Apeejay, Bharati tie up to build ship ancillary units

Apeejay, Bharati tie up to build ship ancillary units
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First Published: Tue, Jul 29 2008. 10 44 PM IST

Flowing in: The ABG shipyard in Surat, Gujarat. With capacities in traditional shipbuilding countries such as Japan, South Korea and Norway booked for the next few years, global fleet owners are now l
Flowing in: The ABG shipyard in Surat, Gujarat. With capacities in traditional shipbuilding countries such as Japan, South Korea and Norway booked for the next few years, global fleet owners are now l
Updated: Tue, Jul 29 2008. 10 44 PM IST
Bangalore: The privately held Apeejay Shipping Ltd, run by Kolkata-based Apeejay Surendra Group, plans to set up ancillary parks close the shipbuilding yards it proposes to build in West Bengal and Orissa to ensure prompt supply of cheaper ship parts, a top executive said.
Flowing in: The ABG shipyard in Surat, Gujarat. With capacities in traditional shipbuilding countries such as Japan, South Korea and Norway booked for the next few years, global fleet owners are now looking at China, India and Vietnam to build ships. (Photograph by Ashesh Shah / MINT)
Apeejay—in partnership with Mumbai-based Bharati Shipyard Ltd—intends to spend nearly Rs4,500 crore to build two yards in Haldia, West Bengal and Badrak, Orissa, which are expected to build their first ships by 2011.
“We have decided in principle to set up shipbuilding ancillary units in the vicinity of the new yards,” said S. Daspatnaik, chief executive officer of Bengal Shipyard Ltd and Oceanic Shipyard Ltd, the two companies that have been formed to execute the projects.
By building the ancillary parks, the joint venture partners are taking an integrated approach to shipbuilding, which would include ship design, construction and ancillary units.
Currently, shipbuilders have to import many parts from overseas as they are not locally manufactured. This often leads to delays given the tight order book position of parts makers due to the boom in global shipbuilding.
Apeejay will invite specialist makers of ship parts to set up their own units, or team up with entities in which the Apeejay-Bharati combine may take a stake. “The extent of our equity participation in these units will depend on the terms, including buy-back arrangements of these parts,” Daspatnaik said. The firm would hire Korea Maritime Consultants Co. Ltd (Komac) to help design the basic layout of the two shipyards, he added.
Komac, a private organization of naval architects and marine engineers, has been involved in the planning of new shipyard projects and yard expansions in Korea, the world’s biggest ship building nation.
The planned 800-1,000-acre shipbuilding facility near Dhamra in Orissa’s Badrak district has sufficient depth to build and repair large crude oil carriers capable of holding 320,000 tonnes of oil. The Haldia facility, however, will only be able to build mid-sized ships due to depth restrictions.
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 China, India and Vietnam to build ships.
India has 23 shipyards, seven of which are owned by the Centre and two by state governments. The rest are owned by private firms, including ABG Shipyard Ltd, Pipavav Shipyard Ltd, Larsen and Toubro Ltd (L&T) and Bharati. These yards have a capacity to build ships with a combined cargo carrying capacity of 2.5 million tonnes (mt) a year, considered small by global standards.
Annual global shipbuilding capacity is expected to peak at 50mt in 2010, before steadying at 40-45mt in the next five years, according to John Stansfeld, president of ship classification society Lloyd’s Register Asia. India’s shipbuilding capacity is projected to rise to 4mt by 2012 and further to 19mt by 2017, aided mainly by cost competitiveness, and availability of cheap and skilled labour, according to audit and consultancy firm KPMG India Pvt. Ltd. India will then have a 7.5% share of the global market, it said in a recent report.
Labour constitutes 15-25% of the total cost of building a ship. Local builders such as ABG, Bharati and L&T are expanding capacities by acquiring small yards, or building new ones to cater to the rising demand. L&T, for instance, is building a Rs3,000 crore facility at Kattupalli in Tamil Nadu. Ship-owning firm Goodearth Maritime Ltd is also investing more than Rs2,000 crore to build a facility at Cuddalore in Tamil Nadu.
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First Published: Tue, Jul 29 2008. 10 44 PM IST
More Topics: Apeejay | Bharati | Shipbuilding | Kolkata | Bengal |