Feature 4 | INDIAN REPORT From here to uncertainty
Gujarat shipyard Memoranda of Understanding raise numerous questions. A report by Shirish Nadkarni, in Mumbai.
(MoUs) valued at over Rs410 billion (US$8.33 billion) in the chemicals, petrochemicals and shipbuilding sector were signed by the end of the annual two-day Vibrant Gujarat Global Investors’ Summit, held recently in Ahmedabad. Tese included over Rs100 billion ($2.05
A
billion) worth of MoUs in the shipbuilding sector, despite the recent downturn in shipping and the global economic meltdown that have combined to see a spate of newbuilding order cancellations, especially in China. A number of existing and aspiring
shipbuilders, including Bharati Shipyard, Dolphin Offshore, Pipavav Shipyard, Afcons Infrastructure, Assam Company, Jindal Shipyard and Tebma Shipyard, have committed to investing in shipyard projects in Gujarat. Te Narendra Modi-led state government
has claimed that some 10 projects have been short-listed for investment in the shipyard arena, for which the authorities are planning shipyard clusters. Te signed MoUs reveal that Chennai-
based Tebma is planning to pump in Rs10 billion to develop a shipyard in the Dahej Special Economic Zone (SEZ) region, while Dolphin Offshore, which has expertise in providing underwater services to the offshore oil and gas industry in India and abroad, is planning to pump in Rs4.5 billion for a shipyard project in Jaffrabad. Assam Company, a diversified group
with interests ranging from tea to oil and gas, is aiming to foray into shipbuilding and shiprepair by setting up a shipyard project at Dahej at an estimated investment of Rs7.5 billion. It had signed an MoU in an earlier Vibrant Gujarat summit for setting up a hydrocarbon SEZ in Kutch at an outlay of Rs20 billion. Shri Mataji Ashapura Ports, in consortium
with the Mumbai-based Allcargo Global Logistics and Infrastructure Leasing &
The Naval Architect February 2009
Financial Services (IL&FS), has signed an MoU for Rs20 billion for a shipyard project at Nana Laija. In addition, construction group Shapoorji
Pallonji, which has already confirmed Rs10 billion for developing a greenfield port at Sinar, is aiming to set up a shipyard at Mahuva through Afcons Infrastructure (in which the group owns a controlling equity stake of 51%) at a cost of Rs6 billion. Bharati Shipyard has earmarked Rs6.20
billion for a shipyard project near Nava Ratanpur and Saratanpar. Dahej, which has been declared a petrochemicals and chemicals investment region, will see four shipyard projects, with Jindal Shipyard and Dahej Shipyard aiming to set their yards in the area. ABG Shipyard has revealed plans to
set up yet another greenfield shipyard in southern Gujarat, at an estimated outlay of Rs12 billion, on a plot of 300 acres. “Te yard will cater to the larger and more
sophisticated genre of ships and offshore vessels,” said ABG’s Chief Financial Officer Dhananjay Datar. “It will have a capacity of building six to eight vessels per annum, and ought to generate annual revenues of over Rs20 billion.” Te company is banking on offering its services to shipowners who have recently
mazing as it sounds in these bleak economic times, a total of 39 memoranda of understanding
Ray Stewart, chief executive officer of Pipavav Shipyard.
cancelled a number of newbuilding orders at yards across the globe. It looks to build up its order-book to Rs100 billion.
Offshore flood Indian yards have recently been flooded with orders for offshore support vessels (OSVs), a segment benefiting from the expansion of firms engaged in oil and gas exploration and production. Worldwide, offshore vessels make up 45% of the total order for new ships. “Te surge in demand for oil and increased
exploration planned by oil companies has generated a huge demand for offshore vessels,” said Mr Datar. “We have estimated the demand in India for offshore vessels till 2012 to be 3.95 million dwt.” This trend was confirmed by a Citi
Asia-Pacific report which said: “Indian yards have recently announced new orders in the offshore services space, which is also their core area of strength. With huge order inflows last year, they are now comfortably placed for the next few years and are focusing more on execution of their capacity expansion.” Bharati Shipyard, for one, is looking at
offshore vessels as the most prospective area of growth. Around 70% of the company’s orderbook consists of offshore vessels; and the company is planning an investment of Rs10-12 billion in building infrastructure over the next three years. “Since we have operations at five locations,
the synergy between these yards allows us to have a tremendous amount of flexibility and construct a large number of vessels in a limited time period,” said Bharati Shipyard’s joint managing director P C Kapoor. “While offshore vessels form the bulk of
our orderbook, we are planning to build large vessels over 200m in length as well as oil exploration rigs, the first of which is already under construction at our shipyard in Dabhol (Southern Maharashtra).”
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