Arpan Mukherjee / Reuters
Mumbai: Huge export and domestic orders are forcing private Indian shipbuilders to shop for yards and assets at home and abroad, industry officials and analysts said.
With a rise in vessel demand, both for trade and offshore oilfield services, shipbuilders are getting huge orders from across the world.
“We need to expand and we have bid for two yards which are good bets,” said managing director Rishi Agarwal of ABG Shipyard Ltd, India’s largest private shipbuilder.
ABG has orders worth Rs55.6 billion (Rs5,560 crore, $1.37 billion), mostly from overseas clients, and increasing each year, Agarwal said.
Earlier, orders used to be bagged by European and later Korean yards, but now China and India are also getting them, analyst Surbhi Chawla of Angel Broking said. India’s share of global shipbuilding is about 0.4% in dead weight tonnes terms.
“It is all set to gain market share on the back of cost competitiveness and availibility of technically qualified manpower,” a report by Angel Broking said.
Of India’s about 32 yards, seven are state-run.
“The Indian shipyards are moving up the value chain, building sophisticated rigs and vessels,” Chawla said.
ABG Shipyard has bid for two shipyards on the western coast, state-run Alcock Ashdown (Gujarat) Ltd. and Western India Shipyard Ltd In May, it bought unlisted Vipul Shipyard.
Its competitor Bharati Shipyard Ltd had shown interest in Alcock Ashdown and Western India Shipyard also, managing director P.C.Kapoor told Reuters.
“There is a pressing need for expansion,” Kapoor said. His firm bought the entire machinery of 130-year-old Swan Hunter (Tyneside) Shipyard Ltd from England earlier this year.
With overseas orders making up 65-70% of its $40-billion order book, Bharati is on the lookout for yards in India and southeast Asia, he said. “I don’t think the expansion will be restricted to India... Any yard with good waterfront and draught would be good,” Chawla said, adding technically qualified manpower has to be available.
Last month, India’s Larsen & Toubro was one of the 15 companies to show interest to develop a repair yard and dry complex in Oman. It also plans to spend about Rs20 billion to start a shipbuilding yard in India.
This month, engineering and construction firm Punj Lloyd Ltd said it plans to invest Rs4.03 billion to buy 25.1% stake in Pipavav Shipyard Ltd, saying it was a strategic investment to support its business in the offshore sector.
Besides engineering firms, private equity investors are also eyeing yards. Earlier this year, India Advantage Fund-VI bought 53% in unlisted Tebma Shipyards Ltd.
“Demand is rising, there is growth visibility and firms are getting orders across the world,” said Angel Broking’s Chawla.