Ocean Sparkle Restricted (OSL) is India’s main port operations and marine companies firm. With a presence throughout all main ports within the nation, the corporate is acknowledged as a floor breaker within the trade with world-class marine companies, most superior vessels, highest high quality, and unmatched expertise. P. Jairaj Kumar, Chairman & Managing Director of the corporate particulars on his journey in offering O&M, dredging companies and enlargement plans.
You may have an intensive seafaring profession and likewise a land-based profession with completely different positions in various industries. So, how did you get into this port operation and administration sector which you began in 1995 and the way was the journey within the final couple of a long time that you’ve got been operating this firm?
Having sailed for 9 years and having been to the ports the world over, I all the time felt that there was a necessity for good port administration programs in India. The privatization of the ports which got here in through the mid-90s truly supplied us the chance. When minor ports got here into being, the concession agreements by the minor ports supplied flexibility for the developer to outsource the operation and administration of the port. What we do as part of the O&M is a complete marine service which incorporates pilotage, provision of tugs and help craft, management tower operations, mooring companies, fireplace and security patrols, air pollution management, upkeep of navigation aids and all of this to offer a single level of accountability to the port developer. So, we first began this exercise in Kakinada the place the federal government of Andhra Pradesh constructed the deep water port at Kakinada and outsourced the marine companies at this port. As you already know, India is a really massive supplier of marine manpower to the service provider marine, however what OSL took upon itself is to coach these marine manpower within the expertise of port administration. So, we first began with Kakinada Port the place we supplied companies of pilotage, towage and all the opposite companies to offer a single level of accountability to the port developer. So, in essence, the reply to your query is that the privatization of the ports gave us this chance to get into this section.
Allow us to speak concerning the current previous, Covid-19 pandemic has affected each enterprise together with our trade. So, what was the impression on O&M operations as a result of port enterprise is also affected to some extent and now with vaccine coming in, individuals are speaking about economic system taking a V-shaped restoration and finances additionally I feel lifted the hopes of individuals. So, how was the final one 12 months for you and what do you look ahead?
As far as the Covid instances had been involved, as you’re conscious, port companies had been declared important companies. So, proper from March when the lockdown was introduced, we continued to supply companies on the ports. It’s true that the site visitors on the ports within the preliminary months took a beating, however from June onwards, there was restoration and as we speak we’re virtually near about 70% to 80% of the site visitors. Fortuitously for us, our O&M enterprise relies on long-term contracts of a take or pay nature. We offer a service and we receives a commission a each day wage for the companies that we offer for. So, when it comes to revenues, we weren’t affected very drastically though they had been some ports, some minor ports, particularly captive ports which needed to shut down their factories due to Covid and therefore the ports that are hooked up to these factories had declared pressure majeure on us, however this was for a really brief interval; once more the industries resumed and ports began to function so we continued to supply our companies.
After all, this was at enormous logistic nightmare for us as a result of we function in 30 completely different ports throughout the nation and to maintain individuals protected from being contaminated, you’ll be able to effectively think about {that a} tug boat has acquired 10 individuals; if anyone will get contaminated, you will be relaxation assured that each one the ten would have been contaminated. So, it was an enormous problem for us and all people rose as much as the event. Actually, for the primary 7 months of COVID, I had 1800 individuals unfold throughout the nation and I didn’t have a single case of COVID. However after 7 months, individuals had been impatient and I do perceive that they’ve been onboard for over a 12 months. Folks at house acquired affected with COVID and so we needed to resort to some sign-ons and sign-offs and we had been in fact affected ultimately however we had been in a position to include it very successfully and we by no means even, for a single day weren’t offering service to the 30 ports that we operated.
You talked about concerning the finances. I’m very joyful that in my 30 years of expertise ashore, that is the primary time I’ve heard shipping being talked about within the finances, though it could indirectly impression our vertical however the subsidy introduced to Indian flagged vessels to compete in tenders that are popping out by PSUs could be a definite benefit to the Indian shipping corporations and I’m positive a bigger quantity of cargo could be carried by Indian vessels coming into India. The opposite factor we’re trying ahead to, we’re ready the small print are the 7 PPP initiatives which have been introduced within the main ports and we’re awaiting these particulars and we hope that there could be one thing for us additionally on this PPP mode of privatization.
