Adanis plan Rs 600 cr ship building facility

The Ahmedabad-based multi-diversified Adani Group is planning to setup a ship building and repairing facility close o Mundra Port in Kutch. The group is also setting up a Special Economic Zone at he same location.

The decision follows the Draft Policy for Maritime Sector, introduced in August, 2004 by the Union government which expresses the interest of the government in setting up a ship-building yard in the western coast of the country, either through a public sector or through private initiative.

The Draft Policy says, "At least two international shipyards would be established, one on the east coast and another on the west coast of India through public-private participation."

The group would require to invest Rs 600 crore in the initial phase as the investment. The group expects that the investment would go much higher at the final stage.

Sanjay Gupta, chief executive officer of Adani Group, told Business Standard here on Tuesday, "We have finalised the location at Mundra which will be very close to our port and also the upcoming SEZ. But the Group is yet to decide whether any of the existing group companies would be setting up the facility or a Special Purpose Vehicle (SPV) would be created for the proposed ship building and repairing unit.

"The Group is in a financially healthy condition to fund the project but we may also look for debts if required while so far we have not decided to invite equity participation."

Gupta also said that the facility which is expected to be operational in three years time from now, would not compete with Asia's largest ship-breaking yard at Alang in Bhavnagar district of Gujarat which is only into ship-breaking activities. Adanis plan to focus more into ship building and repairing and Gupta calls ship-repairing would be only 'incidental.'

The Rs 600 crore of initial investment will, however, include expenses for ship lift facility to be installed in the site which according to initial estimates would cost the company around Rs 140 crore and beam size of ship lift which is presently being finalised, would be around of 33 metres.

Interestingly, though the western coast of India is more known for port facilities there is no ship-building yard in the western coast of India. Only Mazgaon Dock Ltd in Maharashtra has ship-building facility which however, according to the industry experts, not enough to cater to the needs of the country.

In the Draft Policy for Maritime Sector, which is expected to be given shape of Maritime Policy by end of this calendar year, it is said that a package of measures including fiscal concessions and subsidies would be considered to make Indian shipbuilding industry globally competitive and to emerge as a leading player by 2025.

"In the interim, two international size ship building yards would be setup in the country, in addition to the measures for modenising the existing public and private sector shipyards.

Shiprepair and shipbuilding would be kept out of ambit of service tax, sales tax and VAT etc. as shipyards compete globally for repair and new construction," mentioned the draft indicating tax sops for the industry.

India can build ships up to the size of only 1,10,000 DWT which is highly inadequate as per the global shipbuilding standards.