Bangalore: Reinforcing India’s growing stature as a destination for building ships, the country’s biggest engineering firm Larsen and Toubro Ltd (L&T) has won a contract valued at about $240 million (Rs962.4 crore) to build four specialized ships for Dutch company RollDock BV.
Meeting demand: Workers at L&T’s shipbuilding yard in Hazira, Gujarat. The firm is currently building eight ships valued at about Rs1,150 crore. These include six for RollDock and two for BigLift Shipping.
Indian companies are currently building about 245 ships worth more than Rs20,000 crore. Of this, about 70% are for overseas clients, who are placing orders at Indian yards as shipbuilding facilities in maritime strongholds such as Japan, South Korea and Norway are fully booked till 2011.
“The contract involves a firm order for building two ships, each with a capacity to carry up to 10,000 tonnes of modules for the offshore oil industry, and options for two more,” a person familiar with the deal said. He did not want to be identified because the deal has not been made public yet.
Each ship will cost about $60 million to build. These will be built at L&T’s shipyard at Hazira in Gujarat and would take the firm’s order book to 12 ships.
A spokesperson for L&T declined to comment.
Soaring global oil prices have led oil explorers to pump in millions of dollars to prospect for oil and gas under the ocean floor. This, in turn, has triggered huge demand for ships that provide logistics support for offshore oil exploration activities.
L&T is currently building eight ships valued at about Rs1,150 crore. These include six for RollDock and two for BigLift Shipping BV, also of the Netherlands.
The Mumbai-based company launched its shipbuilding venture in May 2006 with an order for building four ships valued at Rs440 crore from Rotterdam-based Zadeko Ship Management CV (now known as RollDock BV). The Dutch firm placed a repeat order in August 2007 with L&T for two more ships valued at more than $70 million.
L&T recently received the required approvals from the Tamil Nadu government to set up what will be the country’s biggest shipbuilding facility at Kattupalli in Thiruvallur district, near Chennai.
The proposed shipyard-cum-port project, which will cost more than Rs3,000 crore, will be capable of building 25 ships a year, including five very large crude carriers and 20 panamax vessels. The yard will also be able to repair 50-60 ships a year.
Very large crude carriers have a capacity to carry 300,000-350,000 tonnes of crude oil and panamax vessels can can each carry 120,000-200,000 tonnes of dry bulk commodities.
L&T ventured into shipbuilding by converting part of its heavy engineering complex at Hazira into a yard that can build three mid-size ships with a cargo carrying capacity of 15,000-20,000 tonnes in a year. Although the company is now expanding the capacity of the Hazira yard to make six ships a year, it cannot make bigger ships there.
India currently has 27 yards with a shipbuilding capacity of 2.8 million tonnes (mt)—small by global standards. “India’s shipbuilding capacity is projected to increase to 5mt by 2012 and to 18mt by 2017,” said Umesh C. Grover, director, technical and offshore, at state-run Shipping Corp. of India Ltd.