Bangalore: The global credit market crisis has not hurt India’s booming shipbuilding industry, say officials at some of the country’s leading yards.
“The (financial) crisis has had no impact whatsoever on our business,” said Dhananjay Datar, chief financial officer of India’s biggest private sector shipbuilder, ABG Shipyard Ltd.
It has been four-five months since local yards announced new orders from fleet owners, but Datar said negotiations for new contracts will be wrapped up by his firm shortly.
Work as usual: A worker at the ABG Shipyard near Surat in Gujarat. The 23 Indian yards have not reported cancellation of orders. (Photo: Sshesh Shah/Mint)
“There is no slowing down of enquiries for new shipbuilding orders,” said Ray Stewart, chief executive officer of Pipavav Shipyard Ltd, the country’s newest private sector shipbuilder.
Local yards are currently building about 245 ships with a capacity of 2.5 million tonnes which are valued at more than Rs20,000 crore.
The 23 Indian yards have not reported cancellation of orders, a phenomenon that global yards are witnessing because of the financial crunch triggered by the subprime crisis.
“That’s because global shipyards and ship owners are facing difficulties in getting funds,” said Stewart.
“All our orders are fully secured in terms of financing, mainly from local sources,” he said. Besides, Datar added, many of the cancellations for global yards belong to the speculative category.
However, shipbuilders are encouraged by the stringent age norms for ships.
“Oil companies worldwide are clamping down heavily on old ships,” said Datar, whose firm specializes in building support vessels for the oil and gas sectors.
The Directorate General of Shipping (DGS), the country’s maritime regulator, recently said offshore support vessels servicing India’s oil and gas exploration industry should be under 25 years to be allowed to operate in India’s territorial waters.
The regulator has fixed an age limit of 25 years for oil and product tankers, and 30 years for gas carriers.
The financial crisis has not prevented firms such as Larsen and Toubro Ltd (L&T) from setting up new and bigger facilities, for instance at Kattupalli near Ennore in Tamil Nadu.
“Our new yard at Kattupalli is on course and there is no delay in our plan,” said an executive at L&T, India’s biggest engineering and construction firm. He did not want to be named.
Existing yards such as ABG and Pipavav are also diversifying their product range. ABG is building a yard at Dahej to build rigs used in oil drilling operations.
“We are cruising along with our plans to enter the off-shore fabrication market,” said Pipavav’s Stewart, whose firm is building 26 dry bulk cargo ships estimated at $1.1 billion (Rs4,360 crore) for global owners.