Académique Documents
Professionnel Documents
Culture Documents
October 2010
All the data and information provided in this document has been taken from public sources.
Innovation Norway and its expert consultants have value added with its own insights and
understanding. Possession of this information or data does not violet any of the regulation. The user
is not liable to be an insider to proprietary information at the time of taking decision.
Disclaimer
The report has been prepared by Innovation Norway in consultation with the experts in the maritime
industry in India.
The objective and scope of this report was to gather and advise on the broad opportunities for
Norwegian companies in India. All due care has been taken to provide accurate data, information
and analysis at macro level. However, there would still be several issues at the micro level while
evaluating investment on each opportunity. Hence, each recipient of the report must, however, make
its independent assessment of the project. The present report due to its broad scope does not
discuss the minute details, which companies should consider before making decision.
Page 2 of 104
CONTENTS
1. INTRODUCTION............................................................................ 8
1.1.
Preface ........................................................................................................... 9
1.2.
Abbreviation ................................................................................................ 11
1.3.
2. INDIAN SHIPPING....................................................................... 15
2.1.
2.2.
2.1.1.
2.1.2.
2.1.3.
2.1.4.
2.1.5.
2.1.6.
2.3.
2.1.1.
2.1.2.
2.4.
2.5.
2.6.
2.1.1.
2.1.2.
2.1.3.
3.2.
3.1.1.
3.1.2.
3.1.3.
3.3.
3.1.1.
3.1.2.
3.1.3.
3.1.4.
3.1.5.
3.1.6.
3.1.7.
3.1.8.
ABG Shipyard
Alcock Ashdown Shipyard
Bharati Shipyard
Cochin Shipyard
L&T Shipyard
Pipavav Shipyard
Shoft Shipyard
Tebma Shipyard
49
49
50
51
51
52
52
52
3.4.
3.1.1.
3.1.2.
3.1.3.
3.1.4.
3.5.
3.1.1.
3.1.2.
4. COASTAL SHIPPING.................................................................. 58
4.1.
4.2.
4.1.1.
4.1.2.
4.3.
4.1.1.
4.1.2.
4.1.3.
4.4.
4.1.1.
4.1.2.
4.1.3.
5.2.
5.1.1.
5.1.2.
5.1.3.
5.3.
Page 4 of 104
5.1.1.
5.1.2.
5.1.3.
88
88
90
6.2.
6.1.1.
6.1.2.
6.1.3.
6.3.
6.1.1.
6.1.2.
6.1.3.
6.1.4.
6.4.
Conclusion................................................................................................. 102
Page 5 of 104
LIST OF TABLES
Table 2-1 Fragmented ownership of Indian Shipping Companies (As on June 2010) .................................... 15
Table 2-2 Ongoing newbuilding activity of Indian Shipping Companies (As on March 2010) ......................... 16
Table 2-3 Ongoing newbuilding activity of Indian Offshore Companies (As on March 2010) ......................... 17
Table 2-4 Offshore fleet with DP System (As on March 2010) ........................................................................ 21
Table 3-1 Financial growth of Shipyards in India (INR mn) ............................................................................. 35
Table 3-1 International Designers and the shipyards they designed in India .................................................. 36
Table 3-2 List of Bidders for Mumbai Port Trust EOI (sep, 2009).................................................................... 38
Table 3-3 Orderbook estimates of Indian Shipyards by Ship type (march, 2010) ........................................... 43
Table 3-4 Infrastructure plans and contracts in hand (Indian Shipyards) ........................................................47
Table 3-5 Existing infrastructures at major Indian Shipyards .......................................................................... 48
Table 3-6 Analysis of the margins of Ship Repair Division of Cochin Shipyard (2008-09).............................. 55
Table 3-7: Analysis of the margins of Western India Shipyard (2008-09) ....................................................... 56
Table 4-1 Fleet distribution of Indian Flagged ships in coastal waters ............................................................ 59
Table 4-2 Comparison of Coastal movement of Containers to total Port traffic .............................................. 61
Table 4-3 Share of rail movement by CONCOR for containers....................................................................... 63
Table 5-1 Flow of Maritime Talent ................................................................................................................... 75
Table 5-2 Statistics related to maritime training institutes in Mumbai.............................................................. 77
Table 5-3 Fleet profile of container feeder vessels in India ............................................................................. 82
Table 5-4 Offshore Vessels currently being built in India ................................................................................ 82
Page 6 of 104
LIST OF FIGURES
Figure 2-1 Opportunities in short term charter ................................................................................................. 20
Figure 2-2 Medium and large ships with Heavy Fuel oil propulsion (March 2010).......................................... 25
Figure 2-3 Age profile of ships operating in India (March 2010)...................................................................... 27
Figure 2-4 Manufacturer distribution of diesel propelled ships (March 2010).................................................. 28
Figure 2-5 Market Share of Engines in the power range 1000 KW to 4000 KW (March 2010)....................... 28
Figure 2-5 Market Share of Engines in the power less than 1000 KW (March 2010) ..................................... 29
Figure 2-6 Engine manufacturer distribution of diesel propelled ships of less than 10 yrs age (March 2010) 31
Figure 2-7 Engine manufacturer distribution of diesel propelled ships of 10 to 20 yrs age (March 2010) ...... 32
Figure 2-8 Engine manufacturer distribution of diesel propelled ships of more than 20 yrs age (March 2010)
.................................................................................................................................................................. 33
Figure 3-1 Geographical location of owners placing orders at Indian Shipyards ............................................ 41
Figure 3-2 Breakup of Newbuilding order book at Indian Shipyard ................................................................. 43
Figure 3-3 Ships on order at Indian shipyards in the order of contracts signed .............................................. 44
Figure 3-4 Delivery from Indian Shipyards since 2007 .................................................................................... 45
Figure 4-1 commodity wise breakup of Coastal movement of cargo............................................................... 58
Figure 4-2 Population density of India and the transportation connectivity .....................................................65
Figure 4-3 Map of Europe ................................................................................................................................ 66
Figure 4-4 Proposed ro-ro/ferry service west coast of Mumbai ....................................................................... 72
Figure 4-5 Proposed ro-ro/ferry service on the Coast of Gujarat and west coast of India ............................. 73
Page 7 of 104
1.
INTRODUCTION
The high pace industrial and social developments in India has led to an increase in the environment
emissions. It has been found that the greenhouse gas emissions in India rose from 1.2 billion tonnes in 1994
to 1.9 billion tonnes in 2007, an increase of close to 60%. Most of these emissions have come from the
industrial and transport sector. With these numbers, India is set to be the fourth largest emitter of
Greenhouse gas after United States, China and Russia.
Indian government and policy makers are quite sensitive to the rising pollution level in the country. It is
believed, that the damage caused to the Indian society due to global warming would be far more compared
to the developed world. As a large population of India still remains below poverty line, they would find it
difficult to fund expensive technologies to escape the heat of global warming. The government has been
pitching for accelerating deployment of green technologies to tackle climate change, wherever affordable
and wherever possible.
Apart from being a global economy, India is poised to be one of the leading maritime nations. It has about
7,212 kms of coast line. India has close to 7% share in the global trade by volume. There are more than
35,000 ships calling to Indian ports in a year for trade. Indian companies are aggressively expanding their
fleet to increase their share in the increasing trade from Indian ports. All these developments lead to
increase in the maritime activity at the Indian coast. This would also lead to increase in the emission of
greenhouse gas from the ships.
The requirement for technologies and systems that are environment friendly is eminent. Norway is
conducting a market research in the Indian maritime sector, which is exploring reasons for using
environment friendly technologies by the shipbuilding and ship scrapping industry. It is also exploring
opportunities for the Norwegian technologies and services in the shipbuilding, shipping and Indian maritime
education sector.
Page 8 of 104
1.1. Preface
This report is an effort to detail out the Indian shipping and its associated industries, and take into account
the areas that have ample of opportunities for the Norwegian firms. This comprehensive compilation was a
result of in-depth analysis and exhaustive interviews conducted with the relevant authorities from various
segment of the Indian shipping industry.
The report tries to put the Indian economy in the context of shipping industry. Despite the recent downturn,
how shipping industry managed to stay afloat and contribute to the Indian economy remains one of the
salient features of the report. Moreover, the facet where the industry lags vis--vis its international
counterparts and the measures taken to lessen this gap, is also featured in the report. The composition also
reflects on all the recent developments in the maritime industry, company performances, their suggested
future plans and the committed efforts, coupled with an educated deduction of the industry.
Through numerous interviews, analysis and reference to our own maritime repositories, every potential
prospect of entering a collaborative effort with various sectors of the maritime industry has been charted out
in this literary work. Opportunities in the form of providing updated education systems, technology transfer,
training and internships for the up-and-coming local content, infrastructure developments and expansion,
and other ancillary services have been laid out as well. The report also comments on the advantages that
can be reaped by the Norwegian firms through various tax exemptions, updated regulations and laws, and
subsidies in various forms. With such backing from the government throughout a companys operational
lifespan in India, the report highlights the length to which both government and private sectors could go to
accommodate foreign investors.
A section of the report has also been dedicated to Green shipping, and how the present scenario of
upholding the environment in the industry leaves a lot to be desired. Despite all the laws and regulations in
place and moderate infrastructure, environment still remains an afterthought. An account of how
contributions could be made in this segment of the industry, and the need for efficient measures and the
relevant technologies has also been mentioned. Theres an admirable amount of degree of willingness from
the Indian shipping industry to adopt environment-friendly technologies. Entering into collaboration with such
companies would favor the Norwegian firms from their business point of view.
The report has benefited immensely from all the officials that were interviewed for the purpose. Officials
residing at respectable posts as well as at grass-root levels helped us get an unbiased picture of the Indian
maritime industry and the maritime education sector. Their valuable inputs helped us zero in on the scope
available for the Norwegians to collaborate with their Indian counterparts.
Innovation Norway New Delhi had put in a concerted effort in the production of this report.
Page 9 of 104
Through this report, it is hoped that the momentous need for a change in the shipping and its associated
industries is emphasized. The need of the hour is collaboration with foreign companies to provide services
and means that India seems to be falling back on; and Norwegians are a good place to start.
Page 10 of 104
1.2. Abbreviation
Acronym
ABG
AHT
AHTSV
AMET
A&N
CBM
CCDS
CFD
Class
CONCOR
DP
DNV
DWT
EOU
EOI
EPTRI
FRP
GE
GMB
GSPCB
HIMT
HFO
IMU
IT
IIT
IITM
IITK
IACS
ICTT
INR
IMO
IMU
IPO
IRS
ISM
JNPT
KSRI
KW
Definition
Agarwal Business Group
Anchor Handling & Towage
Anchor Handling Towage & Supply Vessel
Academy of Maritime Education & Training
Andaman & Nicobar
Condition Based Maintenance
Currency counting and Detection System
Computational Fluid Dynamics
Classification Society
Container Corporation of India
Dynamic Positioning
Det Norske Veritas
Deadweight Tonnes
Export Oriented Unit
Expression of Interest
Environmental Protection Training and Research Institute
Fiber Glass Reinforced Plastic
Great Eastern
Gujarat Maritime Board
Gujarat State Pollution Control Board
Hindustan Institute of Maritime Training
Heavy Fuel Oil
Indian Maritime University
Information Technology
Indian Institute of Technology
Indian Institute of Technology, Madras
Indian Institute of Technology, Kharagpur
International Association of Classification Societies
International Container Transshipment Terminal
Indian Rupees
International Maritime Organization
Indian Maritime University
Initial Public Offer
Indian Register of Shipping
International Safety Management
Jawaharlal Nehru Port Trust
Krylov Shipbuilding and Research Institute
Killo Watt
Page 11 of 104
LNG
L&T
MbPT
MDO
MH
MOU
MPP
MSV
MSRDC
NA
NMDP
NIOT
NSDRC
NSTL
OEM
ONGC
OSV
PCB
PMS
PPP
PSV
Ro-Ro
SCI
SEZ
SME
SNAME
SPCB
STCW
US$
UN
VAT
Page 12 of 104
Reference to existing shipping data and the ones that were the product of our own analysis.
Assessing the degree of willingness and interest shown by the shipping industry players.
Analyzing past data and trends to identify the scope and the amount of opportunity in the present
scenario, as well as the potential ones in the near future.
Evaluating the ground reality of ship-breaking industries and framing a decisive outlook, along with
the impact an immediate overhauling would create in that particular segment.
Identifying the areas in Indian maritime education and R&D segment that can be updated and
improved.
Amassing various viewpoints in ship-building industries, and reaching a critical conclusion that would
cater to the opportunity-seeking foreign investors.
Page 13 of 104
Identifying the market segment that would allow for technology upgrade in their current fleet, and the
reasons why it would work.
Studying the present government regulations, reforms and tax laws, and constructing a brief account
of how the same could be benefitted by the foreign investors.
The current market supplier base in various segments of shipping industry, and the areas it leaves a
lot to be desired.
Determining the ways in which foreign investors could gain through collaboration and investment of
technology, intellectual property, machineries and equipments.
Page 14 of 104
2.
INDIAN SHIPPING
Several shipping companies in India, both private and government owned, have planned to undertake
aggressive fleet expansion drive. The capacity expansion would be undertaken across cargo ships segment
such as bulk carriers, tankers, etc. New building of ships to be used for offshore oil & gas exploration,
towage and coastal security will also be on the prospective ships going forward.
The new building plans of shipping companies open up opportunities for the equipment suppliers and
environment friendly technology providers. The recent slowdown did not deter Government owned
companies in India from making fresh investments for fleet acquisition. The private sector did not cancel their
existing newbuilding orders, unlike their global peers. This shows the robust and long term business
opportunities for the shipping companies in the country. In fact, most of the newbuilding orders awarded to
Indian shipyards in India at the time of slowdown were from government companies such as ONGC, SCI and
other firms such as coast guard, navy, etc. Indian shipping industry opens up window of equal opportunities
both for the Indian firms as well as foreign firms. Moreover, even if the ship is built in India, it has large
dominance of imported equipments and machinery. Indian shipping industry opens up opportunities both in
the newbuilding as well as refurbishment segment for Norwegian equipments and technology providers.
The shipping industry in India is highly fragmented. Despite the nature, a substantial portion of the fleet is
owned by the organized market in the sector. Following table shows the ownerships details of ships with the
age of their fleet.
Table 2-1 Fragmented ownership of Indian Shipping Companies (As on June 2010)
Shipping Firms
Description
Owners
10 to 19
20 to 29
> 30
Total
Organised
20
156
118
152
40
466
Semi Organised
67
102
76
94
44
316
Fragmented
198
48
44
72
52
216
285
306
238
318
136
998
Total
Source: Mantrana Maritime Advisory
There are 20 owners in the organized segment of the shipping industry, and their collective fleet strength is
466; close to 50% share of the overall fleet market in India. Each company in this segment commands at
least 10 ships. The cohesion that comes into play due to such collaboration makes these companies all the
more immune to certain eventualities. For instance, if a particular company were to lose a couple of ships
temporarily due to wear-and-tear or some other reason, it would still have enough fleet strength to fall back
on. However, the same cannot be said for the other unorganized shipping firms in the industry.
