Indian Maritime Sector – Opportunities

for Norwegian Industry

Opportunities in Indian Maritime
Industry
(Commercial Segment)

2
Indian Maritime Sector
• Strategically located on the East – West Trade route
• Over 7,516.5 km of coast -line
• 1197 Islands
• 12 major / 185 non-major ports
• 30 shipyards – 9 in public & 21 in private sector
• 20 Dry-docks and 40 slip-ways
• Ship building tonnage : 1 million DWT
• Global share of order book:
• 2.7% by numbers
• 1.1% by DWT
• 1.4% by value
Indian Maritime Sector

• Approximately, 95% of the country’s Exim merchandise

trade by volume (70% in terms of value) is moved by sea.
• One of the largest merchant shipping fleets among the
developing countries
• Ranked 20th in the world
• Indian maritime sector is -
• Transportation of national and international cargoes
• Cargo handling services
• Shipbuilding and ship repairing
• Freight forwarding
• Light house facilities
• Training of marine personnel
Indian Shipping Industry

5
 Indian Shipping – Overview

Shipping Fleet as on March, 2010

Age Distribution in Years

Shipping Firms Description Owners Total

No. < 10 10 to 19 20 to 29 > 30

Organised More than 10 ship 20 156 118 152 40 466

Semi Organised More than 3 ship 67 102 76 94 44 316

Fragmented Less than 3 ship 198 48 44 72 52 216

Total 285 306 238 318 136 998

• Indian shipping is highly fragmented industry

• Out of 285 owners, about 20 owners control close to 50% of the shipping fleet by number
• The growth of fleet in the organized segment is more compared to other segment
• Large shipping companies have younger fleet compared to smaller ones
• Future growth and investment is proposed by companies with large fleets
• Large ship-owner would provide potential opportunities for Norwegian firms as they undertake more
of newbuilding projects

6
 Fleet Details of Major Owners (Top 20)
Dry Passe Port Product Offshore
Owner Crude Dredger Cargo LPG -nger Tug Carrier Vessel Others Total
SCI 34 21 2 2 11 10 6 86
GE Shipping 10 7 1 20 38
Mercator 2 5 1 10 18
Essar Shipping 8 6 14
ONGC 31 11 42
Great Offshore 12 28 40
Ocean Sparkle 1 28 29
Reliance 6 13 3 22
Samson Maritime 8 10 18
GMB 16 16
Administration of
Lakshdeep 15 15
DCI 13 1 14
Varun 3 6 4 13
Kolkata Port 12 12
Vizag PT 12 12
Chennai Port 11 11
Garware 11 11
Great Ship 10 10
Jaisu Shipping 5 1 3 1 10
Raj Shipping 1 3 6 10
Total 49 23 37 9 25 123 44 111 20 441

Source: DG Shipping (June, 2010)

7
 Supply Scenario – Indian Flagged Ships
• 195 Indian flag vessels are dedicated for offshore
sector Fleet breakup - Indian Flag
Others AHT
• 158 Offshore Vessels 11% 6%
• 37 Specialized Offshore Vessels Utility
5%
• Indian Fleet dominated by AHTS
• Gradual acquisition and hiring of PSV, which CrewBoat
started in early 2000 5%

• Trend likely to continue OSV

• Indian flagged PSV have young fleet 9%

• Fleet acquisition dominated in AHTS, PSV and AHTS

MSV segment PSV 54%
• AHT has a small and old fleet, and has not been 10%
ordered by Indian companies in last decade
No. of Ships is 158
• These ships are hired on spot charter for
short duration – gap mainly filled by boats from Source: Mantrana Maritime Advisory
Singapore
• Ships in Crewboat, Utility boat are owned by
smaller companies, mostly older fleet

Note: AHTS – Anchor Handling Tug and Supply

PSV – Platform Supply Vessel
MSV – Multi Service Vehicle
8
Supply Scenario – Foreign Flagged Ships

