Annual Report FY 2010-11 - Pipavav Shipyard

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Pipavav Defence and Offshore Engineering Company Limited �� U.S. Energy Information Administration, http://www.cia.gov/ To prevent the country from becoming dependent on foreign oil subject to volatile fluctuations in the global market, the development of offshore oil and gas facilities has been made a priority by the Indian Government. India’s Crude import by Volume 140 120 100 80 60 40 20 0 Crude Import by Volume & Value Fy-01 Fy-02 Fy-03 Fy-04 Fy-05 Fy-06 Fy-07 Fy-08 Fy-09 Crude Import Import by Value The Government is exploring opportunities to meet the domestic demand of oil through domestic supply by encouraging the development of modern offshore assets. The energy demand is expected to grow fourfold in the next two decades. The Government is stepping up its offshore oil and gas programme. The inability of aging offshore structures i.e. rigs and platforms to operate in deeper water posts an advantage for businesses that can create new generation efficient offshore structures. Heavy Engineering companies with access to waterfront will be better suited to develop modern offshore structures. Globally, more than 75% of rigs were constructed before 1985, which indicates that most rigs will need to be replaced in the next �� decade. As it becomes more expensive to purchase such offshore structures in Middle East & East Asian countries, economies have been considering low cost destinations like India and many orders may be diverted to Indian 30 growth, INR bn 4000 3500 3000 2500 2000 1500 1000 500 0 India’s Crude import by Value
Annual Report 2010-11 �� builders. Lastly, the demand for supply vessels to offshore structures is increasing significantly. Close to 50% of the Indian offshore support fleet is over 20 years old and is not capable of servicing requirement of deep water rigs and platforms. With the advent of deep water offshore structures, the safety and technological capacity of existing offshore supply vehicles will need to be improved. All in all, greater demand for oil and gas from emerging markets like India has resulted in the need to develop domestic sources of supply of energy and curtail the dependency on foreign markets for imports, thus preserving the country’s security. c. Commercial Shipbuilding and Ship Repair Global Scenario While the global shipbuilding outlook until 2011 looked subdued, it is expected that the commercial shipbuilding industry will turnaround by FY 2012-13. Global trends show a demand for larger vessels as the pursuit of economies of scale drives businesses to demand both bigger and fuel efficient ships. Since ships that can carry larger cargoes translate into lower cost of transport, companies that are able to deliver large vessels will benefit. There is also a demand in niche sectors. For example, increased requirements for dredging have translated into demand for dredgers. Similarly the emergence of LNG as a substitute for coal is resulting in a demand for LNG Carriers. Increased spending on infrastructure and subsea pipelines is resulting in greater demand for Heavy Lift Vessels. Companies like yours capable of manufacturing these specialised vessels would gain from this demand. Indian Scenario According to the Maritime Agenda 2011, there are currently 27 prominent shipyards in the country, of which 8 are in the public sector. India advanced from 0.1% of the world share of shipbuilding in 2002 to approximately 1.5% in 2010. With respect to the shipbuilding and ship repair industry, the Government of India’s vision is: “To have a well developed shipbuilding and ship repair industry of international standard in India which will be self-sufficient in building and repairing commercial vessels required by the country by 2020 and generate huge investment and employment opportunities.” The Ministry of Shipping has set several targets that they wish to meet by 2020, which include gaining 5% of the global market share of commercial shipbuilding, developing a strong ancillary industry, strong research and development facilities, to be self-sufficient in any domestic repair requirements and become a prominent ship repair center in the Indian Ocean. The goals to which the Government is aspiring provide a myriad of opportunities for the Indian maritime companies that will inevitably translate into greater profitability. Labour cost accounts for relatively 10% of shipbuilding cost. India boasts availability of trained manpower in heavy engineering and shipbuilding sector with a strong base of intellectual capital. India commands a natural advantage in terms of skilled labour and technological capacity for shipbuilding business and oil and gas assets, a benefit it has over other countries that may have lower labour costs but lack in quality technology and infrastructure. Globalization has led to the wide dispersal of technology to emerging markets from developed countries. Your Company’s infrastructure is in line with Korean and Japanese counterparts in terms of quality. Secondly, as foreign companies are eager to enjoy the benefits of operating in a low cost country like India, the potential for strategic partnerships has never been greater leading to further improvement and construction of quality vessels. India enjoys a strategic location in the Indian Ocean. India’s long coastline provides suitable locations for setting up ship-repair facilities. India’s prominence in the region as an emerging power strengthens India’s position in commercial shipbuilding and ship repair. �� 31
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I. Registration Details Place :- Mu
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SAFE HARBOUR In this Report, we hav
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Annual Report FY 2010-11 - Pipavav Shipyard

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