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

The public sector Cochin Shipyard Ltd (CSL), in its 35th year, has chalked out an ambitious action plan to emerge as the leading yard in South-East Asia by 2015. The yard has drawn out a corporate plan based on positive economic growth and rising international trade. The CSL Chairman and Managing Director, Commodore M. Jitendran, said that the world ship-building output, which has trebled since the 1990s, is expected to grow with the continued rise in international trade and Asian economic development.

Hence, CSL feels that the market growth in this sector will be sustained by the economic development of the South-East Asian countries and surging international trade, he said. Moreover, the Indian shipping tonnage, which is hardly five per cent of the total overseas trade of India, is expected to grow thus spiralling the domestic demand for ships.

INTERNATIONAL ENQUIRIES

A view of the Cochin shipyard. - K. K. Mustafah.

Having established its reputation in the international market, CSL, Mr Jitendran said, is receiving more enquiries from abroad for new building orders. "What is significant is that the enquiries are received from highly reputed and quality conscious owners from Western Europe. Quality of workmanship and timely delivery have proved to be a very important and strategic strength of CSL," he said.

In 2002, CSL concluded its first export order for building of a cargo launch for National Petroleum Construction Company, Abu Dhabi. This was followed by a series of export orders which had established CSL in the international market. The long-term plan of the yard included substantial expansion of facilities including drydock for construction/repairs of very large vessels and to achieve a turnover of Rs 2,500 crore by 2020, Mr Jitendran said.

SHORT-TERM PLANS

CSL had also initiated some short-term plans that aimed at encouraging ancillary industries, investing in a small-ship division, speeding up the construction of the Navy's aircraft-carrier, and modernising facilities. The yard has four main business areas — ship-building (since 1978), ship repair (1981), marine engineering and training (1993) and offshore upgradation (1999). It is the only shipyard in India capable of building Aframax tankers. Its reputation got as boost when it bagged the Navy's aircraft-carrier order; few countries have the capability to build this vessel.

RECORD BUILDINGS

CSL, Mr Jitendran said, reported a record performance in ship-building in 2005-06, crossing 1 lakh DWT. All the export orders are on schedule.

These orders have been secured against very stiff international competition at razor sharp prices. The yard constructed varied types of ships including tankers, bulk carriers, high bollard pull tugs, patrol vessels, passenger vessels and dredgers.

On the ship repair front, CSL is market leader in India and can repair the ships up to 1,25,000 DWT. This year CSL bagged repair orders for three oilrigs of ONGC worth Rs 372 crore. CSL, he said, had undertaken repairs of around 1,300 ships of varied types including periodical lay repairs and life extensions of the vessels of the Navy, the Coast Guard and the Union Territory of Lakshadweep.

CSL has opened an additional revenue stream by repairing vessels/offshore structures of oil exploration industry. It had completed two offshore projects for ONGC.

THE CONSTRAINTS

In spite of the positive trends in the industry, Mr Jitendran pointed out that the growth in the sector was not expected to be smooth given the myriad taxes and environmental constraints. He pointed out that the imposition of the service tax has been a serious blow to the competitiveness of the yard's repair business. The wafer-thin margins and the highly competitive environment do not give scope for the yard to cope with the increased service tax. Besides, ship-building/repair has been consistently left out of consideration as a priority or infrastructure sector in the country, which is not the case elsewhere. This industry enjoys the most favourable treatment with the policymakers in most of the economically savvy nations, he said.