449 Foreign Flagged Offshore Vessels Licensed in 2008-09

Offshore Vessels by Number

Other, 45 AHT, 44

AHTSV, 18
Survey, 34

MSV, 6

OSV, 68
Source: Compiled by Mantrana
215 Vessels 449 Vessels

• Offshore vessels dominate list of foreign flagged ships in Indian coastal waters
• Anchor Handlers & OSV dominate the offshore ships deployed in India
• Young fleet is chartered for deployment in environmentally harsh conditions
• Older fleet have less charter rates, they are preferred in the fair weather season
• The period of charter ranged from 1 week to several months

9
Indian Shipping – Delivery Schedule
Delivery Schedule of Cargo Vessels as on March, 2010

Year of delivery 2010 2011 2012 2013 2014 Total

Shipping Corporation of India 5 10 6 21
Chowgule Shipping 1 5 6 4 1 17
Great Eastern 2 3 3 8
Essar Shipping 9 5 14
Good Earth Maritime 4 1 5
Adani Group 1 1 2 4
Tata Power 4 4
Gujarat Ambuja 2 2
Total 15 33 20 6 1 75

• Private and government-owned shipping companies intent on aggressive fleet expansion

• These plans were pursued even during the recent slowdown
• Most new-building orders during recession were from government companies such as ONGC, SCI and
other firms such as coast guard, navy, etc.
• Opens up opportunities for Norwegian, both in the new-building as well as refurbishment segment
• Ships scheduled for 2010 and 2011 delivery, already have their supplies and systems in place
• Scope for supplying equipments and materials for ships to be delivered post 2012
10
Offshore Vessels – Delivery Schedule
Delivery Schedule of Offshore Vessels as on March, 2010

Calendar Years 2010 2011 2012 Total

Garware Offshore MSV 2 2

Great Offshore MSV 1 1
GreatShip (India) AHTS 2 2
MSV 3 1 4
PSV 2 1 3
ONGC AHTS 4 8 12
Samson Maritime PSV 1 2 3
TAG Offshore AHTS 1 1
Shipping Corporation AHTS 1 4 1 6
Total 11 14 9 34

• Garware Offshore 1 MSV ordered at Havyard

• Greatship (India) limited has committed a Capital investment of US$ 365 M for ongoing fleet
expansion
• New company with young fleet, subsidiary of India’s largest shipping company in private
sector
• Tag Offshore is developing its fleet focusing opportunities in India
• ONGC ships are managed by Shipping Corporation, would be deployed in India for ONGC project
• Shipping Corporation would deploy all its ships in India, may be on ONGC projects 11
 DP Systems installed on Indian Ships (Major Owners)
Owned DP Under DP on under Remarks
• Out of 28 offshore vessels (supply)Construction
installed owned by Greatconstruction
Offshore aboutVessel
8 have DP
• All the ships belonging to Great Ship has DP 2 (except 1)
Great Offshore 28 8 1 1 Confirmed
• All 7 offshore vessels owned by Tag offshore has DP
Greatship 10 10 7 7 Confirmed
• Shipping Corporation owned
Shipping Corporation 10 10 6 6 Confirmed
ONGC 31 12 Not Available
Tag Offshore 7 7 Confirmed
Varun Shipping 4 4 Estimates
Samson Maritime 10 4 3 3 Estimates
Garware Offshore 11 4 2 2 Estimates
Total 111 47 29 17

Source: Mantrana Maritime Advisory

• Great Offshore has DP-1 installed on their ships
• All the ships of Greatship (except 1) have DP-2 installed on their ship
• Shipping Corporation did not have DP onboard their ships, However company has got it retrofitted
• ONGC has placed orders for 12 offshore vessels to Pipavav shipyard at close to US$ 120 mn, at this
price it would not be possible to supply offshore vessels with DP systems.
• All Ships of Tag Offshore has DP 1 installed on them

Note: DP System – Dynamic Positioning System 12

 Opportunities in Shipping
ONGC
• Placed new-building orders of 12 offshore vessels at Pipavav Shipyard –
• Opportunity for equipment selling
• Opportunity for ship management when they are ready
• Planning to float a tender to build an MSV for US$100 mn

