Mumbai: India’s biggest private sector shipbuilder ABG Shipyard Ltd plans to invest Rs1,300-1,400 crore to expand capacity to meet the rising global demand for building large cargo carrying ships.
After the expansion, the company hopes to build large size ships, including very large crude carriers (VLCCs) at its shipyard located at Magdalla Port in Surat, Gujarat, said Rishi Agarwal, managing director of ABG. A VLCC can typically carry as much as 320,000 tonnes of crude oil.
Indian shipbuilders are moving from building small- and medium-size ships to constructing large ones as fleet owners chase economies of scale.
Workers at the ABG Shipyard facility in Surat, Gujarat. After the expansion, the company hopes to build large-size ships, including very large crude carriers at the shipyard
“We are acquiring additional land along Vipul Shipyard to create facilities that can increase the capacity of the Surat yard,” Agarwal said. Besides, ABG is also looking at setting up a new yard in Surat, he added, declining to give details on this. “The planned expansion will increase our shipbuilding capacity two-three times,” Agarwal said.
The firm’s Surat facility can currently build 32 ships in a year. In May this year, ABG had agreed to acquire Vipul Shipyard Ltd, its neighbour at Magdalla port, to augment capacity to 40 ships in a year.
ABG is currently building its second shipyard across 40 acres at Dahej in Gujarat at a cost of Rs950 crore. The first phase of the project, costing Rs400 crore, will give the company facilities the ability to build eight ships simultaneously, with each ship having a capacity of 120,000 tonnes. These ships will meet growing demand in the dry bulk (cargo) segment. The company expects to complete this phase of the project by April.
The second phase, costing Rs550 crore, will give the company to build jack-up rigs used in deep-water oil drilling operations. The company expects to start constructing rigs in December 2008 and will be able to build four rigs at a time.
ABG has orders in hand to build ships worth Rs7,121 crore.
Global shipowners are building more ships at Indian yards as a scarcity of shipbuilding slots in maritime strongholds such as South Korea, Japan and China force them to look at new destinations including India. As a result, Indian yards such as ABG, Bharati Shipyard Ltd and state-run Cochin Shipyard Ltd are looking to grab a higher share of the global shipbuilding market and capture the space vacated by the closure of yards in Europe and other developed countries.
Local builders, such as ABG and Bharati, are building capacities by acquiring existing yards or building new ones. Bharati is building a new yard in Mangalore that will add to its facilities located at Ratnagiri and Ghodbunder (Thane), both in Maharashtra, and one in Goa.
Bharati also plans to build a new yard at Dhamra in Orissa through a joint venture with shipping firm Apeejay Shipping Ltd at a cost of Rs1,500-2,000 crore.
Pipavav Shipyard Ltd, promoted by Skil Infrastructure Ltd, will start building ships from January at its facility located at Pipavav Port inGujarat.
India’s biggest engineering and construction firm, Larsen and Toubro Ltd, also plans to build a new yard at Kattupalli in Tamil Nadu at a cost of Rs1,500 crore. L&T ventured into shipbuilding last year by converting a portion of its heavy engineering complex at Hazira in Surat into a shipyard.
Good Earth Maritime Ltd proposes to build a shipbuilding facility at Cuddalore district of Tamil Nadu with an investment of Rs2,000 crore.
Pipavav Shipyard and the planned new facilities of Bharati, L&T and Good Earth Maritime will be capable of building VLCCs, a key shipbuilding segment from which local yards have been absent so far.