Considering the cyclical nature of the ship repairing business, Indian shipping firms are investing huge bucks in setting up ship repairing facilities Diversification of services is of paramount importance for sustaining business in difficult times as it ensures continuous fund flow from at least one channel even if others face difficulty. Understanding this need, the Ministry of Shipping (MoS) has directed the major port trusts in the country to diversify their product profile and provide ship repairing facilities, an area where Indian ports and shipping firms do not enjoy a global presence, when compared to countries like China.
The ship repairing business holds immense potential and according to the Planning Commission of India, the business can generate revenues of over Rs 2,700 crore a year. The MoS has asked the ports to formulate their own business model for ship repairing, although tariff would be fixed by the Tariff Authority of Major Ports (TAMP).
In this context, Rahul Asthana, chairman of Mumbai Port Trust (MbPT), while speaking to a ShippingBiz360 correspondent said, “Ship repairing is witnessing high traction on the back of demand coming from coast guards and merchant vessels. In fact, MbPT has undertaken several projects on build operate and transfer (BOT) basis under public-private partnership (PPP) mode to offer ship repairing facilities.”
A lucrative business
 Experts opine that ship repairing facility is a lucrative business offering high profit margin. With shipping activities gaining momentum post-recession, more foreign ships are venturing Indian territories, which require repairing. However, since the domestic market is largely fragmented, these vessels are forced to move to other territories, thereby resulting in loss of business for Indian firms. According to Ms Madhubala, proprietor of Duropack, a mid-sized logistics firm in New Delhi, “Since it is compulsory for ship owners to send out their vessels for repair depending on the ship’s dead weight tonnage (DWT), it is not impacted much even during financial crisis, which is a major advantage of this business.” Ms Madhubala also added that since the business in cyclical in nature, it can reap huge benefits.Other factors boosting the sector
There are several other factors that are boosting the demand for ship repairing. Implementation of stricter emission norms and growing awareness about environment are propelling the growth of the industry. Moreover, low labour costs and proximity of major ports to the international shipping routes are also advantageous for the Indian ports.
Factors impeding growth
However, there are some issues, which have to be addressed to boost the sector further. First and foremost, ports have to be equipped with modern machinery to repair ships. Training has to be imparted to the workforce to keep them updated about the latest developments in the sector, thereby enhancing their productivity. Exclusive R&D activities have to be undertaken. The number of ship repairing units in the country needs to be increased. Currently, India has only 35 such units as compared to more than 200 in China.
It must be noted that in order to tap the potential of the Indian shipping sector, global firms such as Goltens have ventured into the Indian market by setting up a workshop in Navi Mumbai last year. Huge bucks are also being spent by Indian shipping firms to offer ship repairing facilities.
Arup Choudhury |
