Mumbai: In a smooth transfer of control to the next generation, there has been a change of guard at one of Mumbai’s oldest business families, the Khataus.
Vice-chairman and managing director of Mumbai-based Varun Shipping Co. Ltd Yudhishthir Khatau gained control of the company earlier this year after his father Dilip D. Khatau, founder and chairman of the company, voluntarily transferred his stake to him.
Yudhishthir Khatau now controls a 46.5% stake in the shipping company that specializes in transporting liquefied petroleum gas (LPG). According to a company presentation to investors and journalists on 15 May, he owns the stake through three companies—Khatau International Ltd, Tarun Shipping and Industries Ltd and Realpoint (Mauritius) Ltd.
Different ventures: A file photo of a Varun Shipping vessel at sea.
Dilip Khatau transferred his stake, which was earlier jointly owned by Yudhishthir Khatau, as a “gift” and by giving him direct control of firms that hold shares in Varun Shipping.
Dilip Khatau ceases to hold any significant stake in Varun Shipping. He and his wife Rina D. Khatau resigned from Varun Shipping as chairman and managing director, and director, respectively, in late December.
“Now, he is not into day-to-day affairs of the company. He always wanted to take up his passion, that is, wildlife conservation and environment protection,” Yudhishthir Khatau told Mint last week. He did not divulge further details
Yudhishthir Khatau filed his final share transfer details in March. In a filing to the Bombay Stock Exchange on 26 March, the company said the deal is an “inter-se transfer” of equity shares among promoter group and that there was no direct acquisition of shares in Varun Shipping.
Following the transfer of shares, Varun Shipping has appointed Arun Mehta as chairman and managing director, Yudhishthir Khatau said.
Mehta, one of the two original shareholders and directors of the firm, which was set up in 1971, now owns a little less than 3% stake. He was appointed managing director in 1973 and elevated to vice-chairman and managing director in 1999. “Mehta was associated with Varun Shipping from 1971. You should value the kind of experience that Mehta brings in to the company. That is the only rationale behind appointing Mehta as chairman of the company,” Yudhishthir Khatau said, explaining Mehta’s appointment. He himself will continue as vice-chairman and managing director.
Mehta is not related to the Khatau family.
The succession acquires particular significance after Vijay Kantilal Sheth, vice-chairman and managing director of Great Offshore Ltd, became the first promoter in India to lose control of his company after Bharati Shipyard Ltd took over shares Sheth had pledged against loans. Great Offshore is an offshore oilfield services firm that competes with Varun Shipping in the offshore service sector. Bharati Shipyard is India’s second largest shipbuilding firm.
Varun Shipping, which started its shipping business in 1973, was incorporated as a private company and became a public company in 1972. The company has been profitable and has paid uninterrupted dividends for the past 24 years. For fiscal 2009, Varun Shipping declared a dividend of 50%.
The Khataus were once among the leading business families in the city, owning Khatau Makanji Spinning and Weaving Co. Ltd, which was set up in 1874, and was known for its saris, voiles and fabrics under the Khatau brand.
Later, however, like other textile mills in the city, the company faded from the city’s business landscape, and one section of the Khatau family diversified into the shipping business.
Varun Shipping currently owns 11 LPG carrying ships, the largest such fleet in India, the fourth largest in the world. It transported approximately 72% of all state-controlled LPG cargoes brought into India in the fiscal year ended March.
“The business model ofVarun is very good and sound. They had identified the demand of gas much early and strengthened their position. Now seeing the prospects in the offshore sector, they have increased its exposure in that sector, too. However, this ownership change is not going to impact the focus of the company,” said a senior executive with an offshore shipping services company that competes directly with Varun Shipping. He declined to be named for that reason.
“There is no management change in the company. And in any case, Dilip Khatau was not taking part in day-to-day affairs of Varun Shipping. This share transfer is merely internal transfer between the promoters. And there is no implications to the company in any terms. We are going ahead with our plans,” said a senior Varun Shipping executive, requesting anonymity.
Varun is now planning to tap the domestic LPG movement in Indonesia and countries in the Mediterranean region while it is increasing its exposure to offshore sector by investing $80-$100 million (Rs378-472 crore) this year for buying vessels to support oil exploration and production.