Shipyard buzz lures corporates

Ship building has emerged as a favourite investment option for corporate India. Lured by the flood of orders in shipyards across the world and the 30 per cent subsidy element, quite a few big companies have queued up to enter the booming ship repair and building business.

"All shipyards across the world are booked till 2009, forcing shipping companies to shelve their vessel acquisition plans. It makes sense for new players to enter the business," analysts said.

Some of the majors entering the ship building business are Larsen & Toubro, the Adani Group and the Pawan Kumar Ruia Group. Existing players like Bharati Shipyard and ABG Shipyard are also increasing capacity.

Bharati Shipyard, apart from its three current yards, is planning a fourth in Mangalore at a cost of Rs 500 crore. ABG Shipyard, which has a yard in Surat, is setting up another one at Dahej at a cost of Rs 450 crore.

Kandla Port Trust (KPT) and the Gujarat Maritime Board (GMB) are also planning ship repair complexes. While KPT is planning a Rs 400 crore ship repair complex, GMB is inviting private partnership for developing repair yards.

L&T has forayed into ship building by securing a contract from the Netherlands for construction of four ships valued at over Rs 440 crore. The vessels will be built at its new shipyard that will be part of the company's engineering complex at Hazira.

"At present, L&T is scouting for deep-water facilities in the Indian coast to set up a second mega shipyard. The proposed investment towards this project is over 1,000 crore," a L&T executive said.

According to sources, L&T is close to finalising Kakinada (Andhra Pradesh) as a suitable site and has submitted a report to the ministry to build an international size shipyard.

The Pawan Kumar Ruia Group has already applied to the West Bengal government for 1,500 acre land for setting up a dry dock for ship manufacturing. It is likely to float a special purpose vehicle for shipbuilding with leading global players.

The Adani Group is also planning a mega ship building and repair complex at an estimated cost of Rs 1,500 crore. Under the National Maritime Development Programme, the ministry of shipping is planning to set up two international size shipyards, one on the east coast and the other on the west.

"A committee has been set up under the chairmanship of Indian Ports Association (IPA) chief to identify locations and suggest measures to facilitate construction of shipbuilding yards," a government official told Business Standard.