The organized segment even seems to be the healthiest, with one-third of its fleet being under 10 years of
age. Companies forming this market consortium are more visionary and enterprising than any other in the
Page 15 of 104
segment. Carrying out business with such a segment ensures a level of commitment and the ability to
deliver. Large ship-owners would provide potential opportunities for Norwegian firms as they undertake more
new-building projects.
Semi-organized segment fall in close second, with a fleet strength of 316 ships and 67 owners among them.
The collaboration in this segment isnt as full-fledged as the previous one. Here, too, ships under 10 years of
age are larger in number, 102. Next in line is the fragmented section of the industry. Of the total 285 owners
in the industry, this market segment occupies 70% of them, and one-third of its fleet is between 20 years- 29
years of age. With ageing fleet, disordered ownership and business activity, here each owner commands no
more 2 ships. This segment is poised to be hit worst during slowdown or any other complications in the
shipping industry. These small companies cater to their individual needs, instead of consolidating towards a
common goal for the overall benefit of the whole industry.
Following section discusses in detail the opportunities associated with Indian shipping companies for
Norwegian firms.
2010
2011
2012
Shipping Corporation
10
Chowgule Shipping
Great Eastern
14
Essar Shipping
Good Earth Maritime
Adani Group
Tata Power
Gujarat Ambuja
Total
2013
2014
21
4
17
5
2
2
19
Total
2
33
20
75
Similarly in the offshore segment, following is the scheduled delivery of Indian companies. Most of the ships
have already tied up with the equipment manufacturer for supply. A large number of ships in this segment
are delayed deliveries of previous years.
Page 16 of 104
Table 2-3 Ongoing newbuilding activity of Indian Offshore Companies (As on March 2010)
Calendar Years
2010
Q2
Q3
2011
Q4
Q1
Q2
2012
Q3
Q4
Q1
Q2
Total
Q3
Q4
Garware Offshore
MSV
Great Offshore
MSV
GreatShip (India)
AHTS
MSV
1
1
PSV
ONGC
AHTS
Samson Maritime
PSV
TAG Offshore
AHTS
Shipping Corporation
AHTS
Total
1
2
12
1
6
2
33
2.1.1. ONGC
ONGC is Indias largest offshore oil and gas company. ONGC has a fleet of 31 supply vessels which were
built in the 80s. Offshore supply not being its core business, the supply vessels are managed by Shipping
Corporation. ONGC has placed orders for newbuilding of 12 offshore vessels at Pipavav Shipyard. Offshore
vessels intend to outsource the management of these vessels to a 3rd party for operations and management.
This is a good opportunity for Norwegian shipping or ship Management Company in the offshore sector,
which intends to enter Indian market. As an operator, they would not have to make investments on high
value marine assets.
ONGC is planning to float a tender to build an MSV class of offshore vessels at the cost of US$ 100 mn. This
would be a good opportunity for the Norwegian shipyards and equipment suppliers to look for the tender of
ONGC.
SCI is also planning to raise close to Rs 13 billion (US$300 million) through follow-on offer from the public.
Shipping Corporation is also working on a long term tie-up with the Steel Authority of India, Indias largest
steel maker for import of coal. If the association is formed through JV as planned, this would provide
additional boost to the shipping corporation fleet expansion plans.
All the ships in the Bulk Carrier, Product Carriers and Crude oil tankers segment have been ordered at the
shipyards based in Korea and China. They are all in the advanced stages of planning and construction. Most
of the equipments and machinery make and type has been finalised. Hence, the existing orderbook of
Shipping Corporation of India may not offer opportunities for the Norwegian equipment suppliers.
In the offshore segment, Shipping Corporation is planning to place orders for 4 more vessels. This could be
an opportunity for the Norwegian firms.
Dredging
Mercator lines own a Jackup rig which has been chartered on bareboat to GreatShip India. Indias largest oil
and gas company requires the service providers to have a minimum 3 years of experience of operating and
managing the asset and services. Since, Mercator lines did not have the requisite experience and
credentials to qualify technical criteria laid down by ONGC; they chartered the rigs to Greatship on bareboat
charter. Greatship India in turn chartered the rig to ONGC on a long term charter. Being subsidiary of Great
Eastern Shipping which had the offshore division working with ONGC could meet the technical and minimum
years of experience criteria.
Mercator lines have also acquired dredgers to capitalise the rising dredging demand in India.
Page 18 of 104
A subsidiary of Mercator lines, Mercator Offshore has raised US$ 78.5 m as loans from Axis Bank. The
amount will be used to build Floating Production Unit, which has been chartered to UK-based Afren
Resources for a period of 7 years. Mercator lines as a company is quite optimist on the growth potential
offshore oil field services industry has. However, company plans to focus on non maritime revenue to
increase its revenue. Hence, there may not be large opportunities for Norwegian firms from Mercator lines.
Page 19 of 104
AHTs that take up 6% of the total Indian-flagged fleet have a small and old fleet. In the last decade, none of
the Indian companies ordered AHTs. This shows a decline in this fleet segment, and it will soon be phased
out. Such ships are hired on spot basis, and the gap is mainly filled by boats from Singapore.
Crewboat and Utility boat are owned by smaller companies, and most of them are generally older fleet.
There are 195 Indian-flag vessel that serves the offshore sector. Of the total, 158 are OSVs and 37 are
specialized vessels. These specialized vessels undertake geological survey, seismic survey, offshore
construction, etc. A bulk of the OSV fleet is owned by ONGC, Institute of Ocean technology, Geological
Survey of India, Director of light house and some private firms such as Seamec, Reliance, etc.
With ONGC having placed 12 new-building orders at Pipavav Shipyard, there are opportunities for
equipment supplies. The company intends to outsource its OSVs management to a third party. This is again
an opportunity for the Norwegian firms to manage ONGCs fleet for them. The company is even planning to
float a tender to build an MSV for US$100 million; an opportunity for the Norwegian ship-building firms.
Shipping Corporation of India (SCI) plans to order 4 more OSVs; an opportunity for the Norwegian
firms/shipyards. In order to double its cargo-carrying capacity to 10 million DWT, SCI has decided to invest
$4 billion in the next four years. This expansion will provide enough opportunities for the Norwegian firms to
provide SCI with the equipments and the technical know-how.
Greatship has allotted US$365 million for its ongoing fleet expansion. Greatship is likely to raise US$100
million equity through IPO for its scheduled expansion. It can raise a debt of US$100 million to US$150
million and fund expansion of US$250 million. Great Offshore plans to invest US$150 million to acquire 5
OSVs. Its proposed fleet expansion would be a mix of OSVs and offshore construction vessels. These
newbuilds will be ordered at Bharati Shipyard.
These slated expansions can provide ample of opportunities in terms of ship-building, technology transfer,
and machinery and equipment supplies to the Norwegian firms.
Page 20 of 104
Offshore VesselsbyNumber
Other, 45
Survey, 34
AHT, 44
AHTSV, 18
MSV, 6
OSV, 68
Page 21 of 104
Existing Fleet
Under Construction
Fleet
DP
Fleet
DP
Great Offshore
28
14
Greatship
10
10
11
11
Shipping Corporation
10
10
ONGC
31
12
Tag Offshore
Varun Shipping
Samson Maritime
10
Garware Offshore
11
Total
111
54
35
23
Shipping Corporation of India which had its fleet built in the early 80s did not have DP system. They have
got the existing fleet converted DP systems. This opens up opportunities for Norwegian firms such as
Konsberg to undertake such conversion projects in India.
Page 22 of 104
Page 23 of 104
have received substantial wear and tear. This leads to the reduction in the output of the engines to the tune
of 5% to 10%. It also increases emission of environmentally hazardous exhaust.
The Indian shipping industry in the present stage has not been so proactive in embracing the use of
environment friendly technologies. The industry has accepted and implemented all the technologies and
practices which have become mandatory to be used in the ships. There is large scope for voluntary use of
some of the technologies that are friendly to environment and also help in bringing down the operating and
maintenance cost of ship. However, the ship owners, in general, are not ready to try the newer technologies
unless they find visible and tangible benefits of using them. The primary reason for this is the cyclicity of the
shipping industry. Shipping companies 1st tend to expand to newer fleet and sometimes diversify on the
gains they make from high charter rates. Rest of the time they try to make their ends meet. This does not
leave much room for them to try newer technologies. Most of the companies are conservative in their
approach. However, they implement every system and process which has been accepted internationally and
has been made legally binding on them. In such a scenario, it will be essential for the Norwegian service
providers to first spread the awareness of the economic benefits of using these technologies, before actually
selling these to them.
In the present competitive environment, the 2nd deterrent factor in the use of environment friendly systems
and technologies in the Indian shipping industry is the outsourcing of technical management of ships. A
large number of shipping companies, in order to minimize the operating cost of their ships, outsource the
technical management of ships to some 3rd party, predominantly called Technical managers. The technical
managers optimize the fleet taken from various owners, reducing overall cost involved in the technical
management of ships. All decision related to repair and maintenance of ship is undertaken by the technical
managers. As these technical managers work against a fixed fee for maintenance of ships, their main
objective is to save cost by implementing bare minimum requirement specified on the rule book of
classification society or statutory body. This becomes the biggest deterrent for the use of environment
friendly technology.
Page 24 of 104
The chart above shows the broad breakup of the different types of medium and large cargo ships by their
age. As can be seen in the chart, 108 ships out of the total of 294 ships are more than 25 years of age,
constituting more than 30% of the fleet. Dry bulk carrier followed by petroleum products carrier dominates
the ageing fleet. In the drybulk segment, Essar Shipping, Radiant Shipping, Good Earth, Five Star Bulk
Carriers, etc. are some of the companies owning older tonnage. This old ship segment in drybulk is a
fragmented market; therefore there are several owners with one ship fleet.
The product tanker segment has 26 ships of more than 25 years of age. Some of the owners of these ships
are Great Eastern which has 6 tankers, Shipping Corporation and Mercator lines which has 4 tankers each,
and the rest 12 product tankers are distributed among the 9 shipping companies. Out of the total 75 vessels
of above 25 years of age, 19 are crude oil carriers with 13 belonging to Shipping Corporation of India.
Page 25 of 104
Shipping Corporation of India is owned by Government of India. The company has Navaratan Status, which
provides it partial autonomy in financial and operational decision. Still, being government body it would be
difficult for the company to undertake innovative decisions with the flexibility a private firm can take. Hence, it
is less likely that the shipping corporation of India would consider any out of the box proposals related to
environment friendly systems and technologies.
Ships falling in the age group of 10 years to 19 years could also be targeted with the environment friendly
technologies and services. The possibility of acceptance of these technologies by ships falling in this age
group is higher compared to older vessels. These ships are relatively young; hence the owners would not be
concerned even if the payback period is longer.
One of the reasons for poor acceptance of environment friendly technology is that the ship owners look for
immediate tangible benefits of their investment. There could be instances, when the outcome of the
investment is visible immediately. Some of the investments show economic benefits gained due to these
investments in the long run. It becomes difficult to convince the ship owner to invest on technology and
system. Overseas shipping is very cyclical; there is a wide fluctuation in the charter rates and in the earnings
for the shipping company. In such a scenario, solutions which have been proved to reduce operating costs
have more chances of acceptance.
Norwegian service providers, especially ones undertaking propeller maintenance, hull maintenance, engine
and other machinery maintenance, could approach companies with older fleet to provide environment
friendly technologies and systems. Older machinery needs to upgrade their performance to meet the latest
CO2 and NOx norms. These companies would be willing to evaluate technology which would help conserve
exhaust to be reused. The ship owners in India are price sensitive; the value for money takes priority over
environment. The environment friendly technology either needs to be enforced through international or local
laws.
Page 26 of 104
30 to <35
7%
> 35
9%
< 5 Yr
24%
25 to <30
16%
5 to <10
17%
20 to <25
6%
15 to <20
8%
10 to
<15
13%
The willingness to adopt environment friendly technology by shipowners would be a function of the economic
state of the ships. Ship which are in higher power segment command high charter rates, are more willing to
undertake better upkeep of the ship and are also willing to implement technologies and systems which can
reduce emission and improve their performance. Such ships could evaluate installing additional equipments
which could improve their performance or undertake minor modifications after undertaking cost benefit
analysis. The approval of ship owner to undertake modifications to its machinery and system would be in
consultation with the OEM and the classification society. For India, Indian Register of Shipping plays role of
statutory authority for all Indian flagged vessels. IRS will require undertaking type approval of all the
equipments and machinery which would go on board ship. Hence, the Norwegian equipment supplier would
1st have to get registered and type approved with the Indian Register of Shipping. If the equipments have
been accepted and approved by any of the IACS (International Association of Classification Society), the
type approval with IRS becomes simpler.
Page 27 of 104
Following figure shows the distribution of engines by the power and make.
Figure 2-4 Manufacturer distribution of diesel propelled ships (March 2010)
Daihatsu MTU
Greaves
3%
3%
3%
Yanmar
6%
Caterpillar
13%
Wartsila
Rolls 4%
Royce
5%
Others
22%
Niigata
4%
MAN
4%
Kirloskar
4%
Cummins
29%
There are close to 700 ships with diesel propulsion registered with Indian registered of shipping. Most of
these ships have twin screw propulsion. As a large number of these ships are old there exist opportunities
for technology and other service providers to upgrade systems and install newer systems such as exhaust,
boilers with technologies to conserve energy and also system which are environment friendly.
As can be seen in the above chart on the right, there is a dominance of Cummins engine in the diesel engine
segment. These engines are mostly for ships of less than 1000 KW engines. Cummins has its manufacturing
units in India. They make engines which are very popular in small ships and barges. Most of these engines
do not have latest technologies, etc. This is an opportunity segment for Norwegian technology providers
which can tie-up with the engine manufacturer such as Cummins and upgrade their engines with latest
technologies such as fuel injection, etc. Most of the ships using these engines operate in restricted waters.
Unlike larger ships the environment guidelines are not there for such ships or even if they are present
internationally, they may not be applicable in the local conditions.
As can be seen in the charts below ships which fall in the power range of 1000 KW to 4000 KW fall mostly in
the age range of 10 years to 29 years. There is close to 24% of ships less than 10 years of age. For
environment friendly technology the service providers should consider ships which are more than 1000 KW
of engines. These ships are capital intensive ships; they have high operating cost. Hence, the shipowner
based on the economic benefits of the technology would be willing to undertake upgradation of equipments
and machinery in this segment. The ship owners would also be able to accept environment friendly and
efficient solution to hull and propeller maintenance.
