Indian coastline stretches about 5700 kms on the mainland and about 7500 kms including the two island territories. With vast coast line, Indian Shipping Industry needs to develop more.
1.The overall Indian Shipping Scenario:
- With capacities in traditional shipbuilding nations such as Japan, South Korea and Norway booked for the next few years, global fleet owners have started looking at new destinations such as China, India and Vietnam to build their ships.Indian firms are increasingly getting into ship building and repairing as shipbuilding orders are expected to rise significantly to meet the boom in seaborne trade and increased offshore oil exploration.
- India currently has a market share of just 0.5% of the global shipbuilding market. Indian yards such as ABG Shipyard Ltd., Bharati Shipyard Ltd., Larsen & Toubro, Cochin Shipyard Ltd., Hindustan Shipyard Ltd., Mazagon Dock Ltd. and Tebma Shipyards Ltd. are looking to grab a bigger share of the global market and capture the space vacated by the closure of yards in Europe and other developed countries.
- Though India has 28 ship building yards, the largest ship built in the country is a 45,000 DWT vessel at Kochi Shipyard and none of the country’s shipyards have the capability to manufacture high-tech or sophisticated ships.
- Steel maker JSW is also planning to set up a shipbuilding facility either in Gujarat or in Maharashtra.
- India’s shipbuilding industry is expected to touch the $20 billion milestone by 2020, from close to $5 billion now which is about 1 percent by value of total global shipbuilding orders. Consequently, Indian ship builders are expanding their capacities with buyouts of other yards and assets. Shipping and engineering firms are also planning to set up shipbuilding yards to exploit the sector’s surging potential.
- Apart from existing players, the Tata Group, Shipping Corp. of India Ltd., the Jindal Group, Mercator Lines Ltd., Shapoorji Pallonji & Co. Ltd. and the Adani Group are also entering the shipbuilding business. The Gujarat state-controlled Gujarat Maritime Board is planning to set up 100 shipyards in 10 industrial clusters in the next five years. Garware Offshore has so far sold four designs to ABG Shipyard. The company has plans to set up a knowledge process outsourcing centre in India in collaboration with Havyard, which will design all types of marine assets. At present, Havyard is building two offshore ships for Garware Offshore.
- Engineering firm Larsen & Toubro already has one ship building yard in Gujarat state and plans to invest about $378.7m (15 billion rupees) for shipbuilding and a repair yard.
- Gujarat-based Adani group is setting up a ship building and repair yard at a cost of about $252.5m (10 billion rupees).
- Reliance Industries also plans to spend $2 billion on shipbuilding and dredging.
- Besides the location advantage that India enjoys since a large number of vessels sail through this part of Asia, Indian steel mills have started manufacturing steel plates used in shipbuilding.Earlier, shipbuilding steel used to be imported. Essar Steel is already manufacturing shipbuilding steel and plans to increase it with the commissioning of a 1.5-million-tonne plate plant in Gujarat next year.
- The government provided a 30-percent subsidy on value of ships built by Indian yards, which would sail under a foreign flag. The industry hopes this would be extended to help compete with their overseas competitors. This subsidy is also given to certain ships built for the local market. ABG Shipyard and its competitor Bharati Shipyard, which builds sophisticated offshore platform supply vessels, have started building rigs.
2.Bharati Shipyard planning Rs2,000-crore shipbuilding joint venture on east coast:
Already having Shipyards in Ghodbunder and Ratnagiri in Maharashtra State.
- Bharati Shipyard plans to set up a modern shipbuilding yard along India’s eastern coast at an investment of around Rs2,000 crore in a 50:50 joint venture with Apeejay Shipping
- The proposed shipyard, expected to start operations in 2009, will build superior ships of high tonnage and also cater to the global ship repairing business
3.Dolphin Offshore to buy shipyards, to enter shipbuilding:
- Dolphin Offshore Enterprises, the provider of offshore and onshore integrated services to much of the oil and gas industry has decided to move into ship building, for which it will buy shipyards.
