Eight years hence, this is what has happened.
A government that is open to trying out private talent in a company that runs ships where quick decision-making means a lot, cleared the path for Sharma to take a shot at the top post.
While contemporaries and colleagues give him the thumbs up, it is not clear he would have got the top job at Shipping Corp. had he stayed on because appointments there merely went by seniority.
A little before he left SCI, Sharma lost out due to the lack of seniority on becoming a director for bulk carriers and tankers at the company when interviews were held by the Public Enterprises Selection Board (PESB), the government headhunter. He impressed the PESB, but the much senior K.S. Nair got the job.
In a way, selecting Sharma, seen as a “lifetime SCI man", would be a motivating factor for the rank and file of SCI. Bringing a rank outsider could have been a de-motivating factor for people who work for the company.
It was not that the government has now hand-picked Sharma—it ran a proper selection process by inviting applications, short-listing candidates, conducting interviews and securing approval from the Appointments Committee of the Cabinet (ACC). Sharma was one among the eight who were interviewed by a panel headed by India’s cabinet secretary.
In a way, Sharma, who started his career at Shipping Corp., has seen the best of both the worlds. The rigid and often time-consuming decision-making process that characterized state-owned firms, keeping government oversight bodies such as the Central Vigilance Commission (CVC) and the Comptroller and Auditor General (CAG) in mind, on the one hand, and the greater operational freedom in the other.
Whether Sharma can put his eight years in a private shipping company to good use at Shipping Corp. remains to be seen. Because, running a shipping company, a government-owned one at that, is a different ball game altogether.
For instance, despite being a so-called navratna company, a tag that allows state-owned firms greater freedom from government control, Shipping Corp. just does not have the flexibility to buy used or second-hand vessels and sell ships for further trading, which is a normal part of the shipping business globally.
Asset play requires taking quick decisions.
There are times when selling a ship makes much more commercial sense rather than operate it at rates that don’t even allow recovery of operating costs. This is one of the ways fleet owners shore up their financials in a depressed freight market.
SCI, once a target for privatization during the Atal Bihari Vajpayee government, had never sold a ship for further trading since starting operations 54 years ago. Successive chairmen and managing directors (CMDs) have been reluctant to take a call on selling trading ships (which can be run for many more years) due to fear of agencies such as CVC, CAG and the Central Bureau of Investigation.
If CMDs are given immunity from such oversight bodies, the company would be able to improve its efficiency and profitability by several notches. Similarly, buying second-hand ships requires securing time-consuming government approvals.
Since April 2013, SCI had cancelled orders for building 12 new ships after shipyards jumped delivery dates. This allowed the company to preserve cash between 2011 and 2014 when it reported three consecutive years of losses.
Shipping Corp. needs to re-deploy ₹ 330.65 crore of refund money received from the shipyards on order cancellations which were originally part of the proceeds of the follow-on public offer (FPO) in November 2010. This money can only be used for buying ships because that was one of the purposes of the follow-on public offer.
For close to a year now, the company has been looking for at least six second-hand ships but managed to buy just one ship—an offshore oil exploration support vessel from a subsidiary of India’s The Great Eastern Shipping Co. Ltd. With ship prices at record lows, buying ships at low prices would help when the market picks up.
Last week, the company issued a tender for buying a 7-11 year old suezmax tanker (called so because it can transit the Suez Canal fully laden) which can carry as much as 160,000 tonnes of crude oil.
In the private sector, whether in India or abroad, ship acquisitions, both new buildings and second-hand, are never through tenders; they are always done through negotiations.
Sharma will have to contend with such restrictions unless the government decides to ease them in the larger goal of professionalizing SCI.
In much the same way as Shipping Corp., the government could consider hiring professionals from the private sector to run some of its state-owned ports that have always remained a fiefdom of the Indian Administrative Service (IAS).
P. Manoj looks at trends in the shipping industry.