Figure 2-5 Market Share of Engines in the power range 1000 KW to 4000 KW (March 2010)
Page 28 of 104
Caterpillar
15%
Others
23%
Cummins
5%
Daihatsu
6%
MAN
4%
Yanmar
17%
Niigata
10%
Wartsila
10%
MTU
5%
Rolls Royce
5%
In addition to the modification to the engines, Norwegian firms could provide modern rudder, propellers, etc
to the ships which will enable increase in speed and reduce fuel consumption. Depending upon the cost
benefit analysis, Norwegian firms should also pitch for changing system integrated equipments such as
Turbo Charger with the engines. These equipments require huge investment and price sensitive ship owners
may not be open to undertake extensive modification and refurbishment. However, if the economic benefits
of such retrofit and new installation are proved, ship owner could agree to undertake investments.
The chart below lists out the engine make for the ships less than 1000 KW. A very significant proportion,
55% of the total market share, is occupied by the Cummins engine for ships with less than 500KW. Owning
such a large share of the propulsion segment, Cummins is a healthy prospect for any company looking to
invest in the engine segment of Indian shipping industry.
Figure 2-6 Market Share of Engines in the power less than 1000 KW (March 2010)
Others
18%
Caterpillar
10%
Volvo Penta
2%
MAN
2%
Kirloskar
8%
Greaves
5%
Cummins
55%
As of now, Norwegians have no presence in the propulsion segment for smaller power engines. Therefore,
entering into collaboration with Cummins would give them the visibility and the opportunity on Indian shore.
Norwegian engine firms could provide their environmentally friendly technology for engines, such as
electronic injection of fuel. Most of these ships operate in restricted waters; mostly in the coastal shipping,
Page 29 of 104
movement of goods in harbour area, lighterage, etc. Unlike larger ships, environmental guidelines arent
enforced on such small ships; at least not in the local conditions.
Most of these ships were build using older standard design, and during the time when environmental impact
wasnt much of a concern. So, in addition to modification or renewal of engines, Norwegians could even
provide new concept of use of hull forms, propeller, rudder, etc. which will enable increase in speed and
reduce fuel consumption.
The next company that has a remotely mentionable share is Caterpillar; 10% of the total market share. So,
its obvious that ship owners prefer engine of Cummins make more than any other available. So, setting up a
deal with such a company would provide the Norwegians a hefty share in the market to provide their services
and equipments.
Ships with less than 1000 KW engines operate at relatively lower charter rates and lower utilization. There is
less awareness and regulations compared to higher powered vessels. It is less likely that ships less than
1000 KW engines would undertake large investments for environment or efficiency.
The chart below shows the distribution of the ship makers with more than 4000KW engine. Rolls Royce
dominates this segment, with a 37% share in the total 4000KW diesel engine market, whereas the other
three mentionable players have a meagre share in the same. About 40% of the total 4000KW diesel engine
market has a very fragmented supplier base.
Caterpillar
11%
Nohab Diesel
6%
Others
40%
Rolls Royce
37%
Wartsila
6%
The chart below shows the distribution of the ship makers with more than 4000KW engine. Rolls Royce
dominates this segment, with a 37% share in the total 4000KW diesel engine market, whereas the other
three mentionable players have a meagre share in the same. About 40% of the total 4000KW diesel engine
market has a very fragmented supplier base.
Page 30 of 104
Getting into a tie-up with Rolls Royce will present the Norwegians the opportunity to supply their technicallyadept services and other auxiliary equipments that would supplement the engines efficiency, productivity,
and a reduction in the overall fuel consumption.
The ships that are catered by the fragmented segment of the market are very old, and are bound to either
head for scrapping or overhauling. These old ships, again, present the opportunities for the Norwegians to
provide new hull forms, propellers, rudders, etc. that would help elongate and improve the present engine
lifespan of such ships.
Greaves
3%
Others
15%
Caterpilla
r
12%
Yanmar
6%
Wartsila
3%
Rolls
Royce
5%
Niigata
6%
Cummins
50%
More than propulsion and machinery, the ships in this segment could undertake Hull maintenance,
improvement of propeller efficiency, etc.
Page 31 of 104
These ships could undertake modification to their engines such as introduction of electronic fuel injection,
modification or replacement of turbo charger. These modifications would improve the performance of the
engine and also reduce the extent of pollutants to environment.
Figure 2-8 Engine manufacturer distribution of diesel propelled ships of 10 to 20 yrs age (March
2010)
Others
15%
Greaves
6%
Caterpilla
r
16%
Yanmar
10%
Cummins
32%
Wartsila
10%
Rolls
Royce Kirloskar
6%
5%
Source: Mantrana Maritime Advisory
Ship owners in the offshore supply vessels segment would be more open to use of environment friendly
technology if it brings down their operating cost. Hence, service providers should target offshore companies
and also tugs with large bollard pull. Companies which can be targeted in this segment for environment
friendly and higher ship efficiency are ONGC, SCI, Great Offshore, Samson Maritime, Ocean Sparkle, etc.
Most of these shipping firms have older fleet which would require performance improvement.
The supplier base for engine is limited and hence would be easier for the Norwegian technology provider to
work with the OEM and provide the solutions. In most of the cases, an OEM would not provide the mandate
to work on the upgradation of their engines or other machinery. In such a scenario, the service providers
success would depend upon the decision of the owner and the classification society.
Figure 2-9 Engine manufacturer distribution of diesel propelled ships of more than 20 yrs age (March
2010)
Daihatsu
6%
Yanmar
5%
Wartsila
2%
MTU
5%
Caterpillar
13%
Rolls
Royce
5%
Niigata
3%
MAN
7%
Kirloskar
7%
Others
41%
Cummins
6%
Source: Mantrana Maritime Advisory
As can be seen in the chart above, ships with diesel engine propulsion with more than 20 years of age have
fragmented suppliers base. A large number of models would not be in production in the present day. Many of
the engine manufacturers have changed their brand name due to consolidation in the segment. Hence, it
would be very difficult for the Norwegian technology providers to provide custom solution to the shipping
industry. Less number of engines with fragmented supply base would not justify the scale for Norwegian
technology suppliers to supply their products and services. Hence, this segment appears to be less
promising to the Norwegian companies in India.
Page 33 of 104
3.
ABG shipyards new infrastructure at Dahej and Bharati Shipyards new infrastructure at Mangalore are said
to have taken more time in getting clearances than initially estimated. Moreover, Bharati Shipyard at
Mangalore had received resistance from the local community; hence, it had to shift the proposed shipyard
from Mangalore in Karnataka to Dhabol in Maharashtra. This has led to the planning and implementation of
infrastructure at a different location. Moreover, as Bharati shipyard had bought the equipments and
machinery of Swan Hunter shipyard to be installed at their Greenfield shipyard in India, there was a delay in
the arrival of the dismantled equipments which caused delay in the commissioning of the shipyard. For ABG
Shipyard, which had initially planned to setup two dry-docks capable of building capsize bulk carriers, later,
changed its plans to installation of Synchrolift facility. This led to a change in the plan and design of the
infrastructure. The latest equipments and shipyard commissioning took time. Several other shipyards such
as Pipavav Shipyard, Tebma Shipyard and Alcock Shipyard faced newbuilding order cancellations due to
delayed delivery. The work practices and the technology adopted for newbuilding of ships are not enough to
match the required pace of construction which will allow shipyards to complete the ships on building berth on
time. This is one area of opportunities for Norwegian firm, where technology and work practices need
to be customised to Indian conditions. This would help local shipyards in India achieve faster
turnaround from their shipyards.
Page 34 of 104
The shipbuilding industry in India needs support on productivity improvement at all levels. The growth to
Indian shipbuilding, especially private sector shipyards, has been market driven. Due sudden demand for
ships and boom in shipbuilding, newbuilding orders flew to Indian shipyards. The shipyards followed the suit
and developed infrastructure and expand their resources to undertake newbuilding of new orders. The time
frame of this growth achievement has been very short, unlike other countries such as South Korea, Europe,
etc. Hence, the growth of the industry has not been as organised as in case of other counter parts. Since the
year 2002 the shipyards in India has been moving up the value chain with building more sophisticated ships.
If one considers the case of two shipyards namely Bharati Shipyard and ABG shipyard, both the shipyards
had been building ships of the value US$ 12 million to US$ 15 million in the year 2004. However, in the 2006
and 2007 both the companies got orders for US$ 180 mn offshore jackup rigs. The transition from a shipyard
building ships of the value US$ 15 mn to US$ 180 mn has been very fast. In both scenarios the way to
execute project, the process for higher of equipments and machinery, financial management are far different.
As the companies migrated to such large segments in very short period of time, they appear not to have
learned the actual process of handling large projects. This leads to delays, as the shipyard is not able to
scaleup its execution and other management capabilities.
Table 3-1 Financial growth of Shipyards in India (INR mn)
200102
200203
200304
200405
200506
200607
200708
200809
2009-10
8yr CAGR
ABG Shipyard
485
2,145
2,743
3,473
5,493
7,044
9,668
14,122
18,124
57%
Bharati
Shipyard
594
611
1,217
1,793
2,600
4,250
7,017
9,340
13,484
48%
There has been little scope of training to the middle and senior management. Workers have been trained to
an extent to handle shop floor activities. However, there was no time and infrastructure available to train the
middle management and senior management personnel. Persons who were building tugs and barges as
project manager, in the absence of manpower were given the task to handle projects of building
sophisticated offshore vessels. A tug would cost roughly US$ 6 mn and a barge would cost about US$ 1.5
mn, however offshore vessels could cost anything between US$ 15 mn to US$ 70 mn.
In the absence of smooth transition both at the middle management level and senior management level, it
could be difficult to develop at par expertise with the established shipbuilding countries or shipyards. This is
on big opportunity, where Norwegian firms could hand hold Indian companies in training them with the best
practices and improving their productivity across all levels. .
Shipbuilding industry is a specialised and customised industry. Due to its nature it cannot be automated
beyond a certain limit. Unlike automobile or any other light engineering industry where an assembly line can
be created which can generate output irrespective of location, every ship at building stage is a new project
Page 35 of 104
with wide range of variables. This requires meticulous planning and implementation. The knowledge base of
managers and skill set of workers play a very important role in the output. Several shipyards in India at
various stages have taken help of external experts in planning their shipyards and adopting state of the art
work practices. Most of them have achieved partial success in the venture. Following table is a compilation
of the shipyards and their designers who played key role in the planning of shipyard at various stages. This
would provide insights which will enable Norwegian firms to arrive at optimum solutions which are best suited
to the Indian standards and conditions.
Table 3-2 International Designers and the shipyards they designed in India
Name of Shipyard
Location
Designer
ABG Shipyard
Dahej, Gujarat
Bharati Shipyard
Dhabol, Maharashtra
Cochin Shipyard
Cochin, Kerala
Mitsubishi
Appledore International
Goa Shipyard
Goa
Appledore International
Pipavav Shipyard
Pipavav, Gujarat
Appledore, KOMAC
Tebma Shipyard
Malpe, Karnataka
European Consultant
Page 36 of 104
All the large shipyards in India have been designed and implemented by experienced consultants of
international repute, the technology and optimum automation level is already in place with the existing
shipyards. However, there is an urgent need to integrate the latest technology with the skill set available
locally. Norwegian firms could undertake improvement of work practices and skill set development leading to
an increase in the productivity of the shipyards.
The private sector shipyards in India, due to lack of infrastructure, had been employing manual methods of
undertaking newbuilding till the year 2004. However, with the increase in newbuilding orders, most of the
shipyards bought automated cutting and bending machines. Some of the shipyards began to use latest
software such as Foran, Ship-constructor and Tribon for the design and detailed engineering of their ships.
Acceptance of higher automation has led to increase in the productivity level at Indian shipyards to a certain
extent. If one quantifies it, the time taken to fabricate 1 Ton of steel has come down from 300 man-hours to
roughly 220 man-hours, close to increase in the productivity by roughly 25%. However, it is still low
compared to the productivity levels found in the international shipyards based in Korea or China.
The shipyards in India attribute the causes of low productivity to two main causes. Shipyards in India have
been building ships in the specialised segment. The extent of automation is limited leading to lower per ton
output from the Indian shipyards. With increase in the equipments and machinery and better interface
between the workers and the automated machines, the output per person from the shipyard would increase,
increasing productivity from the shipyards. The shipyards also believe that with the increased sizes of ships
built at Indian shipyards most of shipbuilding yards in India have adopted automated cutting and bending
machines. They also make use of extensive pre outfitting leading less man-hour spend in building ships,
increasing productivity.
In order to achieve the level of output and productivity similar to International shipyards, Indian shipyards
have to work on several more fronts. The shipyards in India would have to increase the skill set available
with the workers. These workers could be employees of the shipyard or they could also be on the payrolls of
subcontractors working for the shipyard. It also has to increase the planning and execution capabilities of the
management. This area opens up opportunities for Norwegian firms, which could design work practices at all
fronts, namely detailed engineering, production planning, procurement, inventory management, etc. The
Norwegian firms and shipyards have over the years developed technologies and work practices. However,
these work practices needs to be customised to Indian conditions. Different shipyards at different locations
face wide range of variables. For example, Tebma Shipyard located at Malpe is prone to heavy rains,
whereas Dahej Shipyard of ABG is located at a very hot location. The summer temperature, at this yard,
rises upto 40 degree. Hence, the infrastructure and work practices have to be designed accordingly.
Workers working as welders, fitters, etc. are uneducated, in many cases even illiterate. The technology used
at the shipyard has to be friendly for them to use.
Page 37 of 104
Name of Company
Dry Dock
Slipway
All the above listed companies have expressed interest in leasing the facility offered by Mumbai Port Trust.
This opens up opportunities for the Norwegian shipyard and ship repair facility designers to join hands with
the probable bidders to develop ship repair infrastructure in Mumbai region. There is also a possibility of
Norwegian firms leasing the facilities jointly with the bidder to setup ship repair unit or it can as well advice
the bidder in infrastructure planning for the proposed ship repair yard.
Among the listed companies, ABG Shipyard and Bharati Shipyard are the biggest of all the bidders by
financials capabilities and also have two large yards with no prior experience of repairing ships. Though ABG
has a subsidiary, Western India shipyard undertaking full fledged ship repair activity in Goa, is still
considering an independent bid for the Mumbai ship repair infrastructure. Jaisu shipping is the 3rd largest
company. Rest all are comparatively smaller firms. Hence, it would be advantageous for the Norwegian firms
to associate with the three above mentioned companies.