- Dolphin Offshore started in 1979 as a diving contractor, and has expanded into diving and underwater services, marine operations and management services, topside/fabrication services, maintenance and modifications of offshore structures and ship repair.
- The company has earmarked an investment of Rs400 crore for the project
- Dolphin is reportedly evaluating two existing shipyards on the West Coast for possible acquisition.The company says that the Gujarat Maritime Board has allotted land at Jafrabad for the project, which will get off the ground in about two years, and would progress toward completion in three phases.
- The greenfield project will most probably positioned at the grass-root level, to build relatively smaller vessels of up to 100 metres (1,000-1,200 tonnes), which would be used by the oil and gas industry to assist in in-house repair and the fabrication business, and also for coastal trade, which is an area the company plans to expand into later.
- One of the shipyards under evaluation for possible acquisition has the requisite licences, even though it is yet to commence manufacturing. It’s present value is reportedly Rs30 crore, with a total outlay of Rs90 crore. The other shipyard is valued at Rs50-60 crore in all.
- Dolphin plans to finalize the deal in the next 2-3 months.The acquisition of these two shipyards would allow Dolphin access to shipbuilding expertise and the entire management of the shipyards, which would be an asset for the greenfield project at a later stage.
4.L&T to invest Rs1,500 crore in new high-tech shipbuilding yard:
click to enlarge
L&T’s Shipbuilding facility has been created at Hazira Works to cater to the needs of growing global demand for construction of specialized oceangoing vessels.The Shipbuilding facility recently set up for construction of high tech vessels and the facilities at the shipyard include prefabrication facilities such as shot blasting and priming , CNC cutting machine, semi panel line fabrication, unit assembly bay, block assembly and a slipway to launch the vessels along with a jetty for outfitting jobs for the ships under construction.The shipyard is geared up to take up construction of niche vessels such as specialized Heavy lift Cargo Vessels, CNG carriers, Chemical tankers, defense & para military vessels and other role specific vessels. Construction of specialized mid size vessels is being undertaken and capacity is being augmented by additional infrastructure such as ship lift system and additional outfitting workshops to extend the activities to ship repairs.
- Engineering and construction major Larsen & Toubro (L&T) will set up a major state-of-the-art shipbuilding yard at a cost of Rs1,500 crore.
- The company has identified three locations – Chennai in Tamil Nadu, Kakinada in Andhra Pradesh and Mundhra in Gujarat for the project.
- Once the location is finalised, the project is expected to be commissioned by 2009-2010.
- The L&T shipyard would have the capability to manufacture any type of ship, including frigates and destroyers for Navy and the Coast Guard.L&T already has a shipbuilding yard at Hazira, Gujarat, but the area there is not adequate for expansion and for making large ships.
- The new greenfield ship building yard, to come up on a 1,000-acre area, would have the capability to make all types of ships, including high-tech vessels, such as CNG, LNG carriers and containers up to 3 lakh dead weight tonnes (DWT).
5.Dubai Ports World to invest $2 billion in India operations:
- Dubai-based marine terminal operator Dubai Ports World (DP World) will invest $2 billion in its India operations.DP World operates five container terminals in the country and manages an estimated 40 per cent of the country’s container terminal operations.These include Chennai and Vishakapatnam on the east coast and Kochi, Mundhra and JNPT on the West coast.
- DP World owns the terminals at Kochi and Vishakapatnam while the Mundhra, JNPT and Chennai container terminals were acquired with P&O last year.
- DP World gained control of three terminals in India last year through its $6.8-billion acquisition of UK ports operator Peninsular & Oriental.DP World is eager to gain a presence in eastern India.
- India allows 100 per cent foreign direct investment for port development projects. It plans to raise 64 per cent of the proposed investments in ports from private companies. Container traffic is expected to clock growth rates of 15.5 per cent in the next five years and cargo traffic 7.7 per cent.DP World operates terminals in 24 countries.