Shipping Corporation of India (SCI)

• Plans to order 4 more OSVs - an opportunity for the Norwegian firms/ Shipyards
• SCI has decided to double its cargo carrying capacity to 10 M DWT by investing $ 4 bn in the next four
years

Greatship (India)
• Has committed US$365 mn for ongoing fleet expansion
• Greatship likely to raise US$ 100 mn equity through IPO for its fleet expansion, it can raise a debt of
US$100 mn to US$150 mn and fund expansion of US$ 250 mn

Great Offshore
• Plans to acquire 5 OSVs for US$150 min
• Proposed fleet acquisition would be a mix of new OSVs and offshore construction vessels – Bharati shall
get the order

Mercator Lines
• Subsidiary of Mercator lines, Mercator Offshore, raised US$ 78.5 mn as loans to build FPUs 13
 Scope for Environment Friendly Technology
Age profile of Indian HFO Fuelled ships (Mar, 10)

30 to <35
7% > 35
9%
< 5 Yr
24%

25 to <30
16%
5 to <10
17%
10 to
20 to <25 <15
6% 13%
15 to <20
8%
Source: Mantrana Maritime Advisory

294 Vessels fueled by HFO

Future Opportunities
• More than 38% of the total fleet are more than 20 years of age, and were built when
environment guidelines were very few
• 10 – 19 years age ships are good targets for technology overhauling
• These ships have fragmented supplier base, could be targeted by equipment and service
providers
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Note: HFO- Heavy Fuel Oil
Scope for Environment Friendly Technology

Engine manufacturer distribution of diesel propelled ships

Daihatsu MTU
Greaves
3% 3% 3%
Yanmar
6%
Caterpillar
13%
Wartsila
Rolls 4%
Royce
5%
Others
Niigata
22%
4%
MAN
4%
Kirloskar
4%

Cummins
29%

Approx. 700 Diesel Propelled Ships

Source: Mantrana Maritime Advisory

15
 Diesel Engine makers distribution for ships

• Ships less than 1000 KW are dominated by Cummins

Engines
Caterpillar • 55% share of Cummins engines for ships in 500KW
Others 10%
18% to 1000 KW engines
Volvo Penta
2% • No presence of Norwegian firms in the propulsion
MAN
2% segment
• Norwegian engine manufacturer could tie-up with
Kirloskar
8% Cummins for providing environment friendly
technologies such as electronic injection of fuel etc.
Greaves Cummins • Less 1000 KW ships are mostly used in the coastal
5% 55%
shipping, movement of goods in harbour area,
lighterage, etc.
• This segment has immense growth potential
No. Of ships approx. 100 • Most of these ships have been built using older and
standard design. New concept of use of hull forms,
propeller, rudder would help in increasing efficiency.

16
 Diesel Engine makers distribution for ships
• Ships in 1000 to 4000 KW engines range has
Market Share Engine Power Range (1000 to 4000)
uniform distribution in India
• These ships fall in the category of Supply Vessels,
Tugs and coastal ships
Caterpillar
Others
23%
15% • 23% of the supply has come from fragmented
Cummins
5% small manufacturer.

Daihatsu • Increased emphasis now by ship owners to buy

6%
equipments and machinery of reputed make
Yanmar MAN
17% 4% • Ship owners in India have not bought

MTU
engines of Daihatsu, Niigata and other
Niigata 5%
Wartsila 10% smaller players in last 10 years.
10%
• This trend would generate new opportunities for
Rolls Royce
5% engine manufacturer

No. Of ships is 485

17
 Diesel Engine makers distribution for ships
Makers Distribution of ships with more than 4000 KW engine
Caterpillar
11%
Nohab Diesel
6%

Others
40%

Rolls Royce
37%
Wartsila
6%
No. of ships is 110

• More than 4000 KW diesel engine is dominated by Rolls Royce, rest of the market is
fragmented
• 40% of the ships carrying more than 4000 KW engines have a fragmented suppliers bases
• Most of these ships are very old
• The replacement demand for ships create opportunities

