Mumbai: India’s biggest engineering and construction firm, Larsen and Toubro Ltd, is in talks with a Dutch shipowner for a new building contract valued at more than $100 million (Rs397 crore) said a person familiar with the development.
New orders: Larsen and Toubro’s employees shift a 20-tonne ship part in the company’s shipbuilding yard in Hajira. L&T is negotiating with a Dutch shipowner for a new shipbuilding order.
“Yes, L&T is negotiating with a dutch shipowner for a new building order. But, I cannot tell you the name of the shipowner, the number of ship order being negotiated or the value of the contract,” said Coert Kleijwegt, managing director of Hong Kong-based shipbroking firm Orient Dutch Shipbroking Ltd earlier this week.
Kleijwegt did say that the Dutch shipowner negotiating the deal was one of the shareholders of the Netherlands-based RollDock BV, which signed a memorandum of understanding with L&T on 13 February to built two modular carriers at Hazira yard in Gujarat, each having a cargo carrying capacity of 20,000 tonnes. This will take L&T’s order book to 10 ships.
L&T is currently building eight ships valued at about Rs1,150 crore. These comprise six for RollDock and two from BigLift Shipping BV, also of the Netherlands.
L&T launched its shipbuilding venture in May 2006 with an order for building four ships valued at Rs440 crore from the Rotterdam-based shipping firm Zadeko Ship Management CV (now known as RollDock BV). RollDock placed a repeat order in August 2007 with L&T for building two more ships valued at more than $70 million.
“We have chosen L&T to build the ships on the basis of its quality of ships, timely delivery and price considerations,” said Diederik Legger, managing director, RollDock.
In June 2007, L&T won a contract for construction of two ships valued at more than $94.95 million from the Netherlands-based BigLift Shipping BV, a part of the Spliethoff Group.
Mumbai-based L&T has recently secured clearance from the Tamil Nadu cabinet to set up the country’s biggest shipbuilding facility at Kattupalli in Thiruvallur district near Chennai.
The Rs3,000 crore proposed shipyard-cum-port project will be capable of building 25 ships in a year, including five very large crude carriers, each with a capacity to carry 300,000- 350,000 tonnes of crude oil, and 20 Panamax vessels, which can each carry 120,000-200,000 tonnes of dry bulk commodities and are called thus because they can pass through the Panama Canal carrying cargo. The yard will also be able to repair 50-60 ships a year.
L&T ventured into shipbuilding last year by converting part of its heavy engineering complex at Hazira into a yard that could 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. The yard opens into a river that has limited draft (depth in shipping terminology). That explains its decision to build a new yard at Kattupalli.
India currently has 27 yards with a shipbuilding capacity of 2.8 million tonnes (mt), which is small by global standards. “India’s shipbuilding capacity is projected to increase to 5mt by 2012 and further to 18mt by 2017,” said Umesh C. Grover, director, technical and offshore at state-run Shipping Corp. of India Ltd.
“To achieve this target, India will have to increase its shipbuilding capacity four times its present capacity over the next six-eight years,” said Ajit Tewari, chairman and managing director at state-run Hindustan Shipyard Ltd.