6.Garware Offshore plans shipbuilding yard with Norway firm:
- Mumbai-based Garware Offshore Services Ltd., a company that offers ships for oil and gas exploration activities, plans to enter the shipbuilding business by setting up an exclusive facility for making offshore support vessels.
- This shipbuilding yard will be a joint venture with Norway-based ship manufacturer Havyard Leirvik AS, promoted by Havyard Group AS. Havyard Leirvik is a leader in making offshore ships, ice-breaking ships and other types of specialized vessels. According to the Shipyards Association of India, shipbuilding will entail an investment of about $76.1m by 2017.
- Reportedly, the venture could be 50:50, though nothing has been finalized. Garware Offshore had recently signed an agreement with Havyard Leirvik for exclusive representation for the marketing and sale of ships built by them and ship designs produced by Havyard Maritime AS to Indian shipping companies and yards. According to Shipyards Association of India, a New Delhi-based platform for shipyards, shipbuilding will entail a total investment of around Rs37,000 crore by 2012, and around $76.1m by 2017. The growth triggered by shipbuilding in ancillary and supporting industries will generate an additional income for the government through tax revenues of about Rs4,850 crore in 2012, and approximately Rs26,000 crore in 2017.
7.Gujarat is committed to coastline and shipping development:
click to enlarge
- Gujarat Government has expressed his commitment to develop the 1600-km-long coastline of Gujarat as ”the most prosperous zone” in the country.
- Dholera Port with its status of Special Economic Zone will become a role model of port development sector in the country. After the implementation of the Sagarkhedu Project, the 1600-km-long coastline of Gujarat will emerge as role model for port development in the country with well-developed small and medium size ports dotted along it.
- Proposals worth over Rs. 12,948 crore signed or approved in principle.Investment proposals worth over Rs.12,948 crore were either signed or approved in principle for the development of ship-building industry in Gujarat at the two-day “International seminar on ship-building opportunities,” which concluded 30 September 2007.
- Chairman and Managing Director of the Korea Maritime Consultants, Dong Shik Shin, saw an immense opportunity in Gujarat to develop the industry. He said he was “humbled” by the efforts of the State government and the GMB in organising the seminar. He advocated the setting up of a “well-integrated, well-coordinated and well-crafted” single-window government agency to professionally monitor, guide and support the ship-building industry and another government agency to formulate policies.
- The government, he suggested, would also have to invest in research and development, and arrange for training facilities at all levels and ensure supportive infrastructure to make the industry grow.
- MoU signed: 31 Memoranda of Understanding were signed during the seminar, it included Rs.3,515-crore worth of proposals already finalised, Rs.7,033 crore “approved in principle,” and Rs.2,300 crore worth of proposals at the initial stage of “expression of interest.”
- Agreement: Also, an agreement was signed for the setting up of a Vessel Traffic Port Management System (VTPMS) project in the Gulf of Cambay at a cost of Rs.100 crore.
- The Gulf of Cambay VTPMS, which would manage and control the movements of the sea-bound ships, would manage half the 1,600-km coastline in the State with the other half in the Gulf of Kutch already being covered by an existing VTPMS.
- A major private sector unit in the shipping industry in the country, Essar, signed a Rs.750-crore agreement for the re-launch of the Hazira-Dahej RO-RO terminal and common user dry cargo jetty in partnership with the GMB.
- The government intended to set up about 100 shipyards along the coastline on cluster concept with each cluster being declared a Special Economic Zone. Each cluster would have 10 to 15 ship-building yards with a capacity to build 0.3 to 0.6 million Dead Weight Tonnage (DWT) ships per annum.
- The State also intended to achieve a total annual turnover of 30 million Dead Weight Tonnage by the year 2020, equivalent to the current turnover of the Japanese ship-building yards.
- Three universities had proposed marine engineering courses while similar courses at the diploma level would also be started in several ITIs.