18
Indian Shipbuilding Industry

19
GUJARAT
1. ALCOCK ASHDOWN
2. ALANG 3. ABG (2 yards)
4. L&T 5. PIPAVAV
6. SHOFT W BENGAL
1. GRSE
3. SHALIMAR
7. BHARATI

Major
Shipyards
Map

MAHARASHTRA
1. MDL
2. BHARATI (3
yards)

GOA
1. CHOWGULE
2. DEMPO
3. GSL
4. BHARATI VIZAG
1. HSL

CSL
20
 Key Infrastructure of Commercial Shipyard - India
Shipyard Location Drydock/Shiplift Slipway (mxm) Comments
ABG Shipyard (Pvt)
Hazira 4500 T - Shiplift 18 building berth
155 x 30 x 7.5
Dahej 33,000 T - Shiplift 12 berths
Alcock Shipyard (Gov)
Bhavnagar 85 x 20 Not functional due to heavy siltation
Chanch 122 x 22 x 4.5 up 20,000 DWT
Bharati Shipyard (Pvt)
Ratnagiri 200 x 18 Shiplift is planned
Ghodbunder 100 x 17 4 berths
Goa 80 x 18
Kolkata 120 x 22 Drydock being planned
Dhabol 155 x 40 Floating Dock
Chowgule Shipyard (Pvt)
Goa 220 x 20 x 3.5 220 x 20 supported by 2 construction bay
Exploring setting up drydock of 100 m
Cochin Shipyard (Gov) length
Cochin 255 x 43 x 9 New building
270 x 45 x 12 Repair
Larsen & Toubro (Pvt)
Hazira 120 x 22 Slipway is existing & Shiplift is planned
Pipavav Shipyard (Pvt)
One wet basin 680 x 65 to be converted
Pipavav 662 x 65 in to drydock
Shoft Shipyard (Pvt)
Bharuch 115 x 25 3 slipway
Tebma Shipyard (Pvt)
Malpe 210 x 21.5 supported by 4 construction bay 21
Note: Pvt: Private, Gov: Government
 Orders & Infrastructure of Indian Shipyards
Max. Size of Ship Orderbook (Rs billion)
Name Location
Existing Expansion Domestic Export Total
Hazira &
1 ABG Shipyard 20,000 120,000 49.4 50.7 100.1
Dahej, Gujarat
Alcock Ashdown Bhavnagar,
2 12,000 NA 8.6 0.9 9.6
Gujarat Gujarat
Mumbai,
Ratnagiri(MH),
3 Bharati Shipyard 20,000 100,000 14.2 27.9 42.1
Dhabol (MH),
Goa
4 Chowgule & Co Goa 8,000 NA 0 2.7 2.7
Smaller
5 Cochin Shipyard Cochin, Kerala 110,000 2.9 5.5 8.4
Ships
Hindustan
6 Vizag, AP 70,000 NA 6.8 0 6.8
Shipyard Ltd
7 Larsen & Toubro Hazira, Gujarat 12,000 NA 0 14.8 14.8
Pipavav Pipavav,
8 300,000 NA 5.3 35.0 40.4
Shipyard Gujarat
Malpe,
9 Tebma Shipyard 6,000 NA 0 10.5 10.5
Karnataka
Total 87.3 148.0 235.3

Note: 1 USD ~ 47 INR

22
 Order-book Scenario at Indian Shipyard

Order Book as on March, 2010

Category Domestic Export Total
No Rs bn No Rs bn No Rs bn
Offshore (Oil & Gas) 25 50 43 40 68 90
Cargo 13 18 77 93 90 111
Navy 19 12 0 0 19 11
Others 2 7 9 15 10 22
Total 59 87 129 148 188 235

Breakup of new-building order book at • OSVs & Rigs contribute 39% to the Indian Shipbuilding today
Indian Shipyard • The Cargo segment mostly comprises Bulk carriers of 30,000
DWT, 53,000 DWT and 75,000 DWT
Navy
5% • All orders placed to the Indian shipyards in cargo segment
Others are bulk carriers
9%
• These orders were placed in the year 2006 to 2008
• Cochin Shipyard delivered all its orders for cargo carriers and
Offshore (Oil
& Gas) stopped taking new orders
39% • Hindustan shipyard has about 5 bulk carriers to be built

