July 2015 | Christabelle Noronha
'Being asset light has worked in our favour'
Incorporated in 2004, International Shipping and Logistics FZE (ISL) commenced operations in exclusivity, shipping the captive cargoes of its parent company, Tata Steel. Those days are long past for an enterprise that offers transport solutions to customers worldwide while carrying more than 20 different types of commodities across global waters.
The Middle East is of critical importance to ISL, which gets up to 60 percent of its business from this region. The company’s chief executive, Capt SR Patnaik — who hails from a family of mariners and had a 16-year career with the merchant navy — speaks here about the company’s presence in the Middle East.
Could you tell us about ISL’s operations in Dubai?
ISL is into dry cargo shipping; we operate ships that are generally more than 20,000 deadweight tonnes in size. We carry major bulk, minor bulk and some amount of break bulk. Major bulk includes coal, iron ore and grain; minor bulk includes cement, limestone, gypsum and fertiliser, and break bulk includes logs and steel. In 2013-14 we booked about 9 million tonnes of cargo: 60 percent minor bulk, 35 percent major bulk and 5 percent break bulk.
We have been growing by almost 1 million tonnes a year since our inception. Considering that the shipping industry has remained depressed since 2009 — and financial year 2015 has been the worst — we continue to fare well despite the market. The main reason for the market being down is the overcapacity of ships. Shipping is a cyclical industry and we hope the market will recover sometime in 2016-17.
Our strategy of being asset light has worked in our favour in the ongoing depressed market. We contribute about 50-60 percent to our parent company Tata Steel’s turnover with an employee strength of 25. The nerve centre of our operation is in Dubai, with marketing offices in Mumbai, Chennai and Kolkata. We have plans to expand our business into areas such as offshore, liner and project cargoes — the Middle East region is quite vibrant in terms of offshore business — and we will be focusing on these sectors.
|International Shipping and Logistics grows by 1 million tonnes a year in the MENA region. Watch the video to know more|
Our major trade lanes are Persian Gulf to India; within the Persian Gulf; Southeast Asia to India; and Australia to India. Although we operate across the globe, our focus has always been east of Suez. The percentage of turnover from these lanes has been about 80 percent.
Who are your large customers?
Our large customers are traders, manufacturers and end users. We have a core customer base in the range of 20-30 and a floating customer base of 50-60. Some of our big customers are JSW, Bhushan, Coalnergy and Gimpex.
Is Tata Steel one of your customers?
Yes, they are one of our customers but not on a large scale anymore. They supported us during our fledgling days — that’s where all the learning happened — but now we have fanned out. It used to be 100 percent Tata Steel when we started out but this tapered off with an increase in business from our non-Tata customers.
How many ships does ISL operate?
About 25 ships during peak times, and during the lean season about 20 at any given time. All of these are chartered ships; we don’t own any ships. In a year we do about 150-160 fixtures.
Are you looking to start operations west of Suez?
We do business west of Suez on a small scale. We have carried agri-products from South America to China, coal from the United States to India, fertilisers from the Continent to India.
Any plans to diversify?
Yes, we have diversified into the liner-container business. Having gained a strong footing in the dry bulk trade, we felt a need to diversify into other shipping verticals in our main geography of operations.
|This article is a part of the special report on the Tata group's operations in the Middle East and North Africa region in the July 2015 issue of Tata Review:|
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