8.All decks cleared for Vizhinjam port project:
click to enlarge
- Timeline: $1.3 bn int’l container trans-shipment hub to open by 2012.
- After several delays and false starts, construction work at one of India’s first international container trans-shipment hub and deepwater port, set to come up at Vizhinjam near Thiruvananthapuram, is finally expected to commence by early 2009. The $1.3-billion project, slated to come up on the public private partnership route, has already witnessed interest from over 30 domestic and international port players, even as more companies are expected to jump into the fray over the next month.
- The players that have purchased bid documents for the project include foreign giants like Maersk and the Singapore Port Authority, while domestic heavyweights like Reliance and Larsen and Toubro (L&T) among others, are learnt to have evinced interest as well. This is the second time that bids have been called for the project. Last year, merely two bids were received and the Chinese consortium granted the tender by the state government was rejected by the Centre for want of adequate security clearance, making the project a non-starter.
- The port, with a concession period of 30 years, will see three phases of development. In the first phase, Vizhinjam would be able to accommodate ships of 8,000 TEUs (twenty-foot equivalent units), while subsequently, by 2012, it would be able to dock giant vessels as big as 12,000 TEUs, with a total capacity to handle 5.3 mn TEUs of cargo every year.
- The port’s significance attaches from the fact that it would have a natural depth (draft) of about 20 metres, while being conveniently located at a distance of just 10 nautical miles from international shipping routes.
- The trend in international shipping is the use of supertankers and huge container ships. Currently, more than 40 VLCS (very large container ships over 7500 TEUs) are already in service and 160 are being constructed.The 11,000 TEU ‘Evelyn Maersk’ vessel is already in operation globally and vessels as big as 18,000 TEUs will be commissioned into the global shipping fleet. This port should be able to cater to such large super vessels.
9.Go ahead for Mundra port IPO:
click to enlarge
- Indian regulatory authorities have cleared the way for the proposed $380 million initial public offering (IPO) of the Mundra Port and Special Economic Zone Ltd (MPSEZL). The issue is expected to be floated on November 1. Mundra Port and Special Economic Zone, the largest privately owned and operated port in India, is being developed by the Adani Group. One of the Group’s projects is the construction of a second container terminal at the port. Mundra’s current container facility, the Mundra International Container Terminal, is being managed by DP World under a sub-concession agreement.
- The Adani Group has also just built an inland railway container terminal at the Mundra Special Economic Zone, and industry sources say that the terminal will be operational come October.Most of the money raised by the IPO will be used to finance construction and development of basic infrastructure and allied facilities in the proposed SEZ and south basin terminal for coal and other cargo at Mundra Port.The IPO has also been scheduled to finance the projects lined up by Adani Petronet (Dahej) Port and Adani Logistics.
- Recent reports say that the world’s third-largest shipping line, France’s CMA CGM Group, is poised to acquire a 26% stake in Adani Logistics.
10.Malaysian firm to operate Karaikal port:
click to enlarge
- Malaysia’s Pembinaan Redzai Sdn Bhd has won a partnership with India’s MARG Constructions Ltd to set up a joint venture to run a new deep-water port at Karaikal in Puducherry.
- Pembinaan Redzai has the technology and the skill sets.
- The Mumbai-listed infrastructure development firm (MARG Constructions) is currently building a deep-water port complex at the port of Karaikal, on the Tamil Nadu-Puducherry coast. Reports this month had said that Marg was looking for partner to run the container and cargo handling operations.
- According to MARG Constructions, the two companies have signed an MOU to explore potential cooperation across the board for the Karaikal project including strategic, management and operational expertise. Pembinaan Redzai owns some 40% of Westports Holdings Sdn Bhd which is the holding company for Westports Malaysia Sdn Bhd which runs one of two container terminals at Malaysia’s Port Klang.
- Chennai-based MARG Constructions last year signed a 30-year agreement with the Puducherry government to develop and operate a new port at Karaikal.
