Tuesday, Mar 20, 2007
Shipbuilding sector order books run full http://www.thehindubusinessline.com/2007/03/20/stories/2007032000700700.htm
Amit Mitra
Mumbai March 19 Sitting on a combined order book valued at over $3,700 million, the ten shipyards in the country, including the State-owned facilities, are today literally struggling to keep pace with the flow of orders, both from the domestic as well as overseas markets. At the current pace of growth, it is expected that the domestic shipbuilding sector is well on its course to becoming a $20-billion industry by 2020.
This is in tune with the global order book position, which has more than doubled since 2002. For a long time hovering under the 100 million DWT mark till 2000, the global order book surged to 220 million DWT in 2006. The growth in the shipbuilding space is also attracting financers and private equity investors, as is evident from the fact that ICICI Ventures recently made significant investments in Chennai-based Tebma shipyard, which is India's only shipyard to build offshore supply vessels. This will help the shipyards go in for significant expansions.
Says Mr Ramesh Singhal, Director of I-Maritime Consultancy: "With the current order books running full, there is a danger of over-capacity, in case the global shipbuilding industry slows down. Currently, Indian shipyards import machinery components and assemble them in India. It is expected that with increase in shipbuilding volume, global manufacturers would setup ancillary units locally and Indian shipyards would export ships as well as its components."
Export lead
Private-sector shipyards ABG, Pipavav and Bharathi Shipyards are at present leading the list, with an order book of $844 million, $740 million and $590 million respectively. State-run yards like Cochin Shipyard and Hindustan Shipyard are having orders worth $362 million and $314 million respectively. Interestingly, out of the total of 223 ships on order from the Indian yards, 152 ships (value $2,778 million) are overseas orders.
An analysis of the order books of the shipyards would reveal that private shipyards are mostly banking on export orders - out of their total orders share of $2,686 million, export orders account for almost $2,284 million. In the case of PSU shipyards, it is the other way around, with domestic orders accounting for $517 million out of their total share of $1,011 million. The industry order book has mirrored a CAGR of 60 per cent in the last five years, with expectations being that it could notch up a CAGR of 30 per cent over the next decade.
A report by I-Maritime predicts that the shipbuilding industry will consolidate itself to get into building large cargo vessels, including container vessels and tankers, during the next five years and VLCCs, gas carriers, drill ships and semi-submersibles between 2012 and 17.
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