Firm plans to set up the business within two years with a target
of dismantling 40 ships every year
Ahmedabad:
After making its mark in the port business, the Adani Group is now looking to
set up a shipbreaking business at Mundra in Gujarat. The company made a
detailed presentation on this last month to some state government officials,
according to two people close to the development.
The
billionaire Gautam Adani-led group had in the recent past entered the
shipbreaking business in the US before exiting from it about three years ago.
Adani’s
proposed shipbreaking yard will fall within the special economic zone (SEZ)
limit of Mundra Port. Adani Ports and Special Economic Zone Ltd aims to set up
the yard in about 40 hectares of land close to a boundary of the existing
Mundra West Port, according to the presentation.
If
all goes as planned, Adani plans to set up the shipbreaking yard in the next
one or two years with an initial target of dismantling and recycling 40 ships
every year, said a top Adani Group official. He did not want to be identified.
Nearly
20 hectares land will be used for actual breaking of ships and the rest would
be used for other infrastructural facilities.
Getting
regulatory clearance may be a challenge as the state government is of the view
that port regulator Gujarat Maritime Board (GMB) had entered into an agreement
with Adani for developing port and related activities at Mundra and shipbreaking is an altogether different business, said the Adani official cited
earlier. He refused to divulge financial details of the project.
“GMB
is in the process of hiring consultants for coming out with a new policy for
privatization in ship-breaking industry,” said a GMB official requesting
anonymity.
“We
are reviewing the matter and will decide on it in due course of time,” a state
government official said. He too didn’t want to be identified.
Gujarat
is home to the Alang shipbreaking yard, considered to be the world’s largest,
according to GMB’s official website. However, environmentalists and other
experts have pointed to the highly polluting nature of the industry besides the
lack of safety measures being followed in the area. Partly because of these
reasons, some of Alang’s business have moved to other areas of the world such
as Bangladesh.
The
Ahmedabad-based company is also in the process of setting up a liquefied
natural gas (LNG) terminal at Mundra in association with Gujarat State
Petroleum Corp. (GSPC). APSEZ will have a 25% stake in the project while GSPC
will hold 50%. At least four companies, including Torrent Power Ltd, Reliance
Industries Ltd’s joint venture with BP Plc, GAIL (India) Ltd and Petronet LNG
Ltd are in the race to pick up the remaining 25% stake in the project.
Adani’s
plans to enter the ship-building business by setting up a shipyard at Mundra
have been deferred. A company called Adani Shipyard had been floated by the
Adani Group in 2005 towards this end. “Unlike ship-breaking, ship-building
requires skilled expertise. We could not find an appropriate joint venture partner
to execute our ship-building business hence we have put the plans on a
backburner for now,” said the first Adani official cited earlier.
According
to an industry expert, as many as 100 shipbreaking companies are active in
Alang and the turnover of the industry is about Rs.10,000 crore per year giving
employment to over 50,000 workers. The expert declined to be named.
The
entry of firms such as Adani into the industry will introduce more modern
techniques of ship breaking that will be more environment friendly, according
to Ramesh Singhal, chief executive officer at i-Maritime Consultancy, a firm
that provides consultancy in the maritime and shipping sector. Trends for
India’s shipbreaking industry, situated at Alang, are counter-cyclical to
those for the global shipping industry.
“Bouts
of weak global freight rates make it expensive for shipowners to operate old
ships. This generates a surge in ship-breaking activity. India, Bangladesh and
Pakistan accounted for about 75% of the ships recycled last year,” Singhal
said. “There are serious concerns regarding the constant depreciation of rupee
which has dented the profit margins to a great extent at Alang,” he added.
Source: live mint. 10 July 2013
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