Mumbai: Shipping company Mercator Lines Ltd and shipbuilder Mech Marine Engineers Pvt. Ltd have formed a shipbuilding joint venture, dubbed Mercator Mech Marine Ltd, to build cargo-carrying ships.
Action plan: A tanker waits at sea outside Mumbai. Mercator Lines plans to build cargo-carrying vessels in association with Mech Marine at its proposed shipyard Vansi Borsi in Gujarat.
The proposed shipyard will cost Rs2,000 crore and will be at Vansi Borsi in Gujarat.A. Mohanlal, managing director, Mech Marine, confirmed the development and said the yard would build “ships of up to Panamax size.”
Panamax carriers are large ships that can sail through the Panama Canal, typically carrying 73,000-75,000 tonnes of dry bulk commodities such as coal, steel, iron ore and grains.
H.K. Mittal, chairman and managing director of Mercator Lines, will be the chairman of Mercator Mech Marine, while Mohanlal will be its managing director.
Mercator Mech has been allotted 180 acres of land by the Gujarat government for setting up the yard and the entity plans to start construction of ships in 2009, Mohanlal said. The company is also scouting for suitable land for a second yard, he added.
“Mercator and Mech Marine have shared a business relationship for several years. We have earlier built ships for Mercator. Now, we have started working together by co-promoting a new shipyard,” said Mohanlal. Mercator Mech also plans to sell equity to a private equity firm to help finance the construction of the new yard, he added.
Mercator’s Singapore subsidiary Mercator Lines (Singapore) Pte. Ltd plans to raise as much as $176 million (Rs699 crore) through an initial public offering of 270 million shares in the city state, a company official said.
Meanwhile, Mech Marine is independently setting up a new shipyard on 200 acres of land at Palghar in Maharashtra at a cost of Rs300 crore.
It has already started constructing three ships there even as the civil construction work at the facility is in progress. The Palghar yard is capable of building ships of up to 150 mts in length, such as small tankers that can carry petroleum products. Mech Marine currently has orders for building 13 ships worth around Rs750 crore.
Mercator Lines joins the growing list of local private firms that have entered the shipbuilding sector. Companies such as Larsen & Toubro Ltd, SKIL Infrastructure Ltd, Good Earth Maritime Ltd, Apeejay Shipping Ltd have entered the business, joining established players including ABG Shipyard Ltd, Bharati Shipyard Ltd, Cochin Shipyard Ltd, Hindustan Shipyard Ltd, Mazagon Dock Ltd and Goa Shipyard Ltd.
India’s biggest shipping firm, the state-run Shipping Corp. of India, also plans to enter the shipbuilding business by teaming up with a global shipbuilding firm, according to Umesh C. Grover, the company’s director, technical and offshore services division.
India’s share in global shipbuilding is expected to rise to 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 prepared by Mumbai-based firm i-maritime Consultancy Pvt. Ltd.
The Union government plans to set up two mega shipyards, one each on the east and west coast of the country, through the public-private-partnership route. Each of these yards will require an investment of Rs2,000 crore.