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    Indian Shipbuilding Industry and Its Future Prospects

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    Rocki
    The document summarizes the Indian shipbuilding industry, including current state and future projections and targets for growth. It notes that India has a skilled workforce and its economy and trade are growing rapidly, presenting opportunities for growth in shipbuilding. The industry needs to expand capacity, modernize facilities, and reduce costs to achieve targets of increasing orders, deliveries, employment and economic value. Challenges include high costs compared to competitors like China and Korea.

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    Indian Shipbuilding Industry and Its Future Prospects

    Uploaded by

    Rocki
    683 views22 pages
    The document summarizes the Indian shipbuilding industry, including current state and future projections and targets for growth. It notes that India has a skilled workforce and its economy and trade are growing rapidly, presenting opportunities for growth in shipbuilding. The industry needs to expand capacity, modernize facilities, and reduce costs to achieve targets of increasing orders, deliveries, employment and economic value. Challenges include high costs compared to competitors like China and Korea.

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    Indian Shipbuilding Industry and its Future Prospects

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    The document summarizes the Indian shipbuilding industry, including current state and future projections and targets for growth. It notes that India has a skilled workforce and its economy and trade are growing rapidly, presenting opportunities for growth in shipbuilding. The industry needs to expand capacity, modernize facilities, and reduce costs to achieve targets of increasing orders, deliveries, employment and economic value. Challenges include high costs compared to competitors like China and Korea.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    683 views22 pages

    Indian Shipbuilding Industry and Its Future Prospects

    Uploaded by

    Rocki
    The document summarizes the Indian shipbuilding industry, including current state and future projections and targets for growth. It notes that India has a skilled workforce and its economy and trade are growing rapidly, presenting opportunities for growth in shipbuilding. The industry needs to expand capacity, modernize facilities, and reduce costs to achieve targets of increasing orders, deliveries, employment and economic value. Challenges include high costs compared to competitors like China and Korea.

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    INDIAN SHIP BUILDING INDUSTRY

    OUTLINE

    Global shipbuilding demand and supply


    Indian shipbuilding industry
    Indian shipbuilding projections & targets
    Comparisons
    What Indian Shipbuilding Industry needs
    INDIA OPPORTUNITY BRIC
    ECONOMIES

    • India has a pool of well educated, skilled, enterprising


    young work force. As per Goldman Sachs report on
    BRIC economies - India will be the third largest economy
    by 2025 .The adage that China is world’s factory floor
    and India its back office is looking outdated.
    • World economic growth has been around 4% for last few GLOBAL TRADE IN B
    TONS
    years. India’s GDP growth at 9%.
    • Global Mercantile Trade has been growing at double the
    rate at 8%. India’s trade is growing at >20%. Tonnage
    handled in ports is expected to grow from the present
    level of 500 million tons to 1000 million tons by 2009-10.
    • Indian merchant fleet, numbering 811 with 9.05 m GT,
    average age 18.3 yrs, carries only 13% of trade. Has a
    huge potential of growth. India’s shipbuilding industry is 1000
    growing at >30%.
    • Unlike past, emerging dynamic developing countries like
    China, India, Brazil are driving world economy.
    INDIA’S
    TRADE
    INTERNATIONAL SEABORNE TRADE
    (Millions of Tons)

    In 2006, goods loaded at


    ports worldwide was 7.4
    billion tons.

    This is equivalent to
    annual growth rate of
    4.3%

    Source : Estimated by UNCTAD


    STRONG DEMAND FOR SHIPPING

    •The Global 1,600


    World Fleet Outlook - mGT
    Reference Case
    Shipping Fleet 1,400 Dry Cargo 1,601
    has been growing Chemical
    Gas Carriers
    at 8.6%. 1,200
    Container Ships
    1,196
    Bulk Carriers
    1,000
    Oil Tankers
    •World fleet
    800
    Crossed the 776
    billion dwt mark in 600

    early 2007 and


    400
    stands at 1.04
    billion dwt. 200

    2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

    Source ABS
    NEW ORDERS, COMPLETION & ORDERBOOK

    Source : UNTACD and Tradewinds 29 Feb 08


    W BENGAL
    1. CIWTC 2. GRSE
    3, HDPE 4. SHALIMAR
    9 PUBLIC SECTOR 5. AC ROY 6. CORPORATE

    19 PRIVATE
    SECTOR
    GUJARAT
    1. ABG 2. L&T
    TOTAL 27
    3.ALCOCK ASHDOWN
    4.PIPAVAV 20 DRY DOCKS
    40 SLIPWAYS
    MAHARASHTRA
    2. MDL 600,000 DWT ANDHRA
    3. BHARATI 1. HSL

    GOA
    1. CHOWGULE
    2. DEMPO
    3. GSL

    TAMIL NADU
    TEBMA

    KERALA
    CSL
    ORDER BOOK

    RUPEES
    CRORES
    EXPORTS

    IN 2002 THE EXPORT


    WAS NEGLIGIBLE
    MARKET POTENTIAL

    •To maintain current share (13%) an addition of 15 m


    GT needed (New and Replacement). Projected
    investment is $20 billion.

    •India’s overseas trade is projected to grow to 1000 m


    tons by 2009-10. Additional tonnage required to meet
    this is 100 m DWT.

    •26.2% of world Fleet constituting 273 m DWT is 20


    yrs & older and will need replacement in next 10 yrs.
    SHIPBUILDING POTENTIAL
    The global order book
    is 500 m dwt

    With Indian trade


    requirement of 100 m
    dwt …………

    • Demand for new


    building will remain
    strong
    • Every 4th ship on order
    in the world will be for
    serving Indian trade.

