The sanctions imposed by the US and the European Union on Iran because of its nuclear ambitions are likely to see the Islamic Republic of Iran Shipping Lines and a number of entities with which it is associated becoming prime targets. For Irano Hind Shipping Company the joint venture formed 35years ago between the Shipping Corporation of India (SCI) and Islamic Republic of Iran Shipping Lines (IRISL) it may be tough going for some time and could weather this storm sooner of later. But for SCI the sanctions hardly matter.
Mr. S. Hajara, Chairman and Managing Director of SCI informed that the immediate impact has been the withdrawal of P& I cover by the International group. As an alternative Irano Hind have got their ships now covered by Iranian P & I Club.
“As far as the company’s bulk carriers are concerned they haven’t had any problems in their cross trades because Irano Hind vessels hardly call at any of the Iranian ports,” Mr Hajara said. “In the last 12 ½ years Irano Hind vessels had called at Iranian ports only twice and that too under foreign charter for loading from Iranian ports. This was not under their control. Hence as far as bulk carriers of the company are concerned there has been no major impact so far.
“With regards their tankers I understand the company is still struggling because the cover offered by Iranian P & I Club has not been acceptable to the oil cartels. Obviously you cannot take the risk without an insurance cover. I understand the matter can be sorted out according to what the management has informed us. I understand also that one or two vessels are deployed with an Iranian oil company and this does not pose any problem.”
The joint venture company was formed in 1975 under a government to government bi-lateral agreement. The SCI holds 49% stakes in the seven ship fleet company and IRISL holds the remaining 51%. The government of India has advised SCI not to make any move which is likely to jeopardize relations with Iran in any way. SCI has also been advised to maintain status quo as far as investment in the JV is concerned.
“The impact on SCI is negligible according to Mr Hajara. “We had invested around half a million dollars in 1975 and earned several times over during the past,” he pointed out. “Even today the dividend SCI earns is just a couple of million dollars which does not make any impact on our over all revenue.”
Shipping Corporation of India, which is India’s largest and most diversified government owned shipping company yielded a net profit of $ 42.6 million for the quarter April – June 2010 a rise of 59.68%. Total income of SCI for the same period increased to $ 201.5 million from $ 196.2 million a jump of 2.69%. Earning from the JV is very negligible.