From THE HINDU group of publications
Monday, December 31, 2001


Cochin Shipyard set to bid for global orders

Sajeev Kumar V.

The increasing demand for shipbuilding, ship-repair and offshore engineering services has given rise to intense global competition in the sector. An estimated Rs 7,000 crore will be invested in offshore oil exploration and production engineering sectors in the Tenth Plan. In this background, the Cochin Shipyard Limited has successfully diversified into offshore areas and taken up jobs for the ONGC.

THE public sector unit, Cochin Shipyard Limited (CSL), is set to bid for international shipbuilding and ship-repair orders and has initiated measures to cut lower costs and reduce delivery time.

According to senior officials, CSL has been hit by cyclical fluctuations in the shipping freight and scrapping markets and has, therefore, adjusted operations accordingly. By customising the main products, intensifying marketing efforts and continuously inducting technology, it hopes to absorb the impact of higher wages and rising input costs.

At present, CSL is looking out for partners in design assistance and for sourcing international shipbuilding and ship repair orders. It has participated in various roadshows abroad and held discussions with shipowners in the US and Germany.

We have sent a clear message to foreign shipowners that here is a yard which can deliver goods on time. We are hopeful of getting sufficient orders from abroad soon in view of the tremendous success of the roadshows, a CSL official told Business Line.

CSL recently tied up with IHI, Tokyo, for a facility audit on shipbuilding. It also signed an agreement with Dynex, Germany, for marketing double-hull tankers. CSL is also in touch with a number of companies in Asia, America and Australia for successfully handling its projects in time.

Due to intense global competition, shipbuilding and ship repair prices are expected to fall, though the demand for such offshore engineering services is expected to grow. Considering that an estimated Rs 7,000 crore will be invested in offshore oil exploration and production engineering sectors in the Tenth Plan, CSL has successfully diversified into the offshore field and taken up jobs for the Oil and Natural Gas Corporation (ONGC).

CSLs first offshore job included the fabrication and installation of 12 clamps on structures at Bombay High and Heera oilfields. The work was completed ahead of schedule and at a lower cost to ONGC vis-`-vis similar projects. Last year, the yard bagged an order to upgrade ONGCs rigs, Sagar Sakthi, and Sagar Bhushan at Rs 75 crore and Rs 40.68 crore respectively, against very stiff competition from international and domestic players. It is at present undertaking the replacement of deck cranes at SE and SJ platforms for ONGC.

Due to capacity constraints, officials said the yard was planning to expand its ship repair capacity through the installation of a ship-lift system, which is different from the dry-docking system. A detailed proposal in this regard has been sent to the Shipping Ministry and is awaiting an early clearance. According to the officials, the yard posted profits in the past four years. In 2000-01, it recorded a net profit of Rs 38.49 crore and notched up the highest shiprepair income thus far of Rs 181.33 crore, making shipbuilding activity profitable for the first time.

The net worth of the yard increased five times over the last four years and the companys accumulated losses were completely wiped out. This was possible due to cost control measures and improved productivity. The thrust of the cost control measures was directed at cutting the cost of procurement of materials, deployment of labour, use of raw materials and energy. Audits and studies of the facilities and systems employed were undertaken and corrective action taken in critical areas.

Referring to the order book position, the officials said the yard was presently constructing a 93,000-dwt double-hull tanker for the Shipping Corporation of India at $34.4 million, with a delivery time of 24 months from the contract comparable to any other yards in the world.

According to the CSL official, the ship, scheduled to be launched in January 2002, will be delivered on time. Moreover, a letter of intent was obtained from the SCI for the construction of two Aframax vessels to be used to transport crude.

The CSL has also been asked by the Government to construct within two years an aircraft carrier for the Navy, to replace the INS Virat. However, officials said that the construction of commercial vessels had to be completed before work on the aircraft carrier begins.

CSL is also exploring ways to put its non-performing land assets to better use. It is considering setting up an information technology park, given the advantage Kochi offers in terms of international connectivity for high-speed data communications. Other business plans include setting up floating power stations, and constructing and carrying out repairs on harbour craft.

Picture: A 94,00-dwt double-hull crude oil tanker under construction in Cochin Shipyard.

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