Mercator Lines mulls new shipyard in Palghar

Mumbai, May 28 | Updated: May 29 2007, 05:30am hrs
After a mega deal for acquiring four dry bulk vessels with an investment of Rs 1,000 crore in the dry bulk shipping vessels sector last month, Mercator Lines Ltd is likely to build up a shipyard in Palghar in Maharashtra.

According to sources close to the development, the company recently bought 400 acre of land in Palghar to build a shipyard mostly banking on foreign orders. Sources also added that the company is likely to invest around Rs 1,000 crore to build this shipyard.

When contacted, HK Miittal, chairman and managing director, Mercator Lines Ltd said that the company is yet to look into into any such plans. However, the company successfully raised $51 million by way of issue of convertible bonds, which were listed on the Singapore Stock Exchange last month.

During the past 12 months, the Mercator group has committed to invest about Rs 2,750 crore in the expansion of its fleet and offshore business with a consolidated fleet of 27 vessels with total capacity of about 2.45 million tonne.

According to a Mumbai based shipping analyst, Companies are focusing on the potential for the offshore business market including OSVs and Jack up rigs. In this tight situation, any new shipyard in the country would be in a favourable position.

Smooth Sailing

The company recently bought
400 acre of land to build a
shipyard mostly banking on
foreign orders
It successfully raised $51 million by way of issue of convertible bonds
The Mercator group has committed to invest about Rs 2,750 crore in the expansion of its fleet.

At present, private sector shipyards ABG, Pipavav and Bharati Shipyards are the major shipyards in the country, with an order book of $844 million, $740 million and $590 million, respectively. On the other hand, state-run yards like Cochin Shipyard and Hindustan Shipyard have orders worth $362 million and $314 million, respectively. According to a report by I-Maritime, the shipbuilding industry will consolidate itself and get into building large cargo vessels, including container vessels and tankers, during the next five years.

An analysis of the order books of the shipyards would reveal that private shipyards mostly bank on export orders. Out of their total orders of $2,686 million last fiscal, export orders account for almost $2,284 million. In the case of PSU shipyards, it is the other way around, with domestic orders accounting for $517 million out of their total share of $1,011 million.