    SHOULD THIS HUGE OPPORTUNITY BE GIVEN TO FOREIGN


    YARDS OR USED FOR GROWTH OF INDIAN SHIPBUILDING?
    ACHIEVABLE TARGETS
    ORDER BOOK AND DELIVERIES
    (DWT IN MILLION TONS)

    THIS TRANSLATES TO
    30% Y-O-Y GROWTH
    PROJECTED GROWTH OF INDIAN SHIPBUILDING

    EMPLOYMENT POTENTIAL
    YEAR 2007 2012 2017
    NUMBER 50,000 180,000 500,000
    ECONOMIC VALUE ADDITION
    VALUE ADDITION 2012 2017
    (Rs Crores) (Rs Crores)

    1. INCREASE OVERALL 64,000 3,42,000


    ECONOMIC OUTPUT

    2. TOTAL EMPLOYMENT 4,80,000 24,50,000

    3. INVESTMENT 37,000 2,22,000

    4. ADDITIONAL INCOME TO 4,500 26,000


    THE GOVERNMENT
    THROUGH TAX REVENUES

    SOURCE: KPMG REPORT ON ECONOMIC BENEFITS, DISADVANTAGES FACED ABD


    BENCHMARKING GOVERNMENT SUPPORT ACROSS COUNTRIES
    SHIPBUILDING OUTPUT (Million CGT)

    If India has to achieve 7% of


    world share then someone
    is going to lose its share …..
    Thus, the competition for
    market share will be intense
    and fierce .

    INDIA 0.32 0.8% 0.89 2% 3.1 7%

    SOURCE : Community of European Shipyard Association


    (CESA)
    BUILD CAPACITY COMPARISON
    Japan Korea China India

    Total Building Tonnage in 12.1 11.5 12.2 0.5


    shipyards in million DWT

    Building berths for ships > 17 24 21 Nil


    150,000 DWT
    Building berths for ships > 10 17 8 Nil
    250000 DWT

    1. India presently has small ship building


    capacity
    2. To achieve 4 m dwt deliveries by 2011 it
    will have to increase its capacity 4 times
    its present capacity in next 5 yrs
    3. To achieve 16 m dwt deliveries by 2016 it
    will have to create a capacity of 8 million
    dwt
    SUMMARY OF COST DIFFERENTIAL
    Sector Domestic Export
    .China Korea China Korea
    CD, ED, VAT & Octroi 8.30% 8.30% 2.91% 2.91%
    Service Tax 1.48% 1.48% 1.48% 1.48%
    Corporate Tax 1.40% - 1.40% -
    Charges towards Bank Guarantees 0.86% 0.86% 0.86% 0.86%
    Interest on Working Capital 2.60% 1.60% 2.60% 1.60%
    Interest on Capital Expenditure 0.74% 0.74% 0.74% 0.74%
    Insurance Charges 0.40% 0.40% 0.40% 0.40%
    Sea Freight differentials 3.90% 4.50% 3.90% 4.50%
    Clearing & Forwarding 0.30% 0.90% 0.30% 0.90%
    Bulk purchase discounts on purchase of 3.25% 6.50% 3.25% 6.50%
    inputs
    Forex Rate Disadvantages 23.33% - 23.33% -
    Total Cost disadvantage 46.56% 26.68% 41.17% 21.29%
    Price Disadvantage due to Discount 5-10% 15-20% 5-10% 15-20%
    51.56%- 41.68% - 46.17% - 34.29% -
    Total Disadvantage 56.56% 46.68% 51.17% 41.29%

    Source KPMG
    SHIP REPAIR INDUSTRY

    • SIZE - 35 SRUs limited private participation


    mainly Concentrated in 3-4 yards.

    • EVER GREEN INDUSTRY - Constant source of revenue even in lean period

    • GOOD MARKET POTENTIAL – World cargo fleet >1 billion dwt. Booming
    offshore and energy sector

    • LABOUR INTENSIVE - Promotes local employment and ancillary industry

    • VALUE ADDED - Surge in conversions of SH Tankers

    • STATUARY REQUIREMENTS – Special Surveys, ship maintenance


    requirements
    WHAT INDIAN SHIPBUILDING NEEDS

    NEW SHIPYARDS CONTINUATION OF


    INCENTIVE
    MODERNISATION AND
    UPGRADATION OF
    EXISTING FACILITIES LONG TERM
    SHIPBUILDING POLICY
    HIGH PRODUCTIVITY
    RATIONALISATION OF
    LOW CAPITAL COST TAXES, DUTIES, STATE
    CONTROL
    GROWTH OF ANCILLARY
    INDUSTRY SUPPORT OF INDIAN
    SHIPPING INDUSTRY
    GUJARAT W BENGAL
    1. ABG 2. L&T 1. CIWTC 2. GRSE
    3. ALCOCK 3, HDPE 4. SHALIMAR
    ASHDOWN 5. AC ROY 6.
    CORPORATE

    THIS IS THE MAHARASHTRA

    RIGHT TIME TO 2. MDL


    3. BHARATI ANDHRA
    1.HSL
    INVEST IN THE 2.NSTL
    3.NSDRC
    INDIAN GOA
    1. CHOWGULE
    SHIPBUILDING 2. DEMPO
    3. GSL
    AND TAMIL NADU
    REPAIR TEBMA
    KERALA
    INDUSTRY CSL
    THE END
    O NE THO US AND AND O NE D AYS O F HIS TO R Y
    A turkey before and after thanks giving

    160

    140

    120
    VARIABLE

    100

    80

    60 SURPRISE

    40

    20

    0 100 200 300 400 500 600 700 800 900


    1000
    DAYS
    REQUIREMENT OF STEEL PLATES

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