Annual Report FY 2010-11 - Pipavav Shipyard

Annual Report 2010-11
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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.
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