I perceive that you’re additionally into dredging enterprise. Is it capital or upkeep or each? How is that section doing?
Dredging was a late introduction into our portfolio. We got here into dredging solely in 2005, virtually 10 years after we began this O&M service and the explanation for that was that most of the minor ports the place we supplied a complete service needed to do some quantity of upkeep dredging year-on-year and so they discovered it extraordinarily tough to constitution dredges from all around the world to come back and do a upkeep dredging of say 1million cubics the place the mobilization, de-mobilization of the dredgers was dearer than doing the dredging itself. For Ocean Sparkle this was a unique monetary mannequin as a result of on the O&M companies we work on contract foundation however right here, our revenues depended upon the amount of dredging that we do, however contemplating that we had been in a number of of the minor ports and the managements of the minor ports had requested us to tackle this exercise, we went in to accumulate few dredgers and began this exercise within the minor ports in 2005, solely for upkeep dredging. We then moved on to inland waterways, lakes and canals and have achieved some very prestigious jobs just like the Lalbagh Lake in Bangalore, the Ramgarh Lake in UP and we at the moment are executing very massive desiltation undertaking within the Mahanadi River in Orissa.
In the present day, we specialise in lake rejuvenation and environmental dredging, which signifies that we don’t solely dredge, we additionally desilt and separate the solids and put again clear water into the lakes. We’ve achieved such good work the place the enter water was one million PPN of solids; after we put again, the stable content material is lower than 10 PPN and there are water parks which have are available in these locations. We see this as a really potential section as a result of it is a thrust space of a number of state governments to clear up their water our bodies and develop water parks. So, as we speak, dredging contributes virtually 15% of our annual income and we hope to do rather more work on this section as effectively however we’re not into captive dredging, we’re solely into upkeep dredging, dredging of inland waterways, lakes and canals.
Because you simply talked about inland waterways, that brings me to ask you on two vital areas of our trade – one is coastal shipping and one other is inland waterways. We’ve been speaking about these two segments for lengthy and authorities additionally needs to encourage this mode of transportation. Business additionally made lot of efforts. You’re additionally one of many passionate advocates of coastal shipping. So, what’s your take now, the present state of affairs or the way in which issues are transferring on coastal shipping and inland waterways?
So, coastal shipping, we all the time believed that India, with such an unlimited shoreline will certainly yield for a coastal transportation community. However the disadvantage at that time of time, at the very least we had been one of many first guys to usher in a tug and barge mixture into India means again in 2002 and we did some coastal voyages between Paradeep and Haldia. We did voyages between Thailand and Haldia. However it was through the infancy of coastal shipping. In the present day, a number of minor ports have developed which will be successfully tied up with a coastal transportation system and the second most vital factor is that the federal government has realized that there needs to be a separate code for development of those vessels, separate manning requirements, whereas within the years after we entered that section, a coastal vessel needed to be equal to an ocean-going vessel and which was a really costly proposition.
So, as we speak we now have a close to coastal vessel cadre of individuals and the thrust given by the federal government for development of RSV vessels which function on the coast. Third, the push which has been given to the main ports to supply unique berths for these coastal vessels and to not undergo the identical rigmarole of customs, immigration, port well being which delays the cargo transferring round. I feel the time is correct; as we speak, the one factor which nonetheless holds again coastal shipping is the cargo help. We regularly realized that though transportation by sea could be very aggressive, however the absence of cargo on the return leg is likely one of the tough issues that we now have to take care of and I imagine that each mode of transportation had some help from the federal government. We aren’t asking for any subsidy; identical to when railways got here into being when the federal government mentioned fertilizers, all fertilizers might be transported by rail rakes. One thing of that kind to offer assured cargo help would undoubtedly herald numerous new gamers into this section and I feel we’re undoubtedly on the anvil for a really massive coastal fleet to come back sooner or later of time.
