Shreyas Shipping’s share price jumped 33 per cent in just two days after a vessel-sharing agreement with the Shipping Corporation of India. The arrangement will help the company expand its presence on the east-west trade lane. Speaking to Bloomberg TV India , Shreyas Shipping CEO VK Singh says the deal with SCI increases capacity by 1,600-1,700 TEUs or 22,000 tonnes per month.

This will increase the top-line by 15 per cent, he said. Moreover, the company is looking forward to a similar arrangement with the SCI on the Yangon service as well as the Kolkata-Vizag route, he added.

What is your arrangement with the SCI and how does it benefit you?

We have joined four of our vessels with four of SCI’s and made it two loops going all the way from the east coast to Jebel Ali (Dubai) and coming back to the west coast. So, we are going to serve on the east-coast and west-coast linkage as well as to Jebel Ali. With two loops going on a weekly basis, we have between us added one large vessel of SCI, 4,400 TEU space, and of that 50 per cent of space is taken by us on slot-purchase basis. So we have increased our capacity overall.

And at the same time, the overall loading that we were earlier doing on our four vessels, will now increase to eight vessels. That virtually gives us more sailings on a monthly basis with eight vessels between East and West and Jebel Ali, which gives more scope for large tonnage.

It also gives us better frequency and transit time for our customers. So definitely we can look at maximising the space, and optimising the vessels deployed on the two services and their frequency.

With this deal with the SCI, what type of savings are you looking at?

We have not increased our number of vessels. But at the same time, we are going to use a vessel capacity of almost 1,600-1,700 TEUs or 22,000 tonnes additionally on their vessels on a cost purchase basis, which is just like operating cost purchase basis. So, we will be utilising that space to increase our revenue.

Can you quantify the increase in your tonnage with the sharing of these vessels? And how much extra revenue will this bring in?

Our tonnage will go up by almost 22,000 tonnes deadweight capacity on a round trip on a monthly basis. Virtually, on this trade lane, that is an increase of about 15-18 per cent of capacity that we had deployed earlier. So, with that increase in capacity, we are expecting roughly 15-per cent growth on the top-line on this lane itself.

And the bottom-line will also go up with that because that is the additional space we are taking from the SCI. So that is one part of the alignment.

The second part is: we have charted to the SCI on the Yangon service, where they will be operating. And we will also be buying slots on that service. At the same time, the SCI will be buying slots on our other services on the east coast, which we are connecting between Kolkata and Vizag. So we have better utilisation from both sides.

So, more and more volume can come with the joint effort of both the companies. It definitely results in better utilisation of the vessels, and the throughput, revenue and top-line goes up. Even though we will definitely incur higher costs for the additional purchase of slots, we should be able to make additional 12 per cent in net profits.

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