Cargo
47%

23
Existing Contracts & Delivery Scenario

Ships on order at Indian shipyards in the order of contracts signed (Mar, 2010)
120

100

80

60

40

20

0
2005 2006 2007 2008 2009 2010

AHT AHTS Bulk MPP MSV PSV Offshore Others

• Shipyards have close to 188 ships on the order-book

• Order-books of the existing shipyards were 6 to 10 times their turnover
• In 2009, order rates picked up, mostly through government-owned companies such as SCI, ONGC,
Coast Guard and Navy

24
New building Orders Post Slowdown effect

Following are the orders that major shipyards have received since Jan 09

ABG Shipyard
3 x 20,000 DWT Cement Carrier for Associate Cement to be Chartered to
Ultratech in India

Cochin Shipyard
2 x Offshore vessels on nomination basis by Shipping Corporation of
India

L&T Shipyard
20 x Offshore Patrol Vessels orders for Coast Guard (Being disputed by
Cochin Shipyard)

Pipavav Shipyard
12 x Offshore Vessels ordered by ONGC in Sept 2009
Rs 2.6 billion order from Indian Navy (Media reports)

25
 Shipbuilding Industry in India
Issues with Industry
• Rampant new-building orders, and then failing to deliver
• Delay in the arrival of equipments and machinery is one cause of delay in delivery
• Government clearance, local issues, poor planning, among others, were some of
the reasons
• Scope for improvement in work practices, technology for new-building and skill-
set
• Work practices and technology for new-building don’t match the required pace of
construction
• Several shipping yards look for external experts’ assistance to plan their shipyards
• Yards here could improve on engineering, planning, procurement, inventory
management, etc.
International Designers and the shipyards they designed in India
Name of Shipyard Location Designer
ABG Shipyard Dahej, Gujarat First Marine International Limited
Bharati Shipyard Dhabol, Gujarat First Marine International Limited
Cochin Shipyard Kerala Mitsubishi
Garden Reach Shipbuilders & Kolkata, West
Engineers Bengal Appledore International
Goa Shipyard Goa Appledore International
Pipavav Shipyard Pipavav, Gujarat Appledore, KOMAC
Tebma Shipyard Malpe, Karnataka European Consultant
Source: Mantrana Maritime Advisory 26
 Shipyard opportunities

ABG Shipyard
• Setting up the largest ship-lift facility for its Dahej unit; jointly developed by TTS and
Rolls Royce – Ancilliary support still an opportunity
• Aggressively wants to enter offshore drilling rig building market
Alcock Ashdown Shipyard
• India’s largest FRP unit and shipbuilding (up to 20,000 DWT) – Shipyard is up on sale
• Close proximity to Mumbai Offshore and the international Gulf-bound shipping
routes increases market potential in the ship repair business
• The only commercial shipyard with license to build ships for Navy
Bharati Shipyard
• Scope in planning, construction scheduling, inventory control, minimizing shipyard
wastage, etc.
Cochin Shipyard
• OSVs to increase shipyard utilization – Opportunity for package supply and system
integration
L&T Shipyard
• Looking to invest about Rs.30 billion for an integrated shipyard complex with port facility
Shoft Shipyard
• Needs a private equity investor to scale up infrastructure of its 30 acre yard in Gujarat
27
Taxes & Duties
Tax Duties in Indian Shipbuilding

• All design, engineering, sub-contracting, repair and maintenance or any other

value added service attract a Service Tax at the rate of 10.3% (Irrespective of the
owner’s nationality)

• There are no taxes and duties applicable on the import of equipments, machinery,
steel, etc to be used for shipbuilding in India

Domestic Order

• Domestic raw materials or other items are subject to excise and VAT
• VAT is applicable on sale of ship to domestic owner

