Bangalore: Entreprenuer Rajeev Chandrasekhar’s Hindustan Infrastructure Projects and Engineering Pvt. Ltd plans to set up a shipbuilding facility at Vijaydurg Port, which was recently awarded to the firm by the Maharashtra government for developing and operating an all-weather port on a 50-year contract.
Building blocks: ABG Shipyard in Gujarat. India’s shipbuilding capacity is projected to double?to?4mt?by 2012
“It makes sense to have a shipbuilding facility at the port. We will bring in a strategic partner who is a specialist in building ships to set up the facility,” said a company executive who did not want to be named because of a company policy on speaking to the media.
Hindustan Infrastructure will have to invest about Rs1,200 crore to set up basic infrastructure facilities at the port. “Our strategy is to invest in building port infrastructure while bringing in partners for various port operations and related activities, including shipbuilding,” the executive said.
The first phase of the port, with the capacity to handle about 20 million tonnes (mt) of cargo a year, will become operational by 2011-12. When fully operational, it would be able to handle 40mt of cargo a year.
With capacities in traditional shipbuilding countries such as Japan, Korea and Norway booked for the next few years, global fleet owners have started looking at new destinations such as China, Vietnam and India to build ships. By setting up a shipbuilding facility, Hindustan Infrastructure is trying to tap into this opportunity.
The company is promoted by Jupiter Capital, the venture development firm floated by Chandrasekhar, former owner of BPL Mobile and a member of the Rajya Sabha, to focus on infrastructure, media and technology ventures.
Hindustan Infrastructure is also pursuing investment opportunities in transportation, utilities (such as water), electricity transmission and aviation.
Local builders, such as ABG Shipyard Ltd, Bharati Shipyard Ltd and Larsen and Toubro Ltd, are also expanding capacities by acquiring small yards or building new ones to cater to the rising demand. Larsen and Toubro, for instance, is building a Rs3,000 crore facility at Kattupalli in Tamil Nadu.
India’s share in global shipbuilding is expected to be around 15%, or $22 billion, by 2020 from the current level of 0.4%, aided mainly by cost competitiveness and abundant supply of skilled manpower, according to a report by Mumbai-based consultancy i-maritime Consultancy Pvt. Ltd.
Annual global shipbuilding capacity is expected to peak at 50mt in 2010 before steadying at 40-45mt in the next five years, John Stansfeld, president of ship classification society Lloyds Register Asia, said during a recent visit to India.
Classification societies set technical rules on safety and protection of ships, confirm that designs and calculations meet these rules, survey ships and structures during construction and commissioning, and periodically survey vessels to ensure they continue to meet the rules.
India has some 23 shipyards, seven of which are owned by the Union government and two by state governments. The rest are owned by private companies including ABG, Bharati, Pipavav Shipyard Ltd and Larsen and Toubro.
These yards have a capacity to build ships with a combined cargo carrying capacity of 2.8mt a year, considered small by global standards. Local yards are building about 245 ships with a capacity of 2.5mt valued at more than Rs20,000 crore. India’s shipbuilding capacity is projected to double to 4mt by 2012 and rise to 19mt by 2017.
There is also a huge captive market awaiting local shipbuilders. Indian shipping firms need to invest $20 billion over the next five years to buy new ships to replace old ones and expand fleet to meet the growing demand for carrying cargo.
India currently owns 1.5% of the global shipping fleet and is ranked 17th in the world.