Every few years, the shipping industry bottoms out to protracted low-growth phases. Several simply cut their losses and down shutters. But some persevere to become ‘captains’ of industry.
Ericson & Richards (E&R) are mainline surveyors and assess (and certify) ships and cargo they ferry.
Shipshape is not a phrase one can apply to the domestic shipping industry, which managed a mere 0.7% uptick with its Rs 8,455-crore revenue in the previous fiscal. Lower freight rates, higher running costs and a ‘ship glut’ have landed it in the proverbial stormy waters. “Shipping is capital-intensive and cyclical. It can get very volatile,” says Captain NV Mudaliar, senior vice-president, Five Stars Shipping. “Manpower accounts for close to 60% of our cost and this has been rising consistently.”
No owner can afford to keep his vessel idle for long and must sail or charter. A handymax — the smallest in its class at 40,000-65,000 deadweight tonnage (DWT) — bills close to $5,000 per day for upkeep and maintenance.
“Maintenance cost goes up as ships get older. So it’s better to own a relatively young fleet,” says Mangesh Sawant, managing director, Chowgule Steamships, which has a fleet of five. “Insurance, stores, repairs and crew costs form a lion’s share of maintenance … You don’t make super-normal profits in shipping. When good years come, you make the best of it – and in bad times, you simply try to survive.”
CARE Ratings pegs India’s merchant navy fleet at 1,389 vessels. Over 40% are 20 years old or more. This does not bode well considering the 50% increase in ‘new ship additions’ internationally.
The slowdown is not only hurting shipping but scores of allied services too, including ship handlers, charterers, agents, chandlers, surveyors and stevedores. Every few years, the shipping industry bottoms out to protracted low-growth phases. Several simply cut their losses and down shutters. But some persevere to become ‘captains’ of industry.
FIVE STARS SHIPPING COMPANY Credentials: Ship repairers since 1930s Currently: Own 4 ships Family: The Dhunjibhoys
The Dhunjibhoys of Mumbai are widely known for racehorses bred at their Nanoli Stud Farm in Pune. A lesser known fact is that they are among India’s oldest shipping families, having started off as ship repairers in the 1930s.
Sometime in the 1940s, their company repaired and refitted an empty British troop ship in seven days. “This ship had come to us via the Suez Canal… Our company employed over 2,000 people then to finish the job on time,” recalls Hanoz Mistri, senior official, Five Stars.
After this assignment, the Dhunjibhoys turned owners. They started South East Asia Shipping Company (SEAS), which owned nine ships at its peak. For the next four decades, SEAS hired out ships for exports and cargo and wound up operations prior to the big shipping downturn of the 1980s.
They waited for the storm to pass before starting again in 1985, with Five Stars Shipping. The company moved up the value chain slowly – first into ship management and in 2005, into ship-owning. Currently, Five Stars Shipping owns four vessels – all offered on hire.
“We’ve always ensured we don’t take shortcuts in business,” says family patriarch Khushroo Dhunjibhoy, who is also managing director, Five Stars. “We don’t want to take any chances with the quality of the ship or management… We never forget there are men’s lives at stake. We only work with top-notch, triple-A rated line charterers.”
The company is now co-helmed by and entrusted for modernisation to Zahir, son of Khushroo Dhunjibhoy. Five Stars has taken the ubiquitous loans (to buy ships) and this eats into profitability. As per registrar filings, Five Stars Shipping logged losses of Rs 71 lakh in 2015. Contrast this with the bourselisted Chowgule Steamships, which reported Rs 4 crore loss last fiscal.
“We could have made a little more money by taking shortcuts but in the long run, shortcuts don’t pay,” says Khushroo Dhunjibhoy. “Ours is a tough industry… You need to adopt an orthodox approach to stay relevant in this volatile and competitive business. The very fact that we have sustained is due to our talent and discipline.”
Zahir and Khushroo Dhunjibhoy of Five Stars Shipping.
AS MOLOOBHOY GROUP Credentials: In shipping since 1890s Currently: Sales and service of nautical electronic gadgets, fire and safety equipment, crew training Family: The Moloobhoys
When Adil Moloobhoy took charge of his family business in 1977, he was confronted with some tough decisions.
The family managed passenger ships of The Mogul Line, which carried Haj pilgrims to Saudi Arabia, and had always offered subsidised rates. But their charges were 30–50% below cost and Adil decided to raise rates. This did not go down well with his father (and group chairman) Shareef Moloobhoy. “I value the family legacy and I know the importance of serving Haj pilgrims, but those subsidies had begun to leave us out of pocket,” Adil recollects. “After some discussion, we decided to take a middle path; we raised our cost a wee bit.”
Adil is the third generation to take charge of the AS Moloobhoy Group, which started with shipbreaking and chandling and has seen changes whenever a new family member has taken the helm. When Shareef took over from Ahmed Moloobhoy (the founder) in 1955, the company diversified to sale and upkeep of safety equipment. When Adil took over, the company branched out to maritime electronics and training. When Nafeesa (wife of Adil) took over reins from Adil in 2000, the company diversified into newer product/service lines and geographies.
The couple’s daughters, Ghazalah and Tehzeeb, have also joined business a few years ago.
