Financial Daily from THE HINDU group of publications
Thursday, Feb 10, 2005
Adanis plan to enter ship building biz
Mundra (Kutch) , Feb. 9
GUJARAT Adani Ports Ltd (GAPL), a joint venture of the Adani Group and the Gujarat Government that runs the Mundra Port, is planning to enter into the ship building, repair and breaking business.
The proposed ship building and repair yard would take in up to 100 vessels for repairs or breaking in a year and boast of modern ship-lifts, laterally moving winches and dry docking facilities. It would also build vessels as and when the company gets orders.
"The project is still on the drawing board stage, but we plan to start the process in the next couple of months. The facility would have the infrastructure to build or repair up to Panamax-sized vessels and carry out ship-breaking in a contained environment," the GAPL President, Captain Sandeep Mehta told Business Line.
Asked why the Adani Group wanted to enter into the ship-breaking business at a time when environmental concerns were being raised about the industry at Alang, Captain Mehta said that the Mundra facility would carry out breaking in a closed environment that would ensure that no pollution takes place. Alang, which boasts of the largest ship-breaking industry in the world, has been blamed for marine pollution as ships are simply hauled up to the beach and torn apart in the open.
The Adanis are in the process of finalising a blueprint for the yard and work out cost estimates. The project is expected to cost about Rs 700 crore and would be funded through internal accruals and loans, according to the Adani Group Chief Executive Officer (Infrastructure), Mr Sanjay Gupta.
GAPL has engaged leading marine consultants Maunsell to prepare a detailed project report (DPR) for the proposed ship-building foray. The consultant has already prepared a preliminary report and the company would approach banks for financial closure of the phase one of the project as soon as the final DPR is ready, he said.
"In the first phase, we are looking at ship lifting facilities and four land berths for repair or building. Ship breaking, if it happens, will be incidental and will not be a core activity. In the second phase, we would not only expand the facility but also have wet berths to carry out repairs without lifting the vessel out of the water," Mr Gupta said.
Asked if GAPL was looking at a technical or financial partner, Mr Gupta said that the Adanis would be able to get the entire equity portion of the capital on their own from internal accruals. As regards a technical partner, he said that the group had the necessary expertise to cater to "series built" ships.
Meanwhile, the Mundra Port will see four new cargo berths in the next couple of years. Currently, the port has four berths for bulk cargo and two dedicated container berths that are being operated by Mundra International Container Terminal (MICT), its joint venture with P&O Ports.
Construction has already begun on the two berths being added by GAPL for bulk cargo with Simplex Construction being awarded the contract.
The two new berths are expected to be ready by the third quarter of 2005-06.
Work on the two proposed container berths is also expected to commence shortly.
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