SINGAPORE - There are very few in the ship recycling industry who go by the term cash buyer.
A well-known name among them is Wirana Shipping Corporation, a Singapore-based firm founded in 1983 by Mr Rakesh Tulshyan. Wirana's second director, shareholder and chief executive officer Rakesh Khetan, known as Billu in the industry, came on board in 1995.
"When ship recyclers buy from us, they pay by LC (letter of credit). When we buy the ships from its owners, we pay cash. That is how the term cash buyer came about - the guy who pays cash for the vessel as opposed to LC," explained Wirana's chief financial officer Keyur J. Dave.
"It was by accident that Mr Tulshyan was introduced to the ship recycling business. We have not looked back since," said Mr Dave, adding that prior to moving into shipping,
Mr Tulshyan dealt in recycling waste paper. With over 30 years' experience dealing with vessel buyers and sellers directly, shipowners contact Wirana directly when they are planning on selling their old vessels. At other times, Wirana gets its leads from brokers in the industry.
Said Mr Dave: "We're the oldest cash buyer in the market. So all the major owners and brokers know us and want to do business with us, because we have built up a very good reputation with them."
Saying that they get the most number of ships from countries like Greece, Norway, Germany and Japan, he added: "Today, we are buying from most of the major owners from all continents and we sell them to the major markets in India, Pakistan, Bangladesh and China for recycling."
Why do shipowners choose to sell their ships for recycling through Wirana? Mr Dave said: "We're, in a way, an insurance for the sellers. There is no sanctity of contract in the sub-continent, especially in India, Bangladesh and Pakistan. But because we are well aware and have built good relations over the years with these people (ship breakers), it is difficult for them to go back on their contract.
"However, the sellers cannot ensure that. They may face a lot of problems if they try to go there directly. That is why they are willing to sell it to us to remove that risk."
Over the years Wirana has bought and sold more than 2,000 ships, with an annual average of about 150 vessels in recent years.
As it is with businesses, it was not always smooth sailing, and Wirana has had to deal with court cases. But these were all small cases, which arose from the owners misdescribing their ships in the contract, and not delivering the ship accordingly. Wirana has always won these cases, said Mr Dave.
He also mentioned that the shipping business is, by nature, risky. He said: "It is risky because the asset is on water. Even after all is said and done, it is still at the mercy of the seas."
There are other risks as well, such as movement in prices, government regulations, environmental concerns, currency fluctuations, competition and the threat of pirate attacks.
Despite the risks, Wirana has managed to turn in profits every year or, at the very least, break even.
So can Wirana's success be attributed to high levels of expertise and not making any mistakes?
Not quite, as Mr Dave explained: "In the early years, there was room to make mistakes and still make a profit, but now the margins are very thin. In this trade, you have a very high volume but very low margin, because the trader does not really add much value like the end user or the manufacturer."
Wirana also holds two Guinness Word Records for having sold two of the world's ultra-large crude carriers (ULCC) vessels, for demolition in 2002 and 2003.
This helped the company gain immense brand value, boosting its reputation in the industry, as well as achieve handsome profits.
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