of handloom in the country. The theme of Rajesh’s collection will also be integrated on two specially accessorized Tata Manzas, which will be the show-stopper, on 8th October 2011 at the Wills India Fashion Week.
In the late afternoon, Tata Motors was trading at around Rs159.10 per share on the Bombay Stock Exchange, 7.94% up from the previous close.
Besides allowing nation-wide roaming, the telecom ministry is also planning to allow inter-circle Mobile Number Portability as per the recommendations of the draft New Telecom Policy 2011, likely to be unveiled by telecom minister Kapil Sibal next week
New Delhi: The government is mulling to allow nation-wide free roaming, frame an exit policy for operators to surrender licence and set up a telecom finance corporation to facilitate investment in the sector, reports PTI.
These, among others, are major focus areas of the draft New Telecom Policy 2011, likely to be unveiled next week by telecom minister Kapil Sibal.
Besides, the telecom ministry is also planning to allow inter-circle Mobile Number Portability (MNP), changing operator while retaining same number in different circles.
According to section on ‘financing’ in the draft NTP, it has been proposed to create a special purpose ‘Telecom Finance Corporation’ as a vehicle to mobilise and channelize financing for telecom projects in order to facilitate investment in the sector.
It proposes to include telecom sector projects within the ambit of financing from existing entities such as India Infrastructure Finance Corporation (IIFCL) and also to rationalise taxes and levies affecting the sector to stimulate investment and making services more affordable.
The service providers, particularly who bagged licences in 2008, have been facing problems to get finances. The setting up of a dedicated institution would help the players complete roll outs within stipulated time-frame.
On the exit policy, the draft NTP proposes to frame an appropriate exit policy, different from the surrender of licence to permit easy exit.
In fact, the telecom ministry has asked the Telecom Regulatory Authority of India (TRAI) for its recommendations.
According to the draft, the telecom ministry is mulling to incorporate a framework to increase the availability of spectrum for telecom services, to provide one nation-one licence across country and to permit sharing of networks.
Further, the draft NTP-2011 will also calls for delinking of spectrum in respect of all future licenses and spectrum shall be made available at price through market-related processes.
There is also plan to extend inter-circle MNP facility on nationwide basis so that the users can retain the mobile number while shifting from one service area to another, irrespective of the service provider, the note added.
On 1st January this year, after taking charge of the telecom ministry, the post which was vacated due to the resignation of former telecom minister A Raja, Mr Sibal had announced to bring in NTP-2011 which will replace the existing Telecom Policy-1999 in order to bring transparency and to provide level playing field to service providers.
Further, the note added that the draft NTP-2011 will ask to undertake periodic audit of spectrum utilisation to ensure that spectrum is being used efficiently, to prepare a roadmap for availability of spectrum every five years and to enact a separate Spectrum Act.