In addition to the Mumbai Port Trust, Kandla Port Trust and Cochin Port Trust were evaluating the option of
setting up ship repair infrastructure. Cochin Port Trust has given up its desire to develop ship repair
infrastructure. However, Kandla Port Trust still is pursuing its plans to setup shipbuilding and repair
infrastructure at a site in the vicinity of its ports premises. The port trust already has a floating dry-dock
which is operated and managed by Jaisu Shipping. Jaisu undertakes repair and newbuilding of ports craft,
their own dredgers and vessels owned by the 3rd party. This opens up opportunities for the Norwegian firms
Page 38 of 104
in design of shipyard, planning layout and work process at the shipyard. Ship repair industry requires very
high turnaround from their slipway or drydocks. The services offered in Indian conditions is not at par
international standards for the following major two reasons
Systems and processes at the ship repair yard is not designed adequately
The expertise available with the Norwegian firms could help to mitigate the 1st drawback, by providing
requisite inputs for the design and process management at the ship repair yard. However, the 2nd parameter
would take time. However, there has been visible improvement seen in the recent years as several
international OEM suppliers and 3rd party service providers have setup their workshops to assist Indian
shiprepair Industry. Some of the example of these ventures is Goltens which has setup its workshop in
Turbhe, Navi Mumbai. Rolls-Royce has setup its workshop and service centre at Turbhe in Navi Mumbai,
Wartsila has setup a series of workshops at several ports in India. Wartsila has also taken drydock owned by
Paradip port trust on a long lease of 5 years to be renewed again at the end of 5 years.
With increasing local fleet and growing trade in the Indian subcontinent, the opportunities in the services
sector are likely to increase with time. Service providers, especially SME should increase their presence by
setting up workshops and service centre. Wartsila in the last 5 years has successfully setup 6 workshops
and service centers and one shiprepair unit to repair ships upto 80 m of length.
Page 39 of 104
facility from Norwegian firm; same is true for Indian Navys Karwar facility. The material handling equipments
have been procured by ABG Shipyard from TTS, a Norwegian firm.
Page 40 of 104
the track record of previous delivery. This could be considered as a good sign for technical expertise,
delivery record at a competitive price by Indian Shipyard. However, the commercial terms and pricing of
ships ordered at shipyards have scope for escalation. Hence, in general a yard does not take initiatives for
adding additional items which are not provided in the specification of the ship and the cost of adding such
items have not been factored during the costing of the ship.
The newbuilding orders won by the shipyards in India are after tough competition with the shipyards in
China, Vietnam and Europe. The pricing of the ships has no scope for price escalation. The margins in the
newbuilding activity are very thin. In such a scenario, if the shipyard starts using raw materials which have
15% to 20% higher price, the cost of producing ship increases. In the present competitive scenario, it is
difficult to accommodate any additional feature during newbuilding.
The materials and consumables used during new construction of ships are approved by the IMO and other
regulatory bodies. Newer innovations have led to the production of environment friendly products like paints,
panels etc. which can be used during construction. A ship owner asks for lowest price and earliest delivery
from the shipyard. It provides the specification. Till the time, the owner has not specified to use environment
friendly raw material in the ship, a shipyard uses materials and consumables which have been approved by
the regulatory bodies and classification societies.
The following figure shows the geographical distribution of owners, who have placed newbuilding orders at
the Indian Shipyards. As can be seen in the map below, majority of the newbuilding orders have come from
the ship owners based out of European countries, which are environment conscious and have very high
environmental standards on their ships.
Figure 3-1 Geographical location of owners placing orders at Indian Shipyards
Page 41 of 104
Indian shipyards have built offshore supply vessels for leading offshore companies such as Deep Sea
Supply, Bourbon Offshore, Lamnalco Group, Halul offshore, Maridrive oil, etc. Hence the shipyards are
willing to provide additional technologies in the ship, which would provide cost savings during regular
operations of ships, if the owner specifies and pays for the added equipment and technology. Presently, the
shipyards in India install latest approved equipments and machinery. The technologies adopted and installed
on the ships are approved by the regulatory bodies and also comply with the local regulations prevailing in
the region ships are desired to operate. Any additional requirement by the ship-owner would be implemented
by the shipyard; however, it should be specified in the technical specification of the ship.
Page 42 of 104
Domestic
No
Export
Rs bn
No
Total
Rs bn
No
Rs bn
25
50
43
40
68
90
Cargo
13
18
77
93
90
111
Navy
19
12
19
11
15
10
22
59
87
129
148
188
235
Others
Total
Navy
5%
Others
9%
Offshore (Oil
& Gas)
39%
Cargo
47%
Cargo carriers, especially the bulk segment, and ships catering to the offshore oil and gas segment dominate
the newbuilding orders of Indian shipyards. All of the orders placed to the Indian shipyards in cargo segment
are bulk carriers. All the bulk carriers ordered at the Indian shipyards were contracted in the year 2007. Not
much progress has happened since then. These newbuilding orders were placed at Indian shipyards in the
year 2006 to 2008. Very few ships have been delivered from by Cochin Shipyard and Hindustan Shipyard.
Page 43 of 104
Cochin Shipyard delivered all its newbuilding orderbook for cargo carriers and stopped taking new orders.
However, Hindstan shipyard still has about 5 bulk carriers to be built. The company has been taken over by
the Ministry of Defence and is not likely to undertake newbuilding of commercial ships in future.
Other shipyards which have orders for building cargo vessels are ABG Shipyard, Bharati Shipyard and
Pipavav Shipyard. ABG shipyard is building ships for Essar Shipping.,
AHTS
2006
Bulk
2007
MPP
2008
MSV
PSV
2009
2010
Offshore
Others
As can be seen in the chart above, 2007 was the peak year for newbuilding orders flow to the domestic
shipyards in India. The majority of the newbuilding orders were bulk carriers. For the 1st half of 2008,
contracts were signed with the Indian shipyards. Later there were no new orders placed at Indian shipyards
due to slow down effect. However, in the year 2009, orders began to flow to shipyards in India. Most of these
new orders were newbuilding orders placed by government owned shipyards. In the year 2009, ONGC
placed newbuilding orders to built 12 supply vessels to the Pipavav Shipyard. Shipping Corporation placed
orders for building 4 supply vessels to Cochin shipyard on nomination basis. For the first time in 2010,
newbuilding orders for commercial ships were placed at the ABG Shipyard. Associated bulk carriers placed
newbuilding orders for 3 cement carriers to ABG Shipyard. These cement carriers are on long term charters
to Ultratech Cement in India.
Shipping Corporation of India is likely to undertake large scale expansion program and would be placing
newbuilding orders at various shipyards. In addition, Greatship India limited is likely to raise funds through
IPO. This will be used for expansion of their fleet.
Page 44 of 104
2008
Bulk
MPP
2009
MSV
PSV
2010
Others
The shipyards in India have not received new orders in the bulk segment neither have they delivered any of
the existing bulk carrier orders in last 2 years. Going forward the delivery trend of the existing contract would
provide guidance for newbuilding order in the segment. Despite orders from the international players,
domestic companies are still looking to foreign shipyards for building their ships. Cochin Shipyard has been
an exception, and has delivered all its bulk carrier orders to clipper group. It is also delivering offshore
vessels order on time.
Page 45 of 104
ABG Shipyard has received orders for building 3 numbers Cement carrier of 20,000 DWT. These cement
carriers have been ordered by Associated Cement, which has long term contract for charter hire of these
ships to Ultratech cement on bareboat in India.
Cochin Shipyard has received newbuilding orders for building 2 number offshore supply vessels from
Shipping Corporation of India. Both the orders have been placed to Cochin Shipyard on nomination basis.
Cochin Shipyard is likely to raise funds for expansion through IPO route. Government owned companies
such as Shipping Corporation could place newbuilding orders for more ships to the shipyard to increase
valuation.
L&T Shipyard has received orders for building 20 number offshore patrol vessels from Indian Coast Guard.
The order is being disputed by Cochin Shipyard. Cochin Shipyard is claiming the orders, which may go to
Cochin Shipyard.
Pipavav Shipyard has setup largest drydock in India. The company has received newbuilding orders from
ONGC for building 12 offshore vessels in sept 2009. All the orders have been won at a price of INR 5240 mn
(roughly US$ 120 mn). In the present market, the price quoted by Pipavav Shipyard appears to be an act of
heavily under quoting. ONGC distributed tenders to the selected party, who were eligible to bid for the
project, it is not confirmed whether these ships have Dynamic Positioning System or not. Wartsila ship
design is supplying the complete design package.
Apart from the ONGC offshore vessels order, the media reports have also mentioned newbuilding orders
worth INR 2.6 billion to Pipavav shipyard from Indian Navy.
Page 46 of 104
Name
Location
Capacity DWT
ABG Shipyard
Existing
20,000
Alcock Shipyard
Bhavnagar, Gujarat
12,000
NA
8.6
0.9
9.6
Bharati Shipyard
Mumbai, Ratnagiri(MH),
Dhabol (MH), Goa
20,000
100,000
14.2
27.9
42.1
Chowgule & Co
Goa
8,000
NA
2.7
2.7
Cochin Shipyard
Cochin, Kerala
110,000
Small Ship
2.9
5.5
8.4
Hindustan Shipyard
Vizag, AP
70,000
NA
6.8
6.8
Hazira, Gujarat
12,000
NA
14.8
14.8
Pipavav Shipyard
Pipavav, Gujarat
NA
300,000
5.3
35
40.4
Tebma Shipyard
Mangalore, Karnataka
6,000
NA
10.5
10.5
87.3
148
235.3
Total
Expansion
120,000
Domestic
49.4
Export
50.7
Total
100.1
Pipavav Shipyard has setup the largest shipyard in India, which can build ships upto 300,000 DWT. In
addition, shipyards like Tebma Shipyard, Larsen & Toubro, Shoft Shipyard, etc. are targeting to capture
small and specialised ship market. With the increase in number of shipyards, other smaller and allied
infrastructure has begun to develop by forming clusters in the region. Still, in the present scenario, the extent
of import items to be fitted on ships built in India is quite high. With the increase of newbuilding activity and
the increase in number of shipyards in the country, the local content in the newbuilding of ships are likely to
increase further.
Page 47 of 104
Location
Drydock/Shiplift
Slipway
(mxm)
Comments
Hazira
4500 T - Shiplift
Hazira
155 x 30 x 7.5
Dahej
33,000 T - Shiplift
12 ships
Bhavnagar
85 x 20
Chanch
122 x 22 x 4.5
up 20,000 DWT
ABG Shipyard
18 building berth
Alcock Shipyard
Bharati Shipyard
Ratnagiri
200 x 18
Shiplift is planned
Ghodbunder
100 x 17
4 berths
Goa
80 x 18
Kolkata
120 x 22
Dhabol
155 x 40
Floating Dock
Mangalore
Chowgule Shipyard
Goa
220 x 20 x 3.5
220 x 20
Cochin Shipyard
Cochin
255 x 43 x 9
New building
Cochin
270 x 45 x 12
Repair
Hazira
120 x 22
Pipavav Shipyard
Pipavav
662 x 65
Shoft Shipyard
Bharuch
115 x 25
3 slipway
Tebma Shipyard
Malpe
210 x 21.5
The largest shipyard in private sector, ABG Shipyard, has a yard in Hazira with a shiplift of 4500T capacity,
and the yard houses 18 building berths. ABGs yard in Dahej has a shiplift capacity of 33,000T. The yard is
capable of building 12 ships at a time. Alcock Shipyard in Bhavnagar hasnt been operational due to heavy
siltation. Its yard in Chanch, however, can undertake new-builds of 20,000 DWT.
Bharati Shipyard has planned a shiplift at its Ranagiri asset and a drydock at its Kolkata yard. It has a
floating dock at its Dhabol yard. Cochin shipyard is exploring the possibilities of setting up a 100m drydock.
The yard takes new-building as well as repair activities.
Larsen & Toubro (L&T) has a slipway in its Hazira yard, and is planning to set up a shiplift, too. Pipavav
Shipyard is planning to convert its wet basin into a drydock. Shoft Shipyard in Bharuch has 3 slipways. While
Chowgule Shipyard in Goa is supported by 2 construction bays, Tebma Shipyard in Malpe is supported by 4
construction bays.
Page 48 of 104
There are opportunities from planning and constructions of the scheduled shipyard expansions, to entering
into a deal with these yards and provide them the technological expertise in new-building and repair
activities. Moreover, supply of equipments and machineries is also an area where Norwegian firms could do
business with the Indian ship-building industry.
Page 49 of 104
The shipyard is capable of building all types of steel vessels of ocean going / inland / coastal class and Fiber
Glass Reinforced Plastic (FRP) boats. The manufacturing units of the Company are located at Bhavnagar
and Chanch in Amreli district of Gujarat state. The Company is engaged in the design and manufacture of
FRP boats and steel ships upto 12,000 DWT.
With the rising requirement for ships in the coast guard and coastal police due to security concerns at
Mumbai, the demand for FRP boats has increased. It is likely to increase further in future. Hence, forming a
tieup with Alcock Shipyard to manufacture boats opens up huge opportunities, which can be capitalised by
the Norwegian firms.
The shipyard is primarily into shipbuilding, but has developed the facilities that can be used for the repair of
ships upto 20,000 DWT. The yard was declared for disinvestment in the year 2005 and 2007, though it did
not take place as the bidders price quote was less than the reserve price set by the Government.
Alcock Ashdown caters to the lower and middle segment needs of fleet owners, designs and builds seagoing
grade steel vessels for various purposes as well as inland and coastal ships and boats in steel or fibrereinforced plastics (FRP). The shipyards proximity to Mumbai Offshore and the international Gulf-bound
shipping routes makes Alcock Ashdowns shipyards ideal for offshore support, fabrication, ship repair or new
construction.
The outfit jetty has a depth of 4.5 m and can build multi-purpose cargo and passenger ships of up to 20,000
tonne capacity, platform supply vessels, defence production ships, tugs and barges.
Alcock shipyard had orders for tankers from Sea Tankers; the ships are cancelled due to delayed delivery.
All the equipments and machinery for ships were ordered and most of them have arrived as well. However,
as the orders are cancelled there is no major activity. The ships could be available at very cheap rates. A
Norwegian firm in the segment could evaluate the possibility of acquiring them.
The only risk associated with the transaction is that Alcock being a Government undertaking may face slow
decision making.
Page 50 of 104
Bharati shipyard is working on project of building self propelled offshore jackup rig for Great Offshore. The
rigs are delayed by more than a year.
In addition to the existing six yards, Bharati shipyard jointly with Apeejay group is also setting up a new yard
in Bengal. The shipyard faced opposition on the land issue from the locals. Hence, it is currently looking for
alternate site in West Bengal and Orissa.
Page 51 of 104
Page 52 of 104
Page 53 of 104
According to Section 65 (2) (a) & (b) of Customs Act, customs duty is also levied on the steel scrap
generated during the construction of ocean going vessels which is valued at the price of parent materials if
the vessels are not exported.
