Vikrant Waghmare C - 53 _ Services Management Assignment

8/7/2019 Vikrant Waghmare C - 53 _ Services Management Assignment

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DR. V.N. BEDEKAR INSTITUTE OF MANAGEMENT STUDIES ,

THANE

Getting ready for the Ship Repair Segment

Bharati Shipyard Ltd venture in to Services for vessels

Vikrant Waghmare.

C – 53

MMS SEM – IV

Services Management Assignment



GETTING READY FOR EXPANSION IN SHIP REPAIR SEGMENT

Executive Summary:-

Bharati Shipyard has been in to Ship Building since 1976 with shipbuilding facilities acrosssix locations namely Ghodbunder (Thane, Mumbai), Dabhol, Ratnagiri, Goa, Mangalore and

Kolkata. The company also has revenue coming from wind power with facilities in Dhule.

Since the second generation is taking charge, the company is focusing on exploiting the

existing potential of facilities and core competency of manufacturing vessels. The

organisation is looking forward to start the ship repair unit at it’s Dabhol, Mangalore and Goa

facilities. The organisation is forecasting around INR 100 Crores income from vessel repair

segment. This article is about the ship repair industry in India and Bharati shipyards moves

to venture into this segment. In view of the uncertainty of shipbuilding beyond 2012, Indianshipyards are gearing up to tap into the ship repair market. Bharati Shipyard is set to carry

out ship repairs using the floating dock it acquired from Swan Hunter shipyard. With a view

to realize its 11th five year plan targets, the government will look to fully utilize the 13 dry

docks and 1 floating dock at the various port trusts. It is proposed that Cochin Shipyard Ltd

and Hindustan Shipyard Ltd be upgraded to world class standards, which will require an

investment of Rs 10 billion.

Indian Ship Repair Industry:-

Ship repair is an evergreen industry as all ships require periodic maintenance. India is

strategically located in the Indian Ocean and hence, many ships from the nearby trade

routes call on Indian ports. This means that there is a lot of potential for ship repair industry

in India. However, currently ship repair for these is primarily undertaken in Dubai Dry docks,

Singapore, Bahrain and Colombo dockyards.

Indian ship repair industry is moderately regulated, with the ship repairs being carried out by

SRUs (Ship Repair Units) which operate under licenses from DG Shipping. The license notonly gives permission to carry out ship repair but also gives some benefits in the form of

custom tax exemptions and so on.

Market Potential

The global ship repair market is estimated to be worth $ 10 to 12 billion, with Singapore

hogging 20% share and India on the other hand, has only a share of about $100 million.

India is located strategically on the international trade route; it can attract ships plying fromwest to east in the trade route for its ship repair activity. This represents increasing market



potential for the ship repair business, as ship owners prefer to repair their ships without

deviating from their trade routes as much as possible. But due to lack of infrastructure and

focus, the ship repair industry is not able to reap the benefits. The shipyards involved in ship

repair such as Cochin Shipyard and Hindustan Shipyard have done well in the ship repair

business in the past.

Another reason for high repair potential is the age profile of Indian fleet. As can be seen in

the diagram, almost half of the Indian flag fleet is older than 20 years. Older ships require

more frequent and extensive ship repair and maintenance. This translates into large

opportunity for a Ship repair yard in India.

There are a total of 35 SRU (Ship Repair Units) registered with the Director General of

Shipping of which only 7 SRUs namely - Alcock Ashdown & Co Ltd., Chennai Port Trust,

Cochin Shipyard Limited (CSL), Garden Reach Shipbuilders & Engineers Ltd. (GRSE),

Hindustan Shipyard Limited (HSL), Mumbai Port Trust (MbPT) and Mazagaon Dock Limited

(MDL) have been given the permanent approval as SRUs.

The major SRUs in the country are CSL, HSL, Western India Shipyard, MDL, ABG shipyard,

etc. Western India shipyard is the only shipyard in India, which is dedicated to ship repairing

activity. Other shipyards usually have shipbuilding and repair facilities in the same.Sometimes these facilities and their supporting infrastructure overlap.

The largest dry docking capacity in India belongs to CSL (125,000 DWT) followed by HSL

(74,000 DWT). The maximum size of ship that has been repaired in India is LOA 333.12m,

beam 60m, moulded depth 30.4m.

Bharati shipyard preparing :-

BSL has recently acquired the plant and machinery of Swan Hunter Shipyard, a UK based

ship builder. Swan Hunter shipyard is an internationally renowned shipbuilding yard engaged

in shipbuilding, ship conversion and construction of offshore structures. It had a capacity to

build vessels upto 1, 00,000 DWT. During its 130 years of existence, Swan Hunter built over

1,600 ships of various types including more than 400 naval vessels. Through this acquisition

BSL has acquired fully automated lines, plate bending rolls, gantry cranes, overhead cranes,

plasma burning equipment etc. It has also acquired its 20,000-ton lift capacity floating dock.

These equipments as well as the dry dock would be dismantled and shipped to Mangalore.

The acquisition, dismantling, transport and reinstalling cost would be around Rs 250 crore.



Most of the machinery and equipment acquired, had lead times of at least 10-12 months if

ordered for in the market. While the equipment bought can build up to 1, 00,000 DWT

vessels, the same will not increase the capacity of the Mangalore yard beyond 60,000 DWT

due to constraints on the dept of the draft.

Company’s Strategy1

Bharati Shipyard’s growth strategy focuses on capitalizing its capabilities, competencies,

knowledge and qualifications. The company's strategy is to

a. Establish as a leading Ship Builder, both domestically and internationally.

b. Enter into latest segments by building heavy, large sized multifaceted vessels while

continuing with building of medium sized vessels.

c. Make use of the best modern practices to achieve good productivity and throughput.

d. To construct vessels, which are complex in nature with the help of sophisticated

equipments, acquired from Swan Hunter Shipyard, UK.

e. To strengthen its position in Rig construction and develop an altogether new

business segment.

f. Establish Bharati as unique, reliable and economical service provider for high-end

technical repairs of vessels in India.

Technical Competence:

The company has the wide experience and the strong technical competence in order to cater

the needs of the ship repair segment in the India. Both the promoter directors are naval

engineers from the IIT, Khargpur and the CEO Dr Subiah posses the vast experience in the

shipbuilding & repair industry. Mr Ramesh Warpe (Vice President – Project Management) is

working on the allocation of available facilities to both core functions of vessel building and

the repairs. The company has acquired Tebma Shipyard Ltd recently to focus on the

opportunities available from the East coast. The company has its presence on the every

major costal destination to cater the needs of the global customers.

1Pg 18, Annual Report 2007, Management Discussion



EXIBITS

Income projections:-

Particulars Audited Audited Audited Audited Estimated Estimated2007 2008 2009 2010 2011 2012

INCOME

Turnover 360 642 934 1,265 1,518 1,821

Export Sales 254 324 547 718 911 1,093

Local Sales 106 318 388 547 607 729

Vessel Repairs

Income

-- -- -- -- 35 60

Subsidy 62 60 85 84 121 146

Other Income 3 3 0 4 13 15

Total Income 425 705 1,019 1,352 1,687 2,042

Swan Hunter Equipments acquired :-

Photo 1: Swan Hunter Shipyard, UK



Photo 2: 80 Tons Jetty Cranes

Photo 3: 60 Tons Jetty Crane



Photo 4: Floating Dock 60 Ton Crane

Photo 5: Installation at Dabhol Shipyard

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Vikrant Waghmare C - 53 _ Services Management Assignment