Varun Shipping Co. Ltd has applied for a fresh licence to operate ships under a new entity after its earlier licence was annulled last week due to lapses, director general of shipping Gautam Chatterjee said.

"We have not yet granted approval for a new DoC (Document of Compliance, or the licence to operate ships)," Chatterjee said by phone from Mumbai.

"Yudhishthir Khatau, the chairman and managing director of Varun Shipping, is claiming that he has surrendered the earlier DoC and applied for a fresh interim DoC under a new entity following a court approved re-organization of his company," Chatterjee added.

The re-organization involved splitting the company, which runs one of the world's largest fleet of liquefied petroleum gas (LPG) tankers, into three separate businesses-for LPG tankers, for crude oil tankers, and for ships used to support offshore oil exploration.

Mumbai-listed Varun Shipping has a fleet of 18 ships comprising 10 LPG carriers, three crude oil tankers and five so-called anchor handling, tug and supply vessels, or AHTSVs, that are used to support offshore oil exploration activities.

Of these, eight ships-six LPG carriers and two AHTSVs-are registered in India and fly the Indian flag. One LPG carrier each is registered in Singapore, Cyprus, Indonesia and Marshall Islands, three crude tankers are registered in Singapore and three AHTSVs are registered in Cyprus.

The application for a new interim DoC has been filed in the name of Varun Global Pvt. Ltd, the ship management company formed after the re-organization. It will look after ship management services for all the three sectors.

A DoC certifies that a ship-owning company is complying with the requirements of the International Management Code for the Safe Operation of Ships and for Pollution Prevention (ISM Code) of the International Maritime Organization.

A DoC is issued by the maritime administration where a ship is registered, which in Varun's case is India's maritime regulator the Directorate General of Shipping (DGS). Failure to confirm to the rules could lead to suspension/withdrawal or cancellation of the DoC.

In Varun's case, the cancellation of its DoC will apply only to its Indian-registered ships over which the maritime regulator has jurisdiction.

"The issue whether the earlier DoC issued to Varun Shipping can be converted and made applicable to a new company is something that needs to be examined. I will hear him (Khatau) out and my department officials before taking a call on that," Chatterjee said. "The earlier DoC expired because he didn't make an effort to revive the DoC by following the procedures."
Khatau said it was "incorrect" to say directorate general of shipping had withdrawn Varun's licence to operate ships. "We have ourselves surrendered the DoC to the directorate general of shipping as we have applied for a fresh DoC in the name of Varun Global Pvt. Ltd following the business re-organization," Khatau said.

Khatau had applied for a fresh interim DoC under the name of Varun Global before 4 March, when his earlier DoC was invalidated, an official directly involved in the matter at the directorate general of shipping said.

"We told Khatau clearly that we cannot consider issuing a new DoC even on an interim basis unless he fulfilled the earlier commitment given to us on a credible financial package for payment of wage arrears to crew, payment of dues to service providers and operationalizing laid-up ships by undertaking mandatory dry-docking of ships for safety surveys," the official said. Statutory surveys and certifications on six of Varun's eight Indian ships were overdue for several months, rendering them unsafe and unseaworthy, the regulator said.

When Varun Shipping failed to undertake the mandatory annual verification DoC audit on 3 March, the DoC became automatically invalid and was withdrawn by the regulator the next day. "After that Khatau came and surrendered the earlier DoC," the official explained, adding that Khatau's decision to surrender the DoC after 4 March had "no meaning".

"The idea is not to close down an Indian shipping company," said Chatterjee, the director general of shipping. "The idea is to make him (Khatau) fulfil his earlier commitment on payment of arrears of crew wages and operationalize laid-up ships. I still keep getting all kinds of reports from crew about non-payment of wages."