Section 61 of Customs Act says that the imported items which are kept under customs bond, if not utilized
within a specified time, 1 year in the case of shipbuilding and 90 days in the case of ship repair, for the
purpose for which they have been imported are deboned, resulting in the payment of customs duty and
interest which ends up in huge loss of the yard.
Page 54 of 104
Consolidated
Rs mn
% Share
13,832
100%
1,485
9,044
3,303
190
107
559
2476
876
1,600
11%
65%
24%
1%
1%
4%
18%
6%
12%
Ship Repair
Rs mn
% Share
2,806
100%
800
-
29%
-
9
21
0.3%
0.5%
The EBITA margin of the Cochin shipyard is 29%. The company has undertaken the refurbishment of
offshore Jackup rig Sagar Kiran and Sagar Bhushan of ONGC. It also undertook the repair of INS Viraat, the
lone aircraft carrier of the Indian Navy apart from other smaller repairs. The company has not reported the
detailed break-up of the ship repair segment. However, under segment results the ship repair division of
Cochin Shipyard achieved a turnover of Rs 3.8 billion and generated an operating profit of Rs 0.8 billion.
Page 55 of 104
Most of the ship repair orders which was taken by Cochin Shipyard are from the Government.. The
requirement of opportunities in the segment is on a regular basis. In the absence of other suitable
infrastructure in the vicinity, Cochin Shipyard preferably gets to repair Offshore Jackup rigs and Drillship
owned by ONGC.
This segment is quite promising for the Norwegian service providers as well as the equipment suppliers.
Rs mn
747
Revenue
Less: Expenses
Employee Expenses
Operational Expenses
EBITA
Interest
Depreciation
PBT
Tax
PAT
89
458
200
247
107
-254
1
-213
% Share
100%
12%
61%
27%
33%
14%
-34%
0%
-29%
Western India shipyard has been a loss-making entity since its inception and has defaulted on all its loans.
The primary reason for the mounting losses of the company was the poor management of the company.
With huge debts with them, Western India shipyard has been virtually in the hands of ICICI Bank. With the
restructuring of the company, the loans were converted into equity, and the control of the company was
taken over by ABG Shipyard. The financial performance of the company has begun to improve since then.
Currently, the company posts an EBITA margin of 27%; however, its profit after tax is still negative due to
very high interest burden on loans taken during its previous years of operation. The interest component of
the previous loans of Western India Shipyard is close to 33% of its total revenue, which is very high but is an
exceptional case of its kind. The interest component seen in the case of Western India Shipyard is not the
industry trend.
Though Western India shipyard has the infrastructure to repair ships up to 60,000 DWT, it extensively repairs
ships in the offshore segment and other coastal segments. The operating profit of the company is a good
indication of how profitable the ship repair industry could be in India.
Page 56 of 104
Ship repair is a good segment to be in for the Norwegian firms, either as fully fledged firm or as service
providers for critical equipments and machinery.
Page 57 of 104
4.
COASTAL SHIPPING
Coastal Shipping refers to the movement of cargo via ships between different ports along the coastline of
India. Ideally, the cost effective, energy efficient and environmental friendly nature, should make coastal
shipping one of the most effective mode of transportation in India, which has more than 7,512 kms of
coastline. Use of coastal shipping would not only bring down the cost of transportation, but also bring a
significant reduction in the congestion on roads and railways.
Despite the above mentioned advantages, coastal shipping In India, as compared to the European nations,
is still in its nascent stage. Poor infrastructure facilities for loading and unloading cargo at ports, insufficient
aid from the maritime states for the development of infrastructure for coastal shipping, poor road connectivity
at the minor ports, lack of cargo generating centers at the hinterlands near the ports and such other
disadvantages make the coastal shipping industry in India, lag far behind those of its Western counterparts.
An analysis of the existing fleet owned and operated in India would give a very good understanding of the
influence of coastal shipping in Indian conditions.
Indian ports have cumulatively handled about 730 million tonnes of cargo., Of these more than 133 million
tonnes are coastal. Hence, coastal shipping accounts for close to 18% of the total port traffic. Following chart
shows the breakup of close to 130 million tonnes of Coastal movement of cargo on the Indian Coast. It can
be seen in the chart that majority of the cargo moved on the ships using waterways is low value bulk cargo
such as Iron ore, Coal, petroleum products, cement, etc. There is little share of clean or value added cargo in
using coastal waterways for transportation. Unlike Europe where containerised and finished products
dominated transportation using waterways, India waterways transportation is dominated by low
value added products.
Figure 4-1 commodity wise breakup of Coastal movement of cargo
Cement Others
6%
4%
Iron Ore +
Pellet
17%
Pol + Crude
46%
Coal
27%
Page 58 of 104
As the contribution of value added cargo is small, so is the distribution of fleet for coastal movement of
cargo. It is dominated by ships used for specialised services and ships which are used to carry low value
cargo such as Coal, Iron Ore, etc. Following table shows the share of coastal ships in various categories.
No
Offshore Vessels
110
Specialized Vessel
38
Dredgers
28
Tugs
220
Product Tankers
13
Bulk Carrier
12
71
93
Passenger Ferries
83
Others
674
Source: DG Shipping
Indias coastal fleet is dominated by ships which are used for services sector. As can be seen in the table
above, the Indian coastal shipping fleet is dominated by ships which are used for services sector and not by
ships which undertake coastal or cargo trade. Out of the 674 ships which have been licensed to operate in
coastal waters, only 98 ships are actually cargo carriers and 83 are passenger ferries. Both constitute only
25% of the total fleet. The cumulative carrying capacity of General cargo coastal ships is less than 200,000
DWT.
In terms of numbers, tugs and OSVs form a substantial proportion of the coastal fleet. On the other hand,
bulk carriers, though small in number, make a dominant contribution to the overall GRT. These bulk
carriers include chiefly, the thermal coal carriers operated by Poompuhar Shipping of Chennai that operate
between Haldia/Paradip and Tuticorin.
The tugs are engaged mainly in port operations and towage. Since the 1970s (when Bombay High Oil fields
became operational) and 1980s (when exploratory drilling operations extended to a number of locations
along the Indian coast), the OSVs have emerged as significant contributors to the coastal tonnage. With
increasing oil prices and focus of government on Offshore Exploration and Production, demand for OSV has
increased substantially.
Page 59 of 104
At present, of the total coastal vessels registered with the DG Shipping, almost two-third of the vessels are
non-cargo carrying vessels, and only one-third comprise the cargo carrying vessels. The mini bulk carriers
transporting cargo like cement, clinkers, iron-ore, iron ore-fines, steel coils, finished iron, gypsum, salt, soda
ash etc. form approximately half of the total of cargo carrying vessels.
Bunker fuel oil used for a coastal vessel costs about 30% more than the bunker oil used for an
oceangoing vessel. Coastal vessels, unlike those of the oceangoing vessels have to pay heavy duties on
bunker oil. The diesel used in road transport, on the other hand, is highly subsidized. A lot of spares and
parts of these coastal vessels have to be imported and they, thus, become highly dutiable. The imported
spares can be exempted for taxes only when the ships are repaired in the ship repair units registered
with the Director General of Shipping.
Coastal vessels have to comply with the specifications of the oceangoing vessels even though they are
not subject to the same level of turbulence. This unnecessarily increases the capital costs of coastal
vessels and also the operating cost of the coastal vessels. This makes coastal shipping uncompetitive
compared to the road and rail transportation.
Manning scales, taxes, staff cost on Indian oceangoing vessels are higher than the foreign vessels. Also
qualified officers prefer working in oceangoing vessels for the reward them with better remunerations.
This makes coastal shipping an unattractive choice for knowledgeable and experienced manpower.
Indian seafarers employed on foreign vessels or Indian vessels plying outside of Indian territorial waters
for more than 183 days in a year are considered non residents and are not entitled to pay any taxes.
Seafarers and officers employed on coastal vessels in India do not have the said advantage. Hence, it
becomes tough to attract and retain talent in the coastal shipping. Moreover, companies have to pay
additional wages and perks to bring the salary levels at par with the other segments of shipping. This
increases the operating cost of running a ship and it renders coastal shipping less attractive.
Major consumption centers in India are land locked. A large production base for domestic consumption
of goods is based in landlocked regions, which are hundreds of kilometres away from the coast. Moving
cargo using waterways is not a commercially viable option for them.
Page 60 of 104
companies. The market is operated by a very few players working on a very few dedicated routes for coastal
movement of containers. Some of the shipping lines also touch the ports in Pakistan and Sri Lanka.
Movement of containers on the East Coast and West Coast are more dominant. The coastal vessels mostly
ply between different ports on the East Coast and also on the West Coast. However, due to the large
distance factor and low volume of containers, the movement of containers between ports of East coast and
west coast is restricted. The movement of containers by railways is preferred.
Major container routes in India are as follows
Mundra International Container Terminal Pipavav Port Trust - Jawaharlal Nehru Port Trust New
Mangalore Port Trust - Cochin Port Trust Tuticorin Port Trust Cochin Port Trust
Chennai Port Trust- Vizag Port Trust - Haldia Dock Complex- Vizag Port Trust Chennai Port Trust
There are very few companies which operate coastal container vessels in this segment. Some of them are
Shreyas Shipping, Jindal Vector, Seaways Shipping, Gati, SKS Logistics, etc.
Shreyas is one of the dominant players in the container coastal shipping segment. It owns a fleet of seven
vessels and has a combined capacity of nearly 6000 TEUs, of which majority is deployed on the west coast
of India.
Jindal Vector is a new entrant in the sector. It entered the Indian coastal shipping market for moving
containerised coastal shipping by acquiring 5 vessels.
Seaway shipping has its dominance on the East Coast of India. It also provides reefer services.
SKS Logistics operates 3 container vessels. Three of the vessels are 160 TEU vessels. Container ships of
SKS ply between Mumbai Port and JNPT.
Transhipment
0.299
0.127
0.002
0.074
0.603
0.089
0.211
0.027
0.014
0.000
0.153
Coastal
0.003
0.000
0.000
0.004
0.022
0.056
0.046
0.001
0.000
0.074
0.120
Page 61 of 104
Destination
0.000
0.000
0.000
0.010
0.519
0.294
0.004
0.001
0.000
0.018
3.680
Total
mn TEU
0.30
0.13
0.00
0.09
1.14
0.44
0.26
0.03
0.01
0.09
3.95
% share
for Coastal
0.99%
0.00%
0.00%
4.55%
1.92%
12.76%
17.62%
3.45%
0.00%
80.43%
3.04%
Kandla
Total
0.043
1.642
0.019
0.345
0.075
4.601
0.14
6.588
13.87%
5.24%
As can be seen in the table above, the coastal movement of containers has over 5% share of the total
container handled at major ports in India. Major ports handle close to 6.6 million tonnes of the total 8.0
million TEU of containers handled at the Indian ports. The
The coastal movement of containers faces direct competition for the aggressively expanding railways
network and operators in India. As a rule of thumb, for distance of less than 300 kms of container movement,
roadways is preferred. For distance between 300 kms to 500 kms, the share of road and rail for containers
movement is roughly in the ratio of 50%. However, for all distances of more than 500 kms, railways are the
preferred mode of transporting containers. In the present scenario, the coastal movement of containers are
viable only for the long distance movement of containers. The costal shipping of containers have to compete
with railways which is increasing its infrastructure and also with the allotment of licenses to private players
for operating container trains. The productivity of rail movement of containers is likely to increase further.
Government is also mulling plans to initiate double stacked containers on the train which would double the
capacity of the rail infrastructure used for movement of containers and would also bring down per TEU cost
of moving containers. This would further make coastal movement of containers unattractive in India.
Following is the list of some of the companies which has been awarded license to operate container train in
India.
Adani Logistics
Hind Terminal
Reliance Infrastructure
SICAL logistics
Page 62 of 104
As can be seen in the list above, the number of operators for containerised trains is more than that of the
coastal shipping. The concept of coastal shipping for containers is quite old, but the private participation in
the container trains have been initiated initially. Still, there is more enthusiasm among the developers on the
container train than the coastal shipping. Container Corporation of India is the largest operator of container
trains and containers. As can be seen in the table below, the share of containers moved by Container
Corporation of India (CONCOR) is several times higher than the containers moved using coastal shipping,
as shown in the table earlier.
% Share
Concor Traffic
Kolkata
0.30
0.02
5.61
Haldia
0.13
0.00
0.95
Paradip
0.00
0.00
0.00
Visakhapatnam
0.09
0.01
11.19
Chennai
1.14
0.10
8.49
Tuticorin
0.44
0.01
1.67
Cochin
0.26
0.01
3.75
Mangalore
0.03
0.00
0.00
Mormugao
0.01
0.00
0.00
Mumbai
0.09
0.00
0.36
JNPT
3.95
0.97
24.66
Kandla
0.14
0.01
8.20
Total
6.59
1.13
17.10
As can be seen in the table above and comparing with the previous table, it clearly shows that rail movement
by Indias largest container freight train operator CONCOR has more than 17.1% share in the containerised
cargo whereas coastal shipping has only 5.24%. Other private operators all taken together would have a
market share of about 5% in the rail movement of containers. Hence, rail share of container in India is
roughly between 23% to 25%, whereas coastal shipping accounts for only 5% of the traffic. The railway is
running beyond its capacity utilisation. It is difficult to find newer rakes for movement of containers
using railways, whereas the coastal container ships are running under-utilised. A few of the ships
were sold recently due to lack of volume in the segment.
Page 63 of 104
4.1.2. Reasons for poor penetration of containers for Indian coastal shipping
Most of the states in India are landlocked. Movement of containers is always to the consumption center as
containers mostly carry finished products or low volume semi finished products which are transported to the
factory for final assembly. As can be seen in the maps below, the high density population is located mostly in
Page 64 of 104
the North and Central India. There is no seafront connectivity to these land locked regions in India as can be
seen in the map on the right showing roadways of India. There have been large investments on improving
the road and rail infrastructure across the country. The land locked region now has railways, State Highways,
National Highways, expressways at relevant and high movement locations, Golden quadrangle, East West
Corridor, North South Corridor. In addition, there are several new industrial corridors planned across the
country with the investment of billions of dollars, to name a few Delhi Mumbai Industrial corridor, Freight
corridor, etc. This is increasing the productivity divide between land movement of cargo and the coastal
movement.
Figure 4-2 Population density of India and the transportation connectivity
Coastal movement of finished products to the land locked regions in India requires concept of multi-model
transport. This mode is quite successful in European countries as this requires meticulous planning, robust
infrastructure and very high efficiency at the transition, wherever there is a change in the mode of transport
such as changes from road to coastal or coastal to road or road to rail, etc.
