The Hindu Business Line : Cochin Shipyard lays the keel for small buildings

CSL plans to set up a small ship-building division to cater to the growing demand for small commercial vessels at competitive prices with firm delivery schedules.

A VIEW OF Cochin Shipyard, which has taken several initiatives to keep pace with the booming shipbuilding market worldwide. — K.K.Mustafah

A buoyant shipbuilding market has prompted the public sector Cochin Shipyard Ltd (CSL) to work out new strategies to secure more orders from within and outside the country.

The plan to set up a small ship-building division within the existing yard is one such initiative. The proposed division will cater to the growing demand for small commercial ships at competitive prices with firm delivery schedules, according to the CSL Chairman and Managing Director, Commodore M. Jitendran. Till recently, CSL constructed only large ships (for instance, Aframax tankers).

Small ships hold out big promise, he said, pointing out that Oil Natural Gas Corporation and Shipping Corporation of India would be required in the near future not only to replace their offshore supply vessels. CSL, therefore, proposed to construct sophisticated offshore supply vessels, anchor handling tugs and other small craft, of less than 2000 DWT.

The buoyancy in the shipbuilding market, in his view, would continue till the next decade due to projected growth of the economies of South-East Asia and of international trade.

Additional benefits

The proposed small ship-building division, according to Mr Jitendran, should be fully operational by 2015 and generate an addition revenue of Rs 500-700 crore annually. This would be possible because, depending on the demand, the division would build up to eight vessels annually, starting with three or four. The facility would also absorb a chunk of the existing workforce, thus achieving optimal utilisation of the manpower with some amount of outsourcing. Since the existing infrastructure would be suitably augmented and utilised better, the cost of the project would be optimal with very attractive payback period, he said.

CSL forayed into the international market in 2000, with an aggressive marketing drive. The first export order came from National Petroleum Construction Company, Abu Dhabi, in 2002, followed by a series of orders for constructions of tugs for ATCO, Saudi Arabia; bulk carriers for Clipper, Bahamas; and platform supply ships for Seatankers, Norway.

The yard was also chosen for building the Air Defence Ship (ADS) for the Indian Navy. "The prestigious job for the Indian Navy will keep much of our capacity occupied for the next five-six years", he said.

Separate areas

There would be a demarcation of dock space for ADS and commercial vessels; also, separate areas would be created for fabrication of blocks for commercial ships. The covered bay, called the Small Ship Division Bay, was inaugurated recently by Mr T. R. Baalu, Union Minister for Shipping, Road Transport and Highways. The balance work on the division's infrastructure will start shortly. The division is expected to become fully operational by end 2007. The machinery available in the yard will be augmented to cater to the new bay also.

The setting up of ancillaries in and around the yard is expected to help achieve higher productivity levels in the Small Ship Division. The plan for a mini-industrial estate on 20 acres adjacent to the company is progressing satisfactorily. The yard has issued contracts for installing fabrication shops for heavy blocks. Setting up of other ancillaries such as electronics, hydraulics and accommodation out-fittings, etc., will be taken up soon.

Peak performance

The performance of CSL, Mr Jitendran said, peaked in 2005-06 when its production in shipbuilding crossed 1,00,000 DWT.

The company posted 30 per cent growth in gross income at Rs 418.67 crore (Rs 321.49 crore in 2004-05). The profit-before-tax jumped 60 per cent to Rs 25.44 crore (Rs 16.86 crore) and the net profit 30 per cent to Rs 18.23 crore (Rs 12.10 crore).

Among other future plans, perhaps the most important will be the repair complex at Vallarpadam. In 2005-06, CSL continued to dominate the domestic ship repair market by securing major orders from ONGC at a total value of approximately Rs 370 crore.

The orders for the Mobile Offshore Drilling Units Sagar Vijay and Sagar Bhushan, and the Jack Up Rig Sagar Kiran were secured against stiff international competition and very competitive terms and conditions.

The National Maritime Development Programme, when implemented, would give a tremendous boost to the country's marine industry, in general, and shipbuilding/repair, in particular, he said.

He further pointed out that the various policy measures such fiscal benefits, liberal Customs procedures for the import of critical raw materials, creating additional capacity in the form of setting up two international size shipyards, one on the east coast and the other on the west, would go a long way in creating an investor-friendly climate for the ship-building industry.