Bharati Shipyard plans 40% order rise in 2008

Bharati Shipyard, the country's leading private sector shipbuilding company, is looking to enhance its order book by 35-40% in the coming year. It expects new orders to come from offshore vessels, an area it is increasing focus on.

Having gone slow on taking orders in the last one year, Bharati Shipyard expects its latest capacity addition to boost the order book, which currently stands at Rs 4,780 crore. It is confident many of its talks for new orders will bear fruition.

PC Kapoor, the managing director of Bharati Shipyard, said that its order book needs a growth of 35-40% by next year to fill up the huge capacities the company is building.

Since its yards have been fully booked till 2011, the order book was stagnant at Rs 4,000 crore for almost a year.

But for the last one year, the company has been aggressive with capacity addition. Besides expanding its shipyards at Ghodbunder, Ratnagiri, Goa and Kolkata, Bharati Shipyard is building a facility in Mangalore with an investment of Rs 400 crore. The unit can build vessels of up to 60,000 tonne and is expected to start production by the end of this year.

Its new yard at Dabhol, set up with an investment of Rs 600 crore, has started production and is building the only rig on order — a 450-feet jack-up rig for Great Offshore at a cost of $165 million.

Kapoor said, "We are waiting for Swan Hunter machines to be set up for better clarity on the delivery schedule so we can plan our production better. This is why we were being cautious in taking orders earlier." Bharati Shipyard recently received orders worth Rs 290 crore for two anchor-handling tug supply vessels (AHTS) from Norwegian Offshore.

The company is setting up two shipyards on the east coast in a joint venture with Apeejay Group at a cost of Rs 2,000 crore. The units—in Haldia in West Bengal and Bhadrak in Orissa-are both still in the land acquisition stage and are expected to start operations by 2010.

With oil and gas exploration growing, Bharati Shipyard has increased focus on offshore vessels and is looking to cover the entire gamut of this segment, mainly advanced offshore vessels.

Offshore has been our niche and our focus will be on this segment. Oil exploration will be profitable even if oil prices are around $60-70 a barrel and hence the demand for offshore vessels, Kapoor said. It is talking to various companies for more rig orders.

With global shipbuilding yards being completely booked till 2012, opportunities have opened up for Indian shipbuilders, who have lined up investments close to Rs 20,000 crore for the next 5-6 years.

Private sector yards such as ABG Shipyard, Pipavav Shipyard, Good Earth Maritime and others running full are expanding capacities. Even the Central government has earmarked an investment of $1.57 billion for two shipyards, one each in west and east coasts.

The domestic industry order book, which is estimated at $4-5 billion, is expected to grow at a compounded annual growth rate (CAGR) of 30% to $22.1 billion by 2020. With this growth, India will be able to increase its share in the global market to 5% from 1% now.