As can be seen in the map, the geographical location of countries is favourable to the coastal shipping. In
addition to the close vicinity of landlocked regions to the sea, there are several rivers which are used for
movement of finished products. The distance of consumption center or production center is not far away
from the coast. Whereas, in India the hinterland is most of the times far off from the coast leaving road and
rail the only two modes of transport to undertake door to door movement of the finished product. This is one
Page 65 of 104
of the main reasons, why even the current mode of coastal cargo in containers or breakbulk form is not for
the final finished products. In more than 60% cases these are intermediary products which are used in plants
to manufacture the final products.
Figure 4-3 Map of Europe
Despite the geographical disadvantage, the coastal shipping makes a good opportunity provided corrective
steps are taken by the government and developers. When large investments are made on the land based
infrastructure, an equal importance ought to be given to the coastal infrastructure such as jetties,
connectivity, material handling equipments, etc. Currently, more than monetary disadvantage, time plays a
spoilsport for the coastal shipping.
opportunities compared to containerised cargo, other finished products or passenger vessels. The
coastal shipping is quite different in India compared to what happens in Europe. There is a very high
density of population living in the land locked regions of North India and Central India. All the finished
products which are transported to this population are mostly by roads or railways. There is very little scope
for coastal shipping. Coastal shipping in India is popular only for large bulk movement of bulk cargo. The
finished products are distributed to the consumption center, which is mostly land locked, using road and
railways.
Large quantities of iron & steel, cement and building materials, too, would need to be exported for building
up of infrastructure in the Export oriented units (EOUs) and SEZs along the Indian Coastal areas, and what
could be a better option than the coastal shipping getting a substantial share in the transportation of these
cargoes!
Development of many minor ports along the Indian coastline, too, is in the planning stage. Once the
development of these ports begins, it would require cement, steel and other building materials in substantial
quantity. Mini bulk carriers for transporting these cargoes are considered the best option, since they need
very less draft for berthing. A new coastal shipping entrant can mostly profitably grab the opportunity of
providing for the increasing demand of coastal vessels for the development of EOUs, SEZs and minor ports
in the country. However, the chances of increasing profitable share are less for other finished products.
Indias coastal hinterlands, comprising of 40 districts of five states on the west and four states on the east
coast, including Pondicherry, are rich in silica and minerals like bauxite, iron-ore, manganese-ore and
limestone. As for example, Goa, the Ratnagiri district of Maharashtra, the North Kanara district of Karnataka,
the Calicut district in Kerela, Ongole district in Andhra Pradesh and Cuttack district of Orissa have a rich
concentration of iron-ore. Coastal districts of Gujarat contain lime stone in abundant quantity. Likewise,
states like Maharashtra and Orissa are rich in bauxite. These regions have the potential of being developed
as big industrial units, and once this happens there would be a significant growth in the coastal trade in India.
Lakshadweep Island on the west and Andaman and Nicobar Island on the east, too, target coastal shipping
for the movement of passengers and cargo between the islands and the main land as well for inter-island
movement.
Reliance Industries, Gujarat Ambuja Cements, Ultra-tech cements, Essar Sponge Iron, Didvijay Cements,
Indo-Gulf Fertilizers Co. Ltd. and such other corporates have their plants on the west coasts and are already
operating their own jetties for cargo movement.
Page 67 of 104
Iron-ore from Vishakhapatnam is also distributed in the form of finished sponge iron to the ports along the
west coast. Movement of iron and steel takes place from Revadanda to Mumbai, Cochin and Magdalla.
Finished steel is transported from Hazira to ports of Mumbai, Pipavav and Chennai. Also, the distribution of
finished steel takes place from Vizag to Kolkata and Chennai on the eastern coast.
Vizag-Hajira; Vizag-Paradip, Haldia-Dharamtar; Revdanda-Hajira are some of the coastal routes which can
by targeted by the Norwegian Coastal Shipping operators. All of these routes involve south to north
movement, the major advantage in such movement being its certainty to fetch return cargo during the return
voyage, assuring additional revenue to the vessel chartering operators. Besides, the volume of iron-ore
transported via the routes is very large, bringing in huge profit for the vessel chartering service providers.
The Goa to Revadanda and Pipavav route can also be targeted by the Norwegian vessels chartering
companies, since they, too, have the advantage of bringing return cargo during return trips.
The iron and steel companies make use of their own as well as hired mini-bulk carriers and barges for
transporting their cargo.
Though at present there is coastal movement of finished steel on the east coast, no east to west coastal
movement of the product is taking place in the country. In order to cater to the growing steel market in
Mumbai, Ahmadabad and Jaipur, the companies are intending to move the product from the east to the west
coast, especially to Kandla, via coastal route. Once the movement begins, the situation is sure to become
challenging for the steel companies, for they would not be able to get the required number of vessels. .
The increased demand for the movement of iron ore from the east coast is leading to a surge in the
chartering rates of these vessels. Norwegian vessels chartering companies can target the route, since the
route carries large volume of cargo, and also because of the south to north movement of cargo involved
which is sure to bring additional revenue for the Norwegian vessel chartering providers.
The market for iron ore and finished steel is rapidly growing in India. In order to cater to the increased
demand of the coastal movement of iron-ore and steel from various ports, more number of vessels need to
be chartered by the companies. Norwegian vessels chartering companies can grab the opportunity and
provide for the increasing demand of the vessels.
Page 68 of 104
their cargoes. The major locations where these companies discharge their cargoes are Ulwa-Belapur,
Magdalla, Jaffrabad, Ratnagiri, Raigarh, Mumbai, Cochin, Dharamtar, Navalakhi, and Jamnagar.
Some of these companies, too, have their captive jetties for the coastal movement of cement and clinkers.
These jetties are located at Muldwarka, Hazira (Gujarat), Pipavav, and Jakhau.
ABG Shipping, Chowgule Shipping, Vikram Shipping, Garuda Carriers are the private players providing
vessels chartering services to these companies.
Most of the Cement and Clinker companies do own a fleet of mini bulk, cement and clinker carriers, but they,
too, do hire these vessels from the private players as and when required.
The authorities of the companies are of the opinion that the existing mini bulk carriers are not sufficient to
meet the increasing demand of coastal cargo movement. The carriers are not available when required since
most of them are chartered for long term by the vessels chartering operators.
Some of the companies are even planning to expand their market in South India. Their existing fleet of mini
bulk carriers, though, is catering to the demands of their markets in Gujarat and Maharashtra, would not
suffice for the movement of their cargoes to South India, thus, opening scope for the companies to hire more
and more number of mini bulk carries.
Some of the coast based cement companies located in the states of Maharashtra and Gujarat, though move
clinker via coastal route, do not move cement via the route. Once they start moving cement through coastal
shipping mode, there is definitely going to be a shortage in the availability of bulk carriers.
In general, the companies find the coastal movement of cement and clinker faster and cheaper, for the
coastal route is not infested with congestion which is usually the case with most of the rail and road routes at
present time. The authorities of the companies are of the view that coastal shipping of cement is soon to see
a drastic change in the coming years, for the rising fuel costs is making road transportation only too
expensive.
Also, the trend reveals that the market for cement and clinker is constantly on the rise. The existing mini bulk
and cement and clinker carriers would not suffice to cater to the increasing demand of coastal cargo
movement. Norwegian vessels chartering companies can have a big opportunity, here, where they can
charter their vessels in order to meet the increasing demand of such vessels in Indian Market. They can see
this as an opportunity of entering into the coastal shipping business in India.
Page 69 of 104
Tuticorin-Halida/Paradip-Tuticorin
Tuticorin-Paradip-Tuticorin
Ennore-Haldia/Paradip-Ennore
Ennore-Paradip-Ennore
Ennore-Vizag-Ennore
Vizag-Tuticorin-Vizag
There is a huge requirement of coal in the 4 thermal power stations maintained by the Tamil Nadu Electricity
Board (TNEB), viz Ennore, North Chennai, Mettur and Tuticorin, and in order to meet the requirement, a
large quantity of coal needs to be transported from the ports of Haldia, Paradip and Vizag. The increased
demand of vessels is leading to a number of them being chartered from the private owners. The TNEB,
further, plans to increase its capacity and in order to meet the demand of thermal coal would need to
increase its shipment. This would require more number of such vessels plying on Indian water.
Though the routes are less feasible in terms of economy, as the mini bulk carriers are not much suitable for
the movement of coal, and also since there would be no return cargo on the east coast, yet the Norwegian
companies can see a good opportunity in chartering their vessels in the routes.
Companies are planning to set up thermal power plants at Dharamtar and Dhopawe (Maharashtra), and for
meeting the requirements of the plants would be transporting coal from the east coast.
Norwegian coastal shipping companies can evaluate the opportunity of entering the segment of bulk
transportation of coal and other commodities.
Page 70 of 104
Page 71 of 104
Source(map): Google
The critical part of the project is the speed criteria laid down by MSDRC, which has asked for the Hovercraft
services capable to move at a speed of 40 knots and catamaran with design speed of 25 knots to ply in the
route at every 15 mins during peek hours of morning and evening. As there is no coastal ferry operator or
shipping company who has catamaran or Hovercraft of this specification, it opens up opportunities for
Norwegian firms. Moreover, Mumbai has well connected Natural Gas grid, the proposed catamarans could
use natural gas as propulsion fuel. This would bring down the operating cost of catamaran. Currently, the
natural gas grid of Mumbai is not extended to Jetty and ports. However, for coastal movement of passengers
new infrastructure such as jetties, connectivity, etc. are being planned. Norwegian firms could work with the
winner of the project, Pratibha Industries to develop these infrastructure with the help of Norwegian design,
planning and implementation expertise. This also opens up opportunities for the Norwegian Ship design
firms and equipments suppliers, as this would require newbuilding of close to 10 vessels in the phase I,
which would rise to close to 35 to 40 vessels at the time of implementation of phase II. Catamaran and
Hovercraft available in the secondary market have their limitations and it would not be commercially viable to
use them in the present scenario.
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As seen in the chart above, the government of Gujarat has begun discussion with the private parties and
developers to develop the project. Consultants have been appointed to study the viability of the project.
Some of the ferry operators and hovercraft operators have also made presentations before government of
Gujarat with the proposed interest and plans to run the ferry service. Gujarat Maritime Board (GMB) is the
nodal agency to implement all maritime related projects in Gujarat.
Proposal to run coastal ferries on high potential routes
Okha Mundra
Bhavnagar Mumbai
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Hazira Mumbai
There are talks of running ro ro services between north and south India. North India is Hub for companies
such as Maruti (Suzuki), GM, Tata, etc. and South India has Hyundai. Currently this is being carried out
using railways.
The government of Gujarat is highly enterprising and has achieved the maximum number of private port and
shipbuilding related developments in India. It is most likely to implement the ferry project. The proposed
timelines for completing basic infrastructure such as development of Jetties, etc. is planned to be completed
by the end of the year 2011.
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5.
As has been discussed in earlier sections, the commercial shipbuilding industry in India took shape by the
end of 1990s. Prior to this the commercial shipbuilding in India was controlled by government owned and
run shipyards. These shipyards received newbuilding orders on nomination basis from government owned
shipping companies. There were a few newbuilding orders from the private sector for low value ships such
as tugs, barges, etc. Since, the newbuilding orders to these shipyards were not through competitive bidding
and the shipyards did not have to compete with other shipyards of similar size, there was no need to improve
productivity, undertake research on developing indigenous expertise for building ships of different types.
In the late 1980s and early 90s, the students graduating in the Ocean Engineering and Naval Architects
from the premier institutes such as IITs in India preferred to move out of the core professions, due to
scarcity of opportunities in the sector. The jobs in the shipbuilding sector were low paying; there were lack of
visible growth opportunities in future. This was the period when the IT sector took off and provided promising
opportunities for the fresh graduates. With the IT boom at the present turn of the decade, the information
sector was a sea of opportunities for every graduate. Regardless of the developments and promises other
industries had, IT was the default choice for everyone coming fresh out of their institutes. Most of the Ocean
Engineer and Naval Architect chose Information Technology as the carrier options. The change of trade or
carrier option by the students of Ocean Engineering or students of Naval Architects did not bring any impact
on the shipbuilding and shipping sector in India, as there was virtually very little shipbuilding and shipping
industry at that time. However, the impact of such an act is felt now. All the shipyards are struggling for
talent. There is high degree of poaching by the private sector shipyards and most of government shipyards
have lost their workforce to the private shipbuilding industry. Several senior personnels have joined private
shipyards at senior level after retirement from their government owned shipyards.
Shipping industry, then, wasnt something to write home about. Add to that the towering presence of IT
industry, career in shipping was pushed back into oblivion at that point of time. With a lack of interest and a
somewhat lack of exposure, too, for the industry, its no wonder why this segment slogged during those
years in terms of interest generated in the common masses. But after the IT bubble burst and the
subsequent rise of other sectors against the subdued information sector, interest in shipping industry was
revitalized in a way, but on a smaller scale. However, after around 2006, shipping industry, too, saw a boom
of exponential proportions. That era was marked by overshadowing of every other sector by the shipping
industry. With ample of opportunities being doled out by the industry, the academic interest for the same took
a turn for the better. With a renewed interest, hopefuls ventured into this sector. This pervasive evolution and
flourish in the industry brought along a sea of change, heralding a rise in interest in the maritime sector.
Following table summarises the flow of maritime related talent in India
Table 5-1 Flow of Maritime Talent
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Timeframe
1985 to 2000
2000 to 2005
2005 onwards
of
Other
than
shipyards which got orders scale to building more sophisticated shipping companies and foreign
from
government
owned vessels. However, as the volume of shipping companies led to large
of
Naval
companies, ships in the segment was initially demand
in
the
there
were
not
many professional
commercial shipbuilding did low,
opportunities
for
the
shipbuilding
and
not exist
Architect
shipping
Issues
industry.
shipbuilding
professional
in
the as
Shipbuilding
and
shipping
for
graduates.
engineering
Some
of
the
Impact
Cochin
University
and
Takeaway
&
Opportunities
for
firms
Norwegian
Owners
representative
to
industry.
jobs
in
the
sector.
Large
orders,
improvement
for
graduates.
of
the
Several
recruiting
preferred
choices
shipping
firms
Naval
Architects
began
with
of
able
professionals
No Opportunities /
Moderate Opportunities
Wrong Timing
/ Entry Time
/ Must Enter
Page 76 of 104
in
No of institutes
Mumbai
38
Chennai
17
Kolkata
11
Goa
Page 77 of 104
cochin
Pune
Others
43
Total
124
India has some reputed institutes, providing maritime training of world-class quality, dispensing seafarers
that are absorbed by some elite shipping companies of the world. Interaction with some them during course
of the assignment is as follows:
Academy of Maritime Education & Training (AMET), Chennai, even has an international collaboration as a
joint researcher with Danish Maritime University, and with Norwegian-registered DNV, in the field of shipbuilding among other things. An international institute with inflow of students from Asia and Africa, and
judging by the number of students enrolled, it becomes the worlds largest maritime academy. Fleet
Management Institute, another Indian maritime training institute, even mans the vessels of Norwegian
Principals.
