Dear Friends and Colleagues, As we begin to get into the second half of 2017, one can’t help but remain a little breathless at the speed of events in the first six months. The speed of the events referred to are global events. To start with, the kingdom of Qatar has been sanctioned by Saudi Arabia, Bahrain and the UAE. The PM of the UK, Theresa May, called for a snap poll to strengthen her position for the impeding Brexit, but ended up losing her party’s majority in the parliament. President Trump remains under strong scrutiny but continues to battle ahead. The EU remains under pressure with the imminent Brexit and some of its member countries are yet to achieve financial stability. The bright spot was the emphatic election of President Macron in France. Amidst these dramatic occurrences, the prices of main industrial growth driving commodities, such as crude oil and iron ore, have shown signs of stability and some firmness. The constituents of BRICS, almost 40% of the global population, have emerged well, especially Russia and India. Additionally, as per various commentators, India seems to continue its push to a better position.
This column has said in the past (in previous TIDINGS issue XVII, about GST and the Non-Performing assets of Indian Banks), GST is now a reality as of 1 st July 2017. By the time you are reading this, a single Goods and Services tax will be uniformly applicable across India, instead of a state-wide non-uniform regime. But, of course, this a massive change will come with its own set of challenges, such as processes, procedures, systems, training of people, etc. However, we endeavour to be proactively prepared and invest a fair amount of time and money to try and ensure not only our compliance but also to be able to assist our principals and clients to navigate this crucial settling-down time. The amounts are not small and, with the wafer- thin margins that all of us in the ecosystem work with, none of us can afford mistakes.
The Government of India and the Reserve Bank of India are taking steps to begin resolving the massive issue of non-performing assets. Twelve large and mid-sized companies have been put on a fast track for initiating the process. It is hoped that the momentum created from this will lead to increasing resolutions, which in turn should lead to a resumption of a healthy lending and investment cycle.
On the shipping front, starting with container shipping, global consolidation is continuing. Maersk and Hamburg Sud, Hapag-Llyod and UASC and the NYK, MOL, K-Line merged container business called ONE. And there are rumors that more M & A will happen.
The 20,000 TEU ships are easing into various services and replacing the so called “smaller” ships to other routes. From India’s perspective, this may end up proving to be a great opportunity as ship owners are deploying some of their larger surplus tonnage to India. India is seeing routes, such as Middle East, East Coast Africa and South East Asia trades routes, growing substantively.
On a global basis, bulk carriers are showing intermittent signs of stabilising but until now not much of stability is seen. A similar scene is playing out in the tankers market as well. The offshore oil and gas shipping niche seems to be in a free fall with all classes of ships, crafts and rigs in lay ups.
It was, thus, heartening to observe that Reliance BP have committed to invest at least RS 40,000 crores in the various parts of exploration and developmental activities in the Indian oil and gas field. Such developments seem to point to an inflection point of expected growth in the immediate future.
In our group of companies, we remain relentlessly focused on:
- Principal and client value accretiveness
- Productivity, efficiency and cost consciousness
- To be a holistic solutions provider
- A digital and technology leader
It is with some amount of gratification that we can report steady progress of our various activities, locations and verticals. Our services business, including the ship agency activity, is seeing steady growth and various of our principals and customers have indicated a likely growth in the coming six to eight months. Furthermore, DIABOS continues to strive to achieve not only a market share but, more importantly, a technology and efficiency lead. The past three months has seen our terminals continue to grow in volume. Most importantly, KICT (Kandla) is working hard to grow volumes and provide efficient and effective services to ship owners and the trade.
Our logistics vertical soldiers ahead, whilst our project logistics and transportation division seeks new improved goals and targets. The BOXCOWORLD forwarding business is seeing a robust and committed growth and success.
Once again, India hopes and awaits a normal or, hopefully, good monsoon. As all factors are normal or positive, it would not be surprising if India could end the financial year 2017-18 with a GDP growth of 8%+. I am sure each and every one of you will join me in hoping for the same.
Krishna B. Kotak
Chairman - J M BAXI GROUP