L&T plans to build ship engines, looking for mega shipyard site

-

It has started scouting for land on the west coast; to buy 500 acres more near proposed hub at Kattupalli yard.
India's biggest engineering and construction firm, Larsen and Toubro Ltd (L&T), which has already announced an entry into the shipbuilding business, is now looking to start making engines for ships and other components that go into ships.

Much like in the shipbuilding business, there is currently a boom in the global ship-components business with demand far exceeding supply. Apart from entering this business, L&T, which ventured into shipbuilding in 2006, has started scouting for a suitable site for a mega shipyard on the country's west coast, said a person familiar with the development who did not wish to be named before an announcement on the same.

An L&T spokesperson declined to comment. In early January, the Tamil Nadu government cleared a proposal from L&T to build the country's largest shipyard at Kattupalli in Thiruvallur district near Chennai at a cost of around Rs3,000 crore. The Kattupalli yard, spread over 1,200 acres, will also have a commercial port adjacent to it.

The firm now plans to acquire an additional 500 acres near the Kattupalli project from the state-owned Tamil Nadu Industrial Development Corp. Ltd, or Tidco, to facilitate setting up of ancillary industries that make and supply components used in ships. "L&T wants to convert Kattupalli into a shipbuilding hub," the person familiar with the development said. It is here that the company plans to make diesel engines for ships that it will build and also for other customers. However, L&T is yet to finalize the strategy for the diesel engine venture. "The company is yet to decide whether to opt for the licensing route or float a joint venture with an established player to set up the engine factory," the person said.

L&T has held initial discussions regarding the diesel engine venture with Germany's MAN Diesel SE, one of the world's top makers of large diesel ship engines, Finnish equipment maker Wartsila Corp. and STX Engine Co. Ltd, a unit of South Korean shipbuilder STX Shipbuilding Co. Ltd, the person said. MAN Diesel has adopted the licensing route to manufacture its engines in several parts of the globe. Under this plan, the company making engines using MAN Diesel's technology will have to share a certain proportion of its revenues with MAN Diesel. Wartsila already has a factory at Khopoli in Maharashtra that manufactures and exports components that go into ships, but not engines.

L&T is currently building mid-sized ships at its heavy engineering complex located at Hazira near Surat in Gujarat. However, the potential to build large ships at this facility is limited. Shipbuilders across the globe are facing a shortage of ship engines at a time when they are fully booked for the next few years. If an engine is ordered today, it will not be delivered until 2010. With local shipyards adding capacities and new players entering the shipbuilding business, demand for ship engines within the country is set to rise. In the absence of locally available engines and other gear, Indian shipbuilders import them from factories located in Finland, Norway, Germany, Italy, the UK and South Korea. Amid a global boom in shipbuilding, dependence on overseas factories creates additional bottlenecks for Indian shipbuilders.

Major marine equipment makers such as MAN Diesel, Wartsila, Rolls Royce and STX Engine are looking to set up ship engine factories to cash in on India's rapidly growing shipbuilding industry, riding on increased demand for ships globally. Traditional shipbuilding nations such as South Korea, Japan and Norway have turned down orders for relatively smaller ships for lack of capacities in their facilities. Mint had reported on 27 January that India's largest shipping firm, the state-owned Shipping Corp. of India Ltd, was looking to partner with a few government-run units to enter the business of making ship engines.

India's biggest private sector shipbuilders, ABG Shipyard Ltd, Bharati Shipyard Ltd, Pipavav Shipyard Ltd, Cochin Shipyard Ltd, Hindustan Shipyard Ltd, Mazagon Dock Ltd and a few others are currently building ships worth more than Rs20,000 crore. "There are enough volumes in India to justify setting up of engine factories," Rishi Agarwal, managing director, ABG, had said in an earlier interview.


----- With due apologies and full credits to LiveMint

Popular posts from this blog

IOB capitalises on hike in stake by LIC

-
Indian Overseas Bank rose 1.53% to Rs 46.45 at 10:31 IST on BSE, after the biggest domestic instutional investors Life Insurance Corporation of India hiked its stake in the state-run bank. The bank made this announcement after trading hours on Wednesday, 25 March 2009. Meanwhile, the BSE Sensex was up 126.19 points, or 1.31%, to 9,794.09. On BSE, 31,003 shares were traded in the counter. The stock had an average daily volume of 1.93 lakh shares in the past one quarter. The stock hit a high of Rs 47 and a low of Rs 45.95 so far during the day. The stock hit a 52-week high of Rs 156.80 on 2 May 2008 and a 52-week low of Rs 37.55 on 9 March 2009. The mid-cap bank stock had underperformed the market over the past one month till 25 March 2009, falling 3.17% as compared to the Sensex's 8.60% rise. It had also underperformed the market in the past one quarter, declining 33.94% as compared to the Sensex's 1.04% rise. The bank's current equ The current price of ...
Read more

Lok Housing & Constructions builds on fund raising plans

-
Lok Housing & Constructions jumped 6.99% to Rs 107.90 at 11:20 IST on BSE ahead of a board meeting to consider fund raising options from both foreign and local market, including an institutional placement. Meanwhile, the BSE Sensex was down 50.50 points, or 0.30%, at 15203.73. On BSE, 1.86 lakh shares were traded in the counter. The scrip had an average daily volume of 4.74 lakh shares in the past one quarter. The stock hit a high of Rs 115 and a low of Rs 102 so far during the day. The stock had a 52-week high of Rs 390.50 on 1 January 2008 and a 52-week low of Rs 96.25 on 12 June 2008. The scrip had underperformed the market over the past one month till 12 June 2008, falling 26.55% compared to the Sensex's 10.18% decline. It had also underperformed the market in the past one quarter, falling 31.39% compared to Sensex's 3.24% fall. The small-cap housing projects developer has an equity capital of Rs 42.88 crore. Face value per share is Rs 10. The current...
Read more

Griffin Chemicals surges on re-listing

-
Griffin Chemicals was trading at Rs 29, up 2220% on re-listing after six years on Bombay Stock Exchange (BSE). The counter saw miniscule volume of 4769 shares. The stock opened at Rs 23, up 1740% against its last traded price of Rs 1.25 on 8 August 2002. The Griffin Chemicals stock was highly volatile today. It opened at Rs 23 and then rallied ahead to Rs 50 but soon eased to a low Rs 22. The surge in Griffin shares reminds of unprecedented rise in stock prices of KGN Industries on its re-listing day. KGN Industries, run by Ahmedabad-based Memon family, had re-listed at Rs 100 per share after nearly seven years in May 2008 this year. The stock had risen to a high of Rs 55,000.
Read more