“We have a great company here… We’ve always been profitable and we’re a zero-debt group. Our foray into the Gulf Cooperation Council will speed up growth,” says Nafeesa, managing director. “Our daughters are privileged to have a business with such a long history. But they won’t have it easy… They’ll have to go through the grind to master the trade.”
The Moloobhoys.
ERICSON & RICHARDS Trivia: Founded by a Swedish captain in 1878 Currently: Ship and cargo surveyors, flag state inspectors, magnetic compass adjustors Family: The Agas
Three generations of the Aga family have served on merchant ships before taking charge of their family business. Captain Sam B Aga joined as a partner in 1953; a few years later, his son Captain Behram marched in as did Behram’s sons Kersi, Xerxes and Cyrus. “You get sea-weary after a few years,” says Kersi, who rose to be a chief engineer on a merchant ship.
Ericson & Richards (E&R) are mainline surveyors and assess (and certify) ships and cargo they ferry. They come into the picture when ships/cargo undergo physical damage due to mishandling. They also evaluate personal injuries to crew and dock workers. The surveyor’s report becomes the basis for an insurance claim. E&R annually surveys over 350 ships in Mumbai Port alone, and is present in all ports across India.
E&R is also a ‘flag state inspector’ — certifying the sea-worthiness of ships domiciled in different countries.
E&R is a magnetic compass adjustor of international repute, one of the few Indian firms that do it manually. Though most ships have GPS navigation these days, it is mandatory to keep a magnetic compass in the shipmaster’s cabin. These have to be adjusted periodically, as bearings go awry when ships carry iron or iron ore. “We’re a profitable company,” says Kersi. “But more than money, reputation is our number one priority.”
Capt Behram Aga of Ericson & Richards with his sons Kersi, Xerxes and Cyrus.
DAMANI SHIPPING Trivia: Started business with a capital of 8 annas in 1949 Currently: Charter, custom house agent, warehousing, air cargo and logistics Family: The Damanis
When Dhirubhai Damani decided on a goods wagon clearance business in 1949, his father gave him 8 annas as startup capital. With that, Dhirubhai and his brothers built an empire with revenues worth Rs 1,000 crore at present.
“You have to keep doing new things in business to grow… Every few years, you have to start new business verticals,” says Ashwin, younger brother of the now-deceased Dhirubhai. “As more family members came into the business, we started verticals. We even started a ‘steel cutting centre’, as an auxiliary service,” says the family patriarch who is a qualified mechanical engineer.
The Damanis provide assistance in sea, rail, roadways and air cargo. They offer port equipment such as forklifts, cranes and bulk movers on hire and charter ships for cargo. Last fiscal, Mitsutor Shipping Agency, a Damani group company, led the ‘agents chart’ by handling 7.39 lakh tonnes of cargo at Mumbai port. Ashwin Damani is assisted by three nephews, his son and daughter.
“I accept changes as they come. I give my family members all freedom they want to try out newer businesses. Their lone mandate is to help the group grow,” says Damani.
Flipping his Rubik’s cube, he adds, “I won’t be a ship owner ever. It’s a bad place to be. There are better things to do in shipping. I can be a big-volume freight forwarder. I can also turn a financier. This playground is very big.”
Ashwin Damani of Damani shipping.
JB BODA GROUP Trivia: First Indian reinsurance broking firm Currently: Insurance services, insurance surveyors and loss assessors, offshore and onshore surveys Family: The Bodas
In 1943, Boda brothers Jagmohandas and Dhirajlal set out from Porbandar, Gujarat, to start a reinsurance broking business in Mumbai. In those days, reinsurance was mostly the preserve of European and American insurance giants. However, the Bodas persevered and later, diversified into protection and indemnity insurance, various types of marine, fire and engineering appraisals and oil and gas-related surveys. It’s the largest Indian multinational insurance and reinsurance broking house.
Atul Boda, son of Dhirajlal, manages JB Boda Group at present. He took over from Bharat, son of Jagmohandas, who passed away in 2011. Two others — cousin Gautam and son Rohit — help him out.
Atul has two priorities — the customer and his staff. “We’re in the service business and operate in 90 countries,” he says, “So I advise my colleagues to stay committed to clients’ requirements. Clients have to be satisfied first.” He adds, “We’re a family business and we’ve close to 1,000 employees in India in our 23 branches. If you have to stay in business for long, you’ll have to take care of your employees.”
SHIP CHANDLERS Trivia: A normal ship order would be 100-200 kg of meat and 300 kg of fish Currently: Ship stores supplies Family: The Gondalias
The Gondalias started chandling in 1979 – supplying fresh veggies, fruits and meat to ships in transit. Over the years, ‘Shipchan’ expanded to include over 1,300 items – from antipiracy equipment to safety tools, kitchen stores and packaging material. The company also offers ship repair solutions and fumigation services. “We’ll keep expanding services. There’s lot to be done in shipping,” says Karan, son of Shipchan founder Harish Gondalia.
Most ship captains prefer to source fruits, vegetables, liquor and cigarettes from India and the orders can be as large as 20,000 cigarette sticks for a mid-sized ship. Beer and whisky stocks are also replenished at Indian ports.
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