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With the official dedication of the new-age shipbuilding facility at Pipavav, the country can now claim to have a world-class shipyard meeting global norms of quality in shipbuilding and ship repair facilities
Mark these words. They were spoken by prime minister Dr Manmohan Singh while dedicating Pipavav Shipyard (PSL) to the nation last month. “I am truly impressed by the commitment to innovation, farsighted vision, commitment to do things the best possible way, commitment to get away from the chalta hai tradition which has often I think held our country back.
“I think shipping, ship building and management of our ports assume great importance in our scheme of development planning. Therefore I am very happy to compliment and congratulate all those associated with this highly enterprising, innovative shipyard. “I understand that the Pipavav Shipyard has been developed to have one of the largest dry dock and wet dock facilities in the world, with the state-of-the-art technology which can be used for construction of vessels relating to oil, gas and defence sectors. I hope this modern facility will set new benchmarks in quality and efficiency for our country.” These high-sounding words, however, did express the true happiness and appreciation of the country’s head with the coming up of such a mega facility that has demonstated its ability by getting orders even before its launch. Not for nothing that the shipyard won, earlier in March 2010, the Infrastructure Excellence Award 2010, instituted by Network 18 in association with CNBC. The Infrastructure Excellence Awards recognize and felicitate companies for excellence in the field of infrastructure development. Pipavav Shipyard won the award for the main award category of 'Ports & Shipyards.'
Expansion plans Promoted by SKIL Infrastructure, PSL started building ships in 2008. and today it has an order book of about Rs 4,500 crore.
To execute a major contract for 12 offshore ships awarded by the staterun Oil and Natural Gas Corporation (ONGC), the shipyard plans over a four-fold increase in its workforce from the current 1,800 people over the next three years.
"The shipyard, which is brand new, already employs 1,800 qualified people and this number, as per plans, is expected to increase to over 8,500 in the next three years," a company official said. PSL has won a $112 million (around Rs537.6 crore) contract from the ONGC to build 12 ships to be used to support its oil drilling operations. At a time when other shipbuilders are struggling to get orders in the wake of a global economic slowdown, Pipavav beat nine contenders for the contract, which included ABG Shipyard, Bharati Shipyard and Cochin Shipyard. The contract is Pipavav's first for building ships used to support offshore oil exploration. In the first round of bidding in March, ONGC had received lowest price quotation of $16.7 million for building each vessel. At that price, the contract would have been worth $200.4 million. In the second round in May, the acquisition cost fell to $112 million. ONGC currently has a fleet of 30 offshore support vessels, most of which are undergoing repairs. The oil explorer requires 62 vessels to meet its exploration and production commitments. It has hired 32 support vessels from private shipping firms to assist in exploration, but is facing a shortage. The 12 new vessels are expected to join its fleet within 24-30 months, as part of its long-term plan to reduce shortage of these assets and also to replace older vessels. PSL is also gearing up to get a share of the Rs 8,000-crore defence pie for ships. As per a proposal being considered currently by the government, sophisticated and smaller-size vessels required by Coast Guard and Indian Navy would be built by private shipyards while public sector shipyards would build strategic and large vessels required by the defence sector.
Currently, the Indian Navy orders are restricted to the naval shipyards under the purview of defence ministry, which include Mazagaon Dock, Goa Shipyard, Garden Reach Shipbuilders (Kolkata). But most of the shipyards are already booked for years and working at full capacity. To overcome this, the Indian Navy is likely to start ordering ships from private players. "We are looking at various kind of vessels for the Navy, which will be more complex and weaponsoriented. As we gain experience in doing these things, we will look at more complex vessels," said a Pipavav official. The company has recently bagged an order amounting Rs 2,600-crore to build offshore patrol vessels for the Indian Navy. The deal is to construct about five patrol vessels, each with a displacement of about 2,000 tonne. Shipbuilding companies are likely to claim a subsidy of over Rs 4,000 crore in the next four years from the government. According to industry sources, Pipavav Shipyard may claim about Rs 1,000 crore subsidy from the government for defense contracts entered into and executed within the stipulated period as and when it starts delivering. When fully operational, the shipyard will be able to construct and repair ships and vessels of various sizes and construction of products like offshore rigs, jackets and vessels for oil and gas companies. Pipavav right now has agreements in place for the construction of 26 Panamax bulk carriers with the capacity of 74,500 DWT each for delivery from 2009 to 2012. The latest news is that Mukesh Ambani-owned Reliance Industries (RIL) may pick up a 26% stake in Pipavav Shipyard. Though the news is yet to be vetted by both the parties concerned, a strategic investment in the country's largest integrated shipyard with an exposure to offshore structures for oil & gas structures is an ideal asset that the company of the stature of RIL should be proud of. "We will issue a 26% fresh equity to the strategic investor," SKIL Infrastructure chairman Nikhil Gandhi said, without specifying the name of the company. SKIL, the promoter of Pipavav Shipyard, holds a 39.5% stake in the company. The non-promoter shareholding in Pipavav Shipyard is 60.44%, out of which, 43% is owned by domestic and foreign institutional investors. Major investors include Trinity Capital (6.89%), New York Life Investment Management India Fund II (4%), Citadel (3.45%) and IL&FS (5.35%). In March 2010, Gandhi's SKIL Infrastructure group had bought a 19.6% stake from Punj Lloyd, the other major shareholder, through a negotiated deal at Rs 49.80 per share. Subsequently, it gave an open offer to public for 20% which received weak response. |
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