Up to now we now have talked about lot of fine issues however inform me, what are the challenges or threats you see in your line of enterprise? Now, ports could cease enlargement after someday as a result of possibly we are able to count on one other 3 to 4 ports to come back in India. Second, we’re taking a look at a consolidation the place you will have hardly one or two operators throughout each the coasts. So, what are the threats you see for your enterprise?
Properly, when it comes to development, I feel we now have been in a position to obtain at the very least 10% to fifteen% CAGR year-on-year. I do admire that this will not be doable as we develop bigger however our thrust segments in enterprise as we speak are one, in fact, minor ports and power terminals, the LNG terminals that are popping out new, and naturally the minor ports which have already been developed and that are rising as effectively. For instance, in Krishnapatnam, we began with two tugboats. In the present day, we now have 4 tugboats working in Krishnapatnam. Identical with Kakinada and so forth. The opposite main section for us is the main ports. Main ports initially began to denationalise tugboats that are solely incremental necessities of tugboats however having seen the effectivity of the operations of the personal tugs, as we speak, even the alternative demand of the main ports is being catered to by personal gamers like us.
In impact, in case you see, in JNPT, most likely within the 12 months 2000, JNPT had 10 tugs of its personal. In the present day, JNPT doesn’t have any tugs of its personal. All the ten tugs which function in JNPT are privatized tugs and all the main ports are going on this similar course. With regard to consolidation, sure I feel within the personal ports, there was consolidation however by the standard of companies that we now have supplied, even the brand new acquirers have additionally continued our companies within the ports and as we speak, we’re not taking a look at India alone though India supplies us the bread and butter for development, we’re additionally trying actively on the worldwide section. We’ve operated earlier than in Sri Lanka, Saudi Arabia, Nigeria, in Aramco in Saudi Arabia. So, we’re taking a look at different international locations like Bangladesh, Myanmar, Iraq that are additionally offering contracts of long-term nature and we imagine that internationally, we’d be a robust participant as effectively at the very least within the close to Asian area.
If you wish to put throughout to Ministry of Transport or Ministry of Commerce, Logistics Division, what are the three key points that you desire to the federal government to deal with. What’s your want listing?
I feel before everything is until date, we used to accumulate ships from world over at best costs and handed on the profit to the ports within the constitution price that we function. In the present day, authorities has given a directive to the main ports that henceforth, all of the tugs within the main ports could be India constructed. Actually, we’re very joyful to assemble; I imply, there may be completely no drawback if the standard, timelines and the worth are practical. From what our expertise has been previously, the Indian shipyard costs are at the very least 20% to 25% larger than the worldwide market. Now, as we speak, if I assemble a vessel at this worth, this worth needs to be handed on within the type of a constitution price to the ports. Already there’s a huge hue and cry that the logistics prices in India are excessive and one of many largest culprits in that is the vessel-related fees on the ports the place in case you examine an Indian port to a neighbouring port corresponding to Colombo, the vessel-related fees are already 5 to six instances over and above what’s charged at a neighbouring port.
So, we actually needed to see whether or not the ports will be capable of take in this extra price. I imagine until and till there may be competitors, I imply, it shouldn’t develop into a monopolistic observe out right here the place any individual is pressured. I’m a world operator and I construct vessels for working internationally, proper. Second is, as we speak the contracts what main ports are giving between 5- to 7-year interval. No one amortizes a tug in 5 to 7 years. We require at the very least 15 years to amortize, not solely to payback and provides an inexpensive constitution rent to the port. So, size of the contracts to be elevated is the second factor. Third is funding. Even as we speak, we don’t get funding on such long-term foundation at worldwide costs to compete. These are all international tenders and with the intention to be aggressive, we now have to be aggressive in each side of the enterprise. So, if there’s a particular fund which is actually, we’re joyful to construct in India so so long as the opposite parameters and we’re aggressive in assembly the expectations of the port. So, these are most likely the two to three issues which come my thoughts instantly and these are issues that are very present at this second of time and another factor is that, companies like us, as we’re offering companies to worldwide vessels that are calling, our companies that are supplied from India to a world consumer and so they was once eligible for export incentives such because the SFIS scrips. Our fervent enchantment to the Commerce Ministry is that it is a service that has a international alternate journey and this SFIS Scrips within the type of an export incentive needs to be continued to the section.
