Tomini sticks with dry bulk and eyes buying opportunities

Secondhand buys are in sight as owner takes in latest bulker newbuildings.

Visitors to the office of Tomini Shipping may be surprised when they arrive at its given address in the Al Barsha district of Dubai, which turns out to be a large showroom full of vintage sports cars. While the veteran Porsches, Lamborghinis, DeLoreans and Ford Thunderbirds — all part of the personal collection of Tomini chairman Imtiaz Shaikh — form a pleasing backdrop, the serious business of shipping is still first and foremost on the minds of the senior management.

Tomini has been in business for over five decades as a bulker owner and decided in 2013 to focus exclusively on dry bulk as its core business, ordering nine ultramax bulkers at China Shipping Industry Jiangsu Co (CIC Jiangsu Shipyard). At the same time, it bought an additional five modern panamax bulkers on the secondhand market.

Tomini has so far taken delivery of two of the CIC Jiangsu ultramaxes but chief executive Nitin Mehta reveals that the last two ships in the order were cancelled as banks were not forthcoming with acceptable financing deals because of the bad markets.

“CIC Jiangsu was very understanding and allowed us to cancel without penalty,” he said.

The remaining five ultramaxes will be delivered by the end of next year.

The seven ships that Tomini currently has on the water are managed commercially out of Denmark by Alpina Chartering. It is a strategic relationship that dates back more than 35 years. The ships are deployed on a mix of short and long-term charters, and some are operated in pools.

Technical management was, until very recently, farmed out to third-party managers but the company will bring the business in-house. It set up its own fleet management department earlier this year and the ships are gradually being transferred across as its capability strengthens.

Norwegian shipmanagement veteran Oscar Palacios was recruited to head fleet management, with another shipmanagement veteran Nishant Pandey taking on the role of marine operations head.

Mehta is now keen to expand the Tomini bulker fleet through secondhand purchases.

“It is not a good market but it presents good opportunities. In particular, there are a lot of banks looking to offload distressed assets. Valuations are very good from a buyer’s perspective,” Mehta said.

Tomini is actively inspecting vessels with a view to buying up to five in the very near future. This will be paid outright using Tomini’s cash reserves.

Preference is being shown for vessels of between four and five years old.

“Ships of this age were all ordered before the crisis and were well-built. They are better than more recently built ships, which have had a lot of corners cut when building because the yards were forced to sell them cheap,” said Pandey.

“That is why we are not interested in newbuilding resales,” added Mehta.

As head of fleet management, Palacios has been playing an active role in inspecting potential acquisition candidates and he notes that the dire markets have taken their toll on vessel maintenance.

“This is one of the reasons why we are looking at four to five-year-old ships. They are still generally in good condition. The main problems you see with them now are that the painting is not well maintained and the spare parts inventories on board are low,” he said.

“We do due diligence before we go out and inspect. We do a class search and we check the track record of the owner and manager, so we have a good idea what to expect. The problem when you inspect a ship is that you can’t see how the equipment is working. But with young, well-built ships you don’t expect much wear and tear.”

Mehta cautions that the process of buying a distressed vessel takes longer than an owner to owner sale as bank procedures are bureaucratic and time consuming.

“We are long-term players. We know how to be patient,” he concluded.

Source: TradeWinds