The Hindu Business Line : Cochin Shipyard charts a unique growth path

CSL posted the country’s highest ship repair income of Rs 242 crore in 2006-07, 59 per cent more than last year. The yard has special expertise in repairs on specialised oil-rigs, both Indian and foreign, which is an important growth area.

COMMODORE M. JITENDRAN, CMD, COCHIN SHIPYARD LTD

V. Sajeev Kumar

Having posted a record performance for 2006-07, the public sector Cochin Shipyard Limited is on a unique growth path. The shipbuilding achievement of 1,81,395 DWT was 65 per cent more than its previous best of 1,10,206 DWT in 2005-06. Income from shipbuilding, repairs and services, at Rs 720 crore, was twice that of previous year, and net profit for the year, of Rs 58 crore, is 300 per cent more than the previous year’s. However, CSL is yet to achieve its full potential. Modernisation and expansion plans are being made for building and repairing niche, high-tech ships. Growth in skill-sets and technical expertise will be its key competitive strength. Commodore M. Jitendran, Chairman and Managing Director, CSL spoke to Business Line on the new initiatives of the yard.

What are your plans for Cochin Shipyard?

CSL’s unprecedented growth in the last few years can be sustained by modernisation and expansion into an international size shipyard. Further, the yard plans diversification into niche high-tech products. Towards this end, CSL is preparing detailed plans for additional infrastructure and skills, both short-term and long-term, required in propulsion system, electronics and clean emission technology.

The products under consideration for building and repair by CSL include high-tech large crude oil tankers, high speed container ships, LPG/LNG/CNG carriers, chemical carriers, product carriers, electric propulsion and clean technology, specialised Naval auxiliary ships, modern dredgers and other products.

Could you give us some details of the proposed small ship division?

The Small Ship Division project planned by CSL is essentially to create additional capacity for undertaking commercial ship construction concurrently with the Aircraft Carrier project.

Situated on the southern side of the CSL estate, the division will have separate facilities for plasma cutting, pipe shop, fabrication/sub-assembly, paint-shop and movable outfit shop.

In-principle approval has been obtained from the Ministry of Shipping and the Planning Commission for the project. Conceptualised at a total cost of Rs 98 crore, the project is expected to be completed by March 2009. The division is expected to generate an average turnover of Rs 500 crore per annum when stabilised.

Please outline the plans for ship repair expansion.

In ship repair, CSL’s aim is to diversify into offshore up-gradation and conversion projects. A study is being undertaken to identify the facilities, expertise and skills required for undertaking such projects.

Meanwhile the yard posted the highest ship repair income of Rs 242 crore in the year 2006-07, which is a 59 per cent increase as compared to last year. The yard has undertaken repairs on specialised oil rigs both Indian and foreign.

What is the yard’s order-book position?

At present, the shipyard has orders for one bulk carrier, 18 platform supply ships and one aircraft carrier. Other than the aircraft carrier, all other orders are for exports, with a value of around Rs 2,000 crore.

How about the ancillary units?

For the development of shipbuilding industry, a healthy ancillary development in the proximity of the yard is an efficiency driver. Cochin Shipyard was lacking this facility since its inception.

And it was thus was placed at a disadvantageous position vis-À-vis foreign yards. In the last two years, steps were taken for ancillary development.

About 20 acres of land was earmarked for the development of a mini industrial estate. The areas identified for development were making of blocks, hydraulics, electronics, accommodation, oxygen supply and support services.

Of these, a new oxygen plant and fabrication shops have already been established. A pipe module shop will also come up in the near future.

Could you comment on the competition from neighbouring as well as foreign yards?

There is immense competition from yards in the Far-East and South-East Asia for shipbuilding. Their cost and schedules are very challenging.

So far, CSL has been able to match their performance and win orders globally. In ship repair, the competition is basically from the yards in the Middle East and Singapore.

Your take on the global ship repair scenario, and possibilities of getting new orders.

It has been reported that in ship repair, India can emerge as the next big hub for rig repairs.

The acceleration in oil exploration and production has opened avenues in drilling contracts and services.

Therefore there is a great opportunity in the repairs and maintenance of oil rigs in India. CSL, with its experience in rig repairs expects promising business growth in this sector.

Repair and up-gradation of dredgers is also a promising growth segment.