Hindustan Institute of Maritime Training (HIMT), Chennai, has the largest training offering in the country for
merchant navy officers. Most of these institutes, among other eminent members of the maritime training
academies, are on the same page with respect to the advantages the Indian maritime education sector could
reap, if the collaboration with foreign parties, excelling in technical aspects and others, were to take form.
Most are keen on entering into a joint venture through student exchange, faculty exchange, research in
various fields, and other services. However, theres a minority who believes that the venture would only
escalate the cost, not to mention the guidelines the foreign service providers would bring along, and if it will
be conducive enough to enter into a deal with them.
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IIT Chennai
Its Department of Ocean Engineering is capable of undertaking R&D in primal areas of ocean engineering,
viz., offshore structures, ships and other floating systems, wave hydrodynamics and coastal engineering, to
name a few. The institute carries out its research programs in maritime industry through departments varied
academic programs and others funded by national organization and industry.
Following are some of the areas in which the institute has been carrying out research:
CFD applications and experimental validation in ship powering, propulsion and sea-keeping
Marine instrumentation
Some of the institutes future endeavors in research segment are listed as follows:
Development of deepwater technology for oil and gas exploitation and seabed mining
IITM also takes up sponsored research projects, mostly dealing with technology and the ways it could be
adopted to innovate maritime activities, to wit, using buoy and altimeter to enhance wave forecasting
capabilities, assimilation of satellite data to improve forecast, automatic control of ships, etc.
Indian Institute of Technology, Kharagpur (IITK):
IITK provides courses like B. Tech in Naval Architecture, PG Diploma in Naval Construction for the Indian
Navy, PG MTech program in Ocean Engineering and Naval Architecture.
Following are some of the research areas the Ocean Engineering and Naval Architecture department of the
institute has dealt in:
Wind-Wave modeling
Coastal process
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Turbulence modeling
Ship resistance
Physical oceanography
Mathematical modeling
Some of the facilities that the institute provides to its students in Ocean Engineering and Naval Architecture
department are as follows:
IITK has also developed its own technology in this segment and has also been deployed in the commercial
segment of the industry. For instance, methods for modularization of ship hull, flotilla connector, overloading
indicator and speed control for mechanized country boats, have been put to its commercial use.
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table shows the details of ships acquired for coastal trade of containerised cargo in India and also with
neighbouring countries.
Table 5-3 Fleet profile of container feeder vessels in India
Company
Ship Name
Shipyard/Country
TEU
Built
Jindal Waterways
617
1995
Jindal Waterways
Rendsbergh / GMBH
580
1986
Jindal Waterways
336
1997
Jindal Waterways
630
2007
Jindal Waterways
630
2009
Shreyas Shipping
513
1982
Shreyas Shipping
513
1982
Shreyas Shipping
569
1989
Shreyas Shipping
1,208
1991
Shreyas Shipping
1,050
1992
Apart from container shipping, ships in smaller segments such as offshore vessels have been built in India
since 1980s using standard designs from Norwegian firms. A fleet of 32 ships acquired by ONGC had
Bergen package. Several offshore vessels being built currently for Indian owners at Indian shipyards,
however most of the designers are established, as can be seen in the table below.
Table 5-4 Offshore Vessels currently being built in India
Company Name
Garware Offshore
Greatship India
Great Offshore
ONGC
Shipping Corporation
Ships on order
1
14
1
12
6
Designers
Place of Build
Havyard
Rolls Royce
Rolls Royce
Wartsila Ship Design
Rolls Royce, Havyard
Norway
India, Sri Lanka, Singapore
India
India
India
India has to go a long way before, the design and engineering firms and institutes gain the trust for
undertaking basic design. One of the hindrances in developing basic design of ship in India is that there are
already several standard design forms available internationally. The basic design decides the functional
performance and characteristics of ships; hence the shipping companies in India prefer to buy them instead
of reinventing the wheel.
As newbuilding orders from shipping companies in India is rising, there exists an opportunities for the
Norwegian design firms who could collaborate and undertake independent research and development of
ship designs. Some of the Norwegian design firms have entered India and have been benefitted by
opportunities. VIK Sandvik group was a Norwegian firm which became Wartsilla Ship Design has setup up
an office in India. In mere 4 years of its presence in India, the company has got close to 18 out of the total
188 ships being built in India. In 4 years, it has achieved a market share of close to 10% in the sector.
Havyard has marketing arrangement with Garware Offshore for marketing of its design in India. The
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company has sold more than 6 ship design packages in India to ABG Shipyard and Bharati Shipyard. Rolls
Royce has a large share in the offshore vessels segment which is being built in India.
If a Norwegian firm joins hand with an Indian ship design or research center, the design developed jointly
would get more visibility and acceptability among Indian owners. However, it is doubtful, why a Norwegian
firm share its patented technology and design with an Indian firm, which they can do alone in India.
Alternatively, Norwegian firms or Research institutes could tieup with Indian firms to develop some of the
designs similar to the one developed by IIT Kharagpur. This could be a mutually beneficial move as the
design developed locally in India could gain international visibility due to Norwegian Association. Norwegian
firms could benefit by having additional designs in their kitty.
To promote and develop design and research activities for shipping and shipbuilding
To assimilate knowledge with reference to advancement in maritime technology in the world and
dissemination thereof to elevate the Indian Maritime Sector to keep it abreast with international
standard.
Preparation of long and short term plans for research and development in maritime sector.
To promote the development of maritime standards in the field connected with shipping, shipbuilding
and other maritime activities.
To provide consultancy and training facilities in various fields connected with shipping, shipbuilding
and other maritime activities.
To attend to any other matters incidental or allied to the above mentioned activities.
At the time NSDRC was created, Indian shipbuilding industry was under government protection. The new
building of ships was confined to government shipyards only. Later with liberalization, entry of private sector
shipyards in smaller ship segment was allowed. Gradually the barriers from the private shipbuilders were
taken off and private shipyards were able to bid and build ships at par with the government shipyards,
subject to their own capacity availability.
Having a ship design firm at the time, when there were very few ships being built in India was one of the
major hindrance in the growth of NSDRC. The institute had mandate to work on long term projects which
should fulfil the long term goals of shipping and shipbuilding industry. However, due to limited opportunities,
its main focus remained on survival, rather than developing and implementing long term strategic goals and
plans for the shipbuilding and shipping sector.
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In addition to the Indian Government, NSDRC also had a grant from the Netherlands government an amount
of Rs 240 million. However, as the shipbuilding and shipping industry was in poor share, it became difficult
for NSDRC to undertake projects which had long term goals such as working on the productivity
improvement of shipyards.
NSDRC undertook design of few ships for government agencies. However, apart from these NSDRC
undertook activities related to repair of ships, training of manpower, etc. Some of the work undertaken by
NSDRC had no relation to the maritime and should not have been undertaken by them. One of such projects
were design and development of "Currency counting and Detection System (CCDS)" which is designed to
count and authenticate Indian Currency notes in denomination of INR 10 to INR 1000/- upto about 150 notes
at a time. Such an activity has no relation to maritime and it is doubtful if NSDRC had a mandate from
Government of India or Reserve bank of India to carry out such activities.
The external economic scenario, which was beyond the control of a small R&D and ship design center such
as NSDRC, was one of the biggest hindrances to the growth of ship design and maritime research in India.
Commercial and competitive shipbuilding was virtually absent in India till late 1990. The few shipyards under
government control got newbuilding order for ships mostly on nomination basis from the government owned
shipping companies. Most of these orders were bid and build on cost plus basis. There was no need to look
for productivity improvement and keep track of delivery schedule of the shipyard. Most of the ships took
several years in the shipyards.
It is a recognized R&D institution quipped with modern facilities. Its aim is to provide support to the marine
transportation sector, utilizing the institutes CAD ship design, marine economics and consultancy and
research services. Following are the fields in which NSDRC could initiate research projects to support
shipping and shipbuilding industry:
1. Ship design
2. Management of shipyard vessel operation
3. Research in hydrodynamic structures, noise and vibration
4. Ocean water transport economy
Some of the major achievements of the institute are as follows:
1. 500-Passenger Vessel for A&N Administration
a. Completed the basic design, including the major hull design
b. IRS has endorsed the compliance for the design
c.
2. Buoy Tender cum research vessel for National Institute of Ocean Technology (NIOT)
a. NIOT wants to acquire a ship that caters to the deployment and retrieval of data buoys
b. NSDRC was approached for the concepts detailed design, model testing and construction
supervision
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c.
Apart of these projects, NSDRC has also undertaken techno commercial feasibility studies. It had
undertaken logistics planning and consultancy for ONGC offshore base in Mumbai Offshore.
In order to increase its reach, NSDRC has entered into a MoU with KSRI (Krylov Shipbuilding and Research
Institute) and Inter Tech Services, Russia for taking up collaborative work in the field of Ship Design and
Infrastructure Development. The centre has also entered into a MoU with Environmental Protection Training
and Research Institute (EPTRI) for taking up collaborative work in the field of Environmental Engineering. It
also undertook the work of improving the ship handling services at offshore tanker terminal at
Visakhapatnam port.
Apart from its focus on the ship design work related to newbuilding, NSDRC undertook major repair of ORV
Sagar Kanya, a research vessel belonging to the Department of Ocean Development, Government of India.
It also supervised the eighteen passenger vessels being built at various yards including four passenger
vessels constructed and delivered to A&N Administration, 400 Ton cargo vessel being built at Shalimar
(Works) Ltd., Kolkata, two of Orissa Fisheries Control Boats under construction at Wadia Boat Builders in
addition to repair work of OSV MV Sindhu-II at Mazagon Dock Ltd. The centre is assisting Research and
Development Establishment (Engineers) Pune, to develop an Amphibious Floating Bridge cum Ferry
System.
NSDRC rarely got ship design projects from private sector. If one could stretch it, the reason could be
twofold. Designing a ship is a more meticulous, heavy-duty, and a mammoth enterprise, with almost no
margin for error in its construction. For instance, an automobile industry has the luxury of being put through
various tests to gauge its operational performance. Its performance is distilled through road tests, crash
tests, fuel efficiency test, etc. In fact, even the end user gets the undue advantage of test driving a brand,
new car before actually opting to shell out money for it. Ships, however, dont share the same fortune. On
account of being a massive construction and no sandbox to actually test the final product in, before being put
into operation, the construction is elaborate, expensive and expansive. Its understandable that the owners
are wary of entrusting such a colossal project in the hands of ship-designers whove yet to brand their name
on international level, or who havent undertaken such a task before.
Another reason, a supplementary one, why ship-design hasnt prospered in India, is the unwillingness on
ship owners part to let national ship-designers shoulder the whole responsibility. With massive amounts
being funnelled for such an endeavour, and years that go into building a ship, no owner would like to take a
chance. The high risk shipping industry and owners inability to take risk on a new designer has worked
against success of local design firms in India.
The scale of operation for the private sector shipyard was very small. Most of them built barges, tugs and
other smaller low value vessels. Hence, there was no need to invest in the technology, state of the art work
Page 85 of 104
practices. It did not make commercial case for even NSDRC or other research organization to work on these
fronts.
The shipbuilding activity in India began to increase from the early years of 2000. The shipyards began to
build more sophisticated ships, both for Indian and foreign owners. This was the time, the research and
development institution such as NSDRC could have been roped in to work jointly with the shipyards.
However, as most of the newbuilding orders came to the Indian shipyard as fabrication job, where all the
designs and production schedules were procured from established international design firms. The local ship
design firms in India were given detailed engineering task for the newbuilding. NSDRC was not involved in
the planning, scheduling activity.
Before, NSDRC could make a pitch and gain on the recent shipbuilding boom, the government of India had
run out of patient for the institute and converted it into Maritime institute under IMU. The timing for the
NSDRC was not right. It was in existence, when the shipbuilding industry was in a very poor state. However,
by the time Indian shipbuilding sector began to pickup international standards, NSDRC was converted to an
educational institute.
An organisation such as NSDRC could have been of great help in undertaking research and development
related to work practices and productivity improvement in Indian shipyards. Being local to the shipyards and
understanding their needs and bottlenecks, it could have contributed more positively to the industry.
Page 86 of 104
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International Collaborative Project Funded by EU has been completed at IMU, Visakhapatnam campus REVIEW AND REASSESSMENT OF PROPOSED IMO LED BAN ON TBT PAINTS. Salient features of the
project were as follows:
To make an in-depth study of the status of research and development in antifouling paints and
forecast the availability of these paints to the shipping industry
To analyze the costs and benefits of using and not using Organotin compounds
Ballast free ship concept is being developed in collaboration with IIT Kharagpur under R&D funding from
ministry of shipping. The preliminary findings have already been presented in international seminars and
conferences. A few slides illustrate the concept:
A design solution is needed so that ballast tanks remain empty in fully loaded voyage and full in
ballast condition.
In ballast condition, ballast tanks can be left open to lose buoyancy and achieve the required drafts.
A ship can be designed to have open ballast tanks in ballast condition such that:
a) Hull resistance increases marginally.
b) There is adequate water flow inside the ballast tanks and the ballast tanks are internally
smooth so that there are no stagnant portions and no deposition of sediments.
c) Hydrodynamics and structural requirements of the hull form are satisfactory.
The ballast draft for the proposed No Ballast Ship can be less than in normal case and can have
level trim (instead of trim by aft). Obstruction to the flow through pipes at the E/R is overcome by
having a twin screw form.
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Mechanical systems like valves for opening and closing the flow-through pipes and arrangements for
de-ballasting these pipes are yet to be developed.
The flow-through pipes can be subdivided into a number of segments along the length and each
segment can be controlled by valves. This will provide additional means to control the buoyancy and
trim of the vessel in case of damage.
Future Plans
Various projects have been identified and effort is on to get funding for these projects. Any help from
Norwegian Government for any of the projects will be welcome.
Research in energy efficiency of Marine Power Plant and alternative renewable sources of power
Study of Environmental Risk and Remedial measures for Pollution Control in Indian rivers and coast.
India has a total work force of around 500 million of which a large pool is of scientific manpower
along with the largest pool of unemployed youth. These youths can be converted into high end asset
for the benefit of maritime industry. Providing training and education to these institutes could improve
the skill manpower deficit in India
Marine based companies in India seen consolidating and expanding their businesses so that they
have a larger pie of the total market share. This directly reflects the upcoming need for qualified and
trained personnel in this sector. Norwegian institutes and universities could play a promising role in
that
Manpower costs of Shipping / Logistics companies in India are approximately 8-10% of their overall
sales, which translates to roughly INR 500 billion. Its a big revenue potential to be explored by
Norwegian institutes.
The current group of government and private maritime institutes are able to address only a part of
the industry demand for qualified maritime personnel. Hence every year there is a huge demand
supply gap. The demand supply gap is further affected by the employee turnover and the employees
settling down to on-shore jobs after a period of time. Even on the port side, there is a tremendous
need for trained manpower.