Export Order
• Refund is available on excise duty and VAT on domestically purchased inputs
• Inter-state transaction of raw materials in India invite Central Sales Tax
• VAT and excise duty is not applicable on sale of ship

• Witholding tax on case to case basis on imported goods which can be refunded
back in the home country
• There is no additional tax benefits to Norwegian owned ships built in India with
large share of Norwegian equipments and supplies
29
Coastal Shipping

30
Coastal Movement by Coastal Shipping

• Coastal movement of containers has

Coastal traffic to overall traffic about 5% share
• Roadways are preferred for distance less
than 300 kms
• Road and rail movements share evenly for
distance 300 kms - 500 kms
• Railways always preferred for more than
500 kms
• Coastal shipping has to compete with the
government-backed expansion of railway
networks
• Due to lack of volume and growth
potential a few coastal container ships
were sold recently
• Coastal shipping remains underutilized
• LNG fuelled vessels for coastal shipping
but LNG infrastructure is not there

31
Other Opportunities
 Opportunities for OMS Companies

• The Indian Offshore Sector needs Norwegian Expertise

related to
• Offshore Supply Vessels
• Seismic Survey Vessels
• Offshore Construction Barges
• Offshore Pipe laying segment
• Offshore Installation of platforms and Heavy Lift
• Good opportunity for Norwegian OMS companies

Note: OMS – Offshore Maritime Services

33
 Opportunities for OMS Companies

• Norwegian firms should consider

• Rep-office in India
• Recruit agents
• Tie-up with ship management companies
• Tie-up with local marketing firms
• Due to regulatory and contractual arrangement of E&P
companies with government, business prospects in India is
bright for the next 4-5 years, irrespective of oil prices
• Some of the companies says they would revaluate their
exploration if the oil price remains below US$ 75/ barrel

34
 Other Opportunities for Norwegian firms

• There is huge requirement of fast boats for coastal security by state

government, central government
• Every port is required to keep minimum two crafts for security and patrolling
• Oil & Gas installation would require fast crafts
• Specialized vessels for towage, salvage and oil spill prevention would be
required in India
• Luxury and tourism market in India is increasing. There is requirement of
luxury yachts, cruise vessels, passenger ferries
• Terms of Reference as per proposed JWG document
• Ship Building Design/Naval Architecture/R&D/Maritime
Education/Training/Consultancy.
• Smarter and Greener Shipping, including Coastal
Shipping/Environmental friendly Environmental preparedness against
marine pollution.
• Green Ship building technology and collaboration between Equipment
Makers and Ship Builders.
• Technology for construction and installation of off-shore Wind Energy
Systems.

35
JWG & Ministerial Visit
 Joint Working Group in Maritime

• Norway would like to establish a joint working group in maritime sector

with India -
• The goal, seen from the Norwegian side is to develop the Indian
market for Norwegian Maritime Industry
• Concrete cooperation projects between Nrowegian and Indian
maritime industry
• Including the project "Green Shipping India"
• MoTI shall in cooperation with the Embassy in India to prepare a
launching of a maritime working group during Mr. Trond Giske's visit to
India 27-30 October 2010
• The first meeting in the maritime cooperation group should take place in
accordance with the next meeting in the Indian-Norwegian Joint
Commission meeting in Oslo during 2011.
 Maritime Programme in Week 43

• 25 Oct - Arrival in Mumbai

• 26 Oct - Visit Pipavav Shipyard
• 27 Oct - Green Shipping Seminar
- Experience Sharing Seminar
- Dinner with Indian Companies
• 28 Oct - Plenary session
- Seminar on ’Smart Shipping,
- Summing up of Green Shipping
• 29 Oct - Arrival in Delhi
- Seminar with Indian Navy
- Summing up
- Public Diplomacy event at the Embassy in the evening

Any speakers?
Thank You

Asheesh Agarwal
Senior Market Adviser
Innovation Norway, New Delhi
C/o Royal Norwegian Embassy, New Delhi
Tel: +91 11 4177 9200
Mobile: +91 9871567786
asheesh.agarwal@innovationnorway.no
www.innovationnorway.no
39