The agreement, which allows MARG Constructions to invite partners, calls for the port to be developed to handle more than 10 million metric tonnes (mt) of cargo per year.
- Reports say that the first phase, costing some $105 million (416 crore) will begin operations in October 2008, with two common berths to handle coal and general cargo including containers. The two berths have been scheduled for a maximum depth of 14 metres, which will allow ships with a cargo capacity of 60,000 tonnes to call.
- Second phase development will deepen both channel and berth depth to 16 metres, allowing ships with a cargo capacity of 100,000 tonnes to call. It will also provide a dedicated berth exclusively for container handling.
- Reports say that Pembinaan Redzai will have the freedom to set port and terminal handling tariffs without consultation or regulation.
India’s government-owned ports have tariffs are set by a tariff regulator such as the Tariff Authority for Major Ports (TAMP).
11.Tatas to look at shipbuilding:
- The Tata group is looking at the possibility of entering the shipbuilding business even as India looks to boost its shipbuilding capabilities to meet growing global demand for cargo carrying ships.
- The Tata group has shown interest in building a shipyard near Shivrajpur in Gujarat after the state government invited expressions of interest from private firms, according to a senior Gujarat government official.
- The group, which makes everything from salt to cars, is conducting a feasibility study on the project, said people familiar with the matter who did not wish to be identified. Tata Steel Ltd makes steel, a key input for constructing ships.
- In December 2006, the company signed an agreement to set up a 50:50 joint venture with Japanese transportation firm Nippon Yusen Kabushiki Kaisha (NYK) Line for setting up a shipping company. Developing a shipbuilding and repair yard would have great advantages for the Tata group given its association with NYK Line that has a fleet of more than 700 ships Responding to the opportunity for building steel plates with larger width, steel makers such as Essar Steel and Tata Steel are planning to put up plate rolling mills that can make steel plates having a width of more than 2.5 metres.
- Typically, for making 10-15 ships in a year, a yard would require close to 70,000 tonnes of steel, and steel makers such as Tata Steel, Essar Steel and Jindal Steel are now eyeing the shipbuilding business because the steel they make can also be utilized for constructing ships at their own yards. Increasing global economic activity and India’s booming economy have boosted demand for ships to transport cargo.
12.SembMarine pays $29m for Pipavav Shipyard Ltd (PSL), India shipyard stake:
SEMBCORP Marine, the world’s second largest builder of offshore oil rigs, is buying a 3.31 per cent stake in an Indian shipyard for $29.12 million.This will be its first investment in India, one of the world’s fastest growing economies, and is seen as an investment in the country’s future.
- SembCorp Marine, has signed an investment agreement with Pipavav Shipyard Ltd (PSL) and its promoters, SKIL Infrastructure Ltd, to subscribe for 17.5 million shares in PSL at 45 rupees apiece.
- Located within the vicinity of Pipavav Port, Gujarat in India, PSL is strategically located on the west coast of India along the Middle East-Singapore sea route.
- The 85-hectare shipyard is poised to be one of the largest shipbuilding yards in India.
- The shipyard to-date has secured contracts worth a total of US$1 billion for the construction of 22 panamax-sized ships with options for an additional four vessels.
- Currently, the shipyard infrastructure is under development and construction and is scheduled for completion in September 2008. This comprised a 600-metre long VLCC drydock equipped with shipbuilding workshop facilities and equipment.
- The shipyard infrastructure is geared towards the building of large vessels up to VLCC size in the future.
OldSailor expects that developments would take place without cost and time over run.
Update: September 30, 2008
Port majors in countries like China, France and Britain are keen to invest in Indian ports. This could be towards setting up greenfield projects, improving productivity at existing ports and setting up other facilities like container terminals and roads.The total investment is expected to cross Rs 10,000 crore over one year. Read more from The Economic Times.
Did you enjoy this article? Please subscribe to RSS Feed to receive all the updates!
- No related posts found