Demand exists not only for conventional maritime courses but also for courses aligned with shipping
and logistics like general management, transportation & logistics and Information technology.
There is an increase in number of Maritime institutes are looking at foreign collaborations, faculty
/student exchanges and technical knowhow.
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Shipping companies looking at outsourcing the training function will also benefit from a Maritime
Institute and make for repeat business.
Norway already has a well established bilateral relationship with India and The Research Council of
Norway has set up programmes to promote research cooperation between Norway and India.
Norway being a sea faring nation and being surrounded by sea has a well established Maritime
Industry as well as excellence and solid experience in the area of marine research and fisheries
management.
Norway has well established Universities and Colleges that offer courses in Maritime education, right
from basic course to Degree, Masters and Ph. D level programmes.
Courses offered by the educational institutes in Norway are world class and are recognized across
the globe.
Page 91 of 104
6.
India has endorsed international regulations related to ship dismantling. The government of India, state
governments and judiciary have laid down guidelines for health, disposal of hazardous material and working
conditions at par with international standards. Unlike European firms, Indian ship dismantling yard follows
beaching method for dismantling of ships. The international regulations have approved the guidelines to be
safe, if the wastage generate by them is recycled and disposed off safely.
However, as the ship dismantling industry is highly fragmented with lot of smaller players, there are several
instances of violation of these guidelines at the ground level by these companies. Though, Government of
India and laws in India is for safe working practices. Due to economic reasons, the companies or the workers
sometimes ignore these guidelines due to commercial issues.
The ship dismantling industry, in the present scenario works in a highly dynamic environment. With the
uncertain and changing commodity prices especially steel, the ship scrapping industry. The high fluctuation
of steel price from the time ship is bought for scrap till the time scrap is sold in the open market leaves very
less room for the ship scrapping company to generate large profits. Hence, these companies compromise on
the workers benefits, technologies, environment, etc.
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Taking a cue from the Information technology, where the company does not outsource its job to a company
which does not use licensed software. Norwegian government and companies can for a lobby not to
entertain the ship dismantling yard to sell their ships for scrap, if they do not adhere to the environment
guidelines. This would be more appropriate and effective way to implement environment standards in ship
dismantling yards in India.
Norwegian firms could also customise the equipments and systems which are cost effective and can be
procured by the local firms. Spreading awareness among the workers and their employers in the ship
dismantling industry is essential. This can be taken up by Norwegian firms jointly with the Government.
Following is a brief breakdown of ship breaking industry in India, alongside the factors that smoothen and
impedes the process.
Commercial Factor
Scrapping
Regulation bans use of certain type of ship
Class declares ship beyond repair
Regulatory Factors
Freight rates, price of steel scraps and the cost of maintaining ageing fleets are the factors that influence the
ship dismantling industry. Low freight rates and high steel prices translate into more number of ships getting
scrapped. Price is the sole criteria for selecting a ship dismantling yard for a ship. Higher the price offered to
the company by the ship breaker, most likely are the chances for selecting the yard.
Depending upon the price of labour and the costs of infrastructure for workers safety and environmental
protection, the costs of ship recycling can vary considerably. Being a labour intensive industry, it tends to
favour regions having low labour costs; hence the focus has been shifted to Asian countries. In the western
countries as the ships are scrapped in dry docks, the cost of dismantling ships are much higher compared to
the developed nations where the ships are dismantled on beaches.
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Shipping companies, too, expect a healthy payoff from their dying fleet that are on its way to being scrapped.
The owners focus is on getting maximum revenue from its fleets scrap, and environmental guidelines are a
mere afterthought.
Stringent environmental regulations developed countries make it impossible for ship owners, mostly
European and US, to have their ships dismantled there. It also does not allow them to export ship with
hazardous material to a third country. However, with the present loophole in the system, these owners
manage to sell their ships to a third party, who in turn sells them to a location with absence of environment
friendly measures.
Shipping Companies
Dismantling Yard
Has to pay market driven price to secure contract f or
ship dismantling
Fluctuating steel price increases his risk
May buy ship f or scrap at higher price, however price of
steel may f all af ter beaching
To workout the revenue & cost balance, compromises
on wages, saf ety, investment on inf rastructure
Neglecting
Health &
Environment
Location Identification
Workforce
The owners are paid a hefty amount by the dismantling yard, for the ships to be scrapped. Yard owners have
very little room to manoeuvre, with respect to the un-skilled, workforce, government enforcements,
environmental regulations, and a pre-defined return in the market on the scrapped parts. In such a scenario,
where the yard owners buy ageing ships at a high price, in return for miniscule revenue, theyre left with no
other option than to cut corners. These compromises come in the form of lapses in infrastructure
overhauling, meagre wages, and more importantly, a blatant disregard to the safety and environment
policies. These yard owners melt the steel parts and sell them back in the market. This and through reselling
of other scrapped parts is how the yard owners earn their revenue.
Lack of technology and infrastructure to carry out dismantling on a safer and economical level remains an
issue that demands to be addressed. Even if the ship owners were to provide the technology for such tasks,
the yard owners wont be in any position to take up the same. The cost implication that would entail would
weigh down on the already financially-strapped yard owners.
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Hence, ship owners, in order to keep themselves from investing any more in their dying fleet, turn toward the
available means and the lack of it, to have their ships scrapped. Yard owners, with whatever limited
resources they have, do their best in converting an expensive proposition of scrapping into decent enough
revenue.
India being a growing economy and having a huge appetite for various grades of steel, ship recycling
becomes an important source of steel in the country. Recycling scrap steel into steel becomes cheaper
compared to the extracting steel from iron ore. The other secondary items on board ships are used by
various industries; some of such items are generator sets, panels, etc.
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140
120
100
80
60
40
20
0
Bulk
General
Cargo
2008
Pass/cargo
2009
Tanker
Ro-Ro
others
2010
Page 96 of 104
Metal cutting
Reuse
A substantial portion of the recovered material includes re-rollable plates and melting scrap. The equipments
and machinery such as motors, pumps, generator, navigation equipments, life saving equipments, furniture,
electrical cables, utensils etc. are sold to second hand market.
Apart from the reusable parts, dismantling also gives away hazardous substances, both to the environment
and health. Due to lack in training in removing and handling such substances, workers are invariably
exposed to these hazards.
Following are some of the measures which can be initiated by the Norwegian firms which could help promote
a safer practice for such tasks:
For asbestos removal procedures, train the workers in critical barriers and/or negative pressure
enclosures.
The supervisors, too, need to be trained about the regulation and the means of compliance.
Besides, there are needs for safe storage area for such harmful substances until its ready to be discharged
in an environmentally-sound way, for which technology and proper infrastructure needs to be provided.
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Theres even the need to train the workforce in the face of oil spills. Training that covers aspects like the
correct response during a spill and the methods of recovering the spilled oil also need to be implemented.
Some of the containment measures that can be undertaken for oil spills are as follows:
1.
2.
Chemical and biological methods in conjunction with mechanical means can be used for
containment.
Ship-breaking yards in India require investment in terms of technology, infrastructure, training and facilities
that cater to the yard workforce. Training, too, is an indispensible part that cant be stressed enough.
Present-day workers are ignorant towards the dangers their everyday work possesses, in return for minimum
wages.
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minimal safety measures to be undertaken while carrying out ship breaking activity. However, there are
instances when small companies do not to have adequate safety equipments for the employees.
GMB has taken several initiatives to create common infrastructure for the workers involved in the ship
breaking activity. It has created Labour Housing Complex to provide suitable accommodation with proper
infrastructure facilities. GMB has also acquired land of about 60 acres in Alang and 14 acres at Sosiya. The
land will be used by GMB create infrastructure for the ship breaking industry.
Sanitation, housing facilities, health care, safety equipments and practices are some of the areas where
opportunities for investment remain open.
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despite the fact that GMB has constructed solid and hazard waste management plant. With the introduction
of technologically-adept firms, such practices are sure to go down.
In order to carry out various developmental activities and provide infrastructure facilities in the yard, GMB
has submitted proposals for transferring government land and for acquiring private land in the nearby
villages. Here, too, opportunities exist with the state government to work in tandem, and build the
infrastructural facilities that the yard so urgently needs.
Limitation on the number of ships to be beached and the location of these (distance between
A ship should have proper consent before arrival from the concerned authority or the State Maritime
Board, stating that it does not contain any hazardous waste or radioactive substances. In appropriate cases,
AERB should be consulted.
The SPCBs should ensure that the ship, prior to breaking, is properly decontaminated by the ship
owner.
Waste generated should be classified under Hazardous and Non-hazardous and the quantity
Waste materials should be properly handled and disposed. Total quantity of asbestos wastes should
be informed to the concerned authorities. The final disposal of asbestos wastes should be authorized by the
Gujarat Pollution Control Board.
Only if the ship breaking industries have provisions for disposal of the waste in environmentally
sound manner, they should be given authorization. Only if the industry has facilities for disposing waste in an
environmentally sound manner, should all the authorization be renewed.
The State Maritime Board should see to it that all quantities of wastes and paint chips etc. are taken
Burning of hazardous and non-hazardous materials on the beach should be completely banned.
Direction should be given to the State pollution control board of all the coastal states where the ship
breaking activity is conducted including the state of Gujarat, to order closure of all those units that are not
authorized under the Hazardous Waste Rules.
Unless having the necessary authorization, the plots where currently no activities are being
conducted should not be allowed to conduct any fresh ship breaking activity.
As per the standard fixed, continuous monitoring of ambient air, SPM and noise level should be
monitored by the Gujarat PCB. For the installation of proper equipments and infrastructures for inspection of
hazardous materials and radio-active substances, the Gujarat pollution control board should be directed, and
also the AER should be consulted.
Compliances of the new Gujarat maritime Board, such as provisions of fire and accidents for safety
and welfare or workers and protection of environment during ship breaking activities should be ensured by
the Gujarat pollution control board.
The notification that was issued by GMB in the year 2001 on Gas free for hot work should be made
mandatory and the ship should not be given beaching permission unless this certificate is shown. If any
explosion takes place, irrespective of the possession of certificate, it should be dealt sternly and the license
of the plot holder should be cancelled. For giving false certificate, the explosive inspector should be
prosecuted.
The ship owners should maintain an inventory of the hazardous waste on board a ship, and no
beaching permission should be granted without such an inventory. For the safe disposal of hazardous and
toxic waste the GMB should submit the inventory to the concerned SPCBs.
The regular visit of GMB and GSPCB officers to the sites at regular intervals would make the plot
owners realize that these institutions are serious about improvement in operational standards. An interMinisterial Committee should be constituted comprising Ministry of Surface Transport, Ministry of State,
Ministry of Labor and Ministry of Environment and Forests with the involvement of labor and environment
organizations and representatives of the shipbreaking industry.
As per the CPCB guidelines, landfill sites and incinerators should be prepared by the SPCBs with
the involvement of State maritime Boards. This should be done only after the prior approval of the CPCB.
India should make an active participation in international meetings on shipbreaking at the level of
International Maritime Organization and the Basel Conventions Technical Working Group, and this
participation should be included from Central and state level.
The shipbreaking activities in Alang and in other coastal states should continue and expand in
6.4. Conclusion
With so many laws, regulations and reforms laid down to facilitate a safe and environmentally sound
approach and execution of ship dismantling in India, the ground reality still doesnt reflect all of the above
measures. Part ignorance and part lack of infrastructure, training and technology are attributed to the nearfailure of responsible undertaking of the ship-dismantling business.
The global recession was actually a boon for the ship-breaking industry. Old vessels and financially-hit
companies resorted to scrapping their ships, which they could no longer afford to run. Over 200 ships arrived
at Alang for dismantling in 2008-09, and the number is expected to shoot up to 300 in 2009-10. Some
optimists at Alang estimate that over 600 ships are available for scrapping due to the recent economic
turmoil. In fact, The Baltic and International Maritime Council forecasts that demand for ship scrapping will
outstrip the existing recycling capacity.
Considering the aforesaid potential in the industry itself, coupled with the opportunities existing in the
infrastructural development, training and technology supply in India, the time is ripe for a foreign firm to make
a foray.
The Norwegian companies would be required to spread awareness among the ship dismantling companies
to undertake mechanisation. The cost benefit analysis of the same has to be shows to them.
It could be challenging for persuade ship dismantling yards undertake voluntary implementation of stringent
environment laws fallowed in Europe. Most of them fear that their cost would go up forcing them to lose their
business to Bangladesh and Pakistan. This problem could be tackled in a different way. Taking cue from the
Information Technology business process outsourcing industry, a project is not outsourced to the company
which does not uses licensed software. This brings fair competition between all stakes holders.
As majority of the ship owners are European companies, a resolution could be passed through their
association that the ship owners would not sell their ship for scrap to yards which do not have safe disposal
of environmental waste and do not adopt environmental friendly scrapping of ships.
7.
CONCLUSION
In the wake of recent downturn, Indian shipping industry still managed to hold its own; although not at a
scale that was seen prior to the meltdown. The Indian shipping sector exhibited certain immune properties,
and after the worst was over, it also showed some resilience to the market fluctuations. In addition to the
promises the industry holds at present, and the potentials that foreign investors could bank on in the future,
the industry still has a lot of ground to cover.
The growth in the shipbuilding industry has been very steep. However, the industry has yet to find the
efficiency that would stand shoulder-to-shoulder with that of the international players. Technology has been
the sore issue that has played a spoilsport in the overall development of the industry. India has an
abundance of manpower. However, the ship industry needs a balancing act; in fact, in present times, the
balance should tip a bit in favour of technology.
Technology is the area where boundless opportunities could be found and taken advantage of. This entity
can play a key role in not just ship-building or ship-scrapping but also in the maritime academies, training
and other means of technological assistance. Norwegians, being technologically sound that they are, have a
world of opportunities, and can also create limitless ones in this sector. Even the federal and state
governments have realized the need of the hour, and have implemented laws and regulations that would
benefit the Norwegian participants immensely. All this is meant to build a sturdier and a more conducive
environment for foreign investors, and help India put on the world-map as one of the appealing, lucrative and
resourceful shipping markets.
In India, the coastal shipping, too, has its share of bottlenecks; mostly infrastructural. The existing and
coming-up ports would help ease the transportation hurdles. Coupling the upcoming developments with the
government-backed enterprising projects, opportunities are available for pickings in the coastal shipping
segment.
Both the tangible and the intangible needs of the Indian shipping industry are waiting to be addressed. Its
inspiring to watch the Indian shipping industry put an effort in modernizing its approach and improving its
efficiency. Such exploits have always resulted in bilateral opportunities, where both the involved parties
stand to gain; Norwegians would have found another market to expand its operations, and India would have
found the assistance it so gravely needs.