|Cochin Shipyard Ltd. has picked Simplex Infrastructures Ltd. to construct a new ship repair facility at nearby Cochin Port Trust as the State-owned firm looks to expand its high-margin ship repair business.|
Cochin Shipyard signed off on the ₹610-crore work to Simplex Infrastructures on October 30, a Shipping Ministry official said. Shipping Minister Nitin Gadkari will lay the foundation stone for the project on November 17, he added.
Cochin Shipyard sold shares through an initial public offering (IPO) in August to raise money to part fund an expansion plan involving the construction of a ₹1,800-crore new dry dock to build larger and more sophisticated ships and a ₹970-crore exclusive facility to boost its ship repair capacity.
“Ship repair is a high-margin business,” says Madhu Nair, Chairman and Managing Director of Cochin Shipyard.
In FY 17, 26% of Cochin Shipyard’s revenue came from ship repairs. “This is not going anywhere down for the last two years. It is only increasing, not by small figures but by big figures. Our ship repair revenues have jumped from ₹196 crore in FY 15 to ₹375 crore in FY 16 to ₹550 crore in FY 17. That is the kind of jump we are seeing in the ship repair business,” Nair added.
To tap more business, the firm is setting up an exclusive ship repair facility on 16.9 hectares of land and 15.6 hectare of water front leased from Cochin Port Trust, including their existing ship repair facility, for 30 years. The new repair facility comprises a ship-lift, transfer system and allied facilities. The ship lift is designed for vessels with a length of as much as 130 metres and a lifting capacity of 6,000 tonnes.
The existing repair dock on its own premises – one of the largest in India – can accommodate 80 to 100 ships a year. “We are turning down as many as 30 ships a year because of lack of capacity,” a company official said.
The Shipyard is not selective in taking ship repair works. “We repair fishing vessels, survey vessels, seismic vessels, geological survey vessels, oil drilling rigs, tankers, bulk carriers, cement carriers, chemical tankers, and all types of naval ships such as aircraft carriers, offshore patrol vessels, fast patrol vessels and landing platform docks. That’s our versatility,” the official said.
Revenues from ship repair (commercial and defense vessels) at commercial shipyards in India is estimated to be worth over ₹1,000 crore, accounting for less than 1% of the global ship repair market.
India’s domestic fleet of some 1,350 vessels represents a huge opportunity to boost India’s share in the commercial ship repair market. The ship repair market for the Indian fleet alone is estimated to be worth ₹2,600-2,800 crore, according to a document prepared by the Shipping Ministry.