Indian Manufacturing Sector

[Theo_Fidel]

The rupee has fallen from almost 50 to the US dollar in 2003 to under 40 currently.

DDM.

Thats not a fall fools, is a rise only.

Zee rupee is stronger only.

[Rudranathh]

HCL launches sub-14K laptops

Indian hardware manufacturer HCL Infosystems on Tuesday launched an ultra portable range of laptops with mobile Internet computing experience under Rs 15,000

Great news for poor people like me.

Must Buy.

History of HCL

Born in 1976, HCL has a 3 decade rich history of inventions and innovations. In 1978, HCL developed the first indigenous micro-computer at the same time as Apple and 3 years before IBM's PC. This micro-computer virtually gave birth to the Indian computer industry. The 80's saw HCL developing know-how in many other technologies. HCL's in-depth knowledge of Unix led to the development of a fine grained multi-processor Unix in 1988, three years ahead of Sun and HP.

HCL's R&D was spun off as HCL Technologies in 1997 to mark their advent into the software services arena. During the last eight years, HCL has strengthened its processes and applied its know-how, developed over 30 years into multiple practices - semi-conductor, operating systems, automobile, avionics, bio-medical engineering, wireless, telecom technologies, and many more.

Today, HCL sells more PCs in India than any other brand, runs Northern Ireland's largest BPO operation, and manages the network for Asia's largest stock exchange network apart from designing zero visibility landing systems to land the world's most popular airplane.

TIMELINE
1976
- Hindustan Computers Limited (HCL) born.

1977
- Distribution alliance formed with Toshiba for copiers.

1978
- HCL successfully ships in-house designed micro-computer at the same time as Apple. The Indian computer industry is born.

1980
- HCL introduces bit sliced, 16-bit processor based micro-computer.

1983
- Indigenously develops an RDBMS, a Networking OS and a Client Server architecture, at the same time as global IT peers.

1986
- HCL becomes the largest IT company in India.

1988
- HCL introduces fine grained multi-processor Unix-3 years ahead of “Sunâ€

[bart]

HCL launches sub-14K laptops

With a little help from Intel, Indian hardware manufacturer HCL Infosystems on Tuesday launched an ultra portable range of laptops with mobile Internet computing experience under Rs 15,000

If you remove the Excise duty + import duties + VAT from the 15000 Rs, you arrive at around 200 $ per laptop, while the much hyped OLPC laptop sells for $ 150. Remove private/public subsidies from the OLPC laptop and you are at the same ballpark.

Goes to show that Indian innovation can beat the crap out of even MIT hyped projects and also that the OLPC seems to be an overrated dud that the govt was right to pull out of.

[ArmenT]

HCL launches sub-14K laptops

With a little help from Intel, Indian hardware manufacturer HCL Infosystems on Tuesday launched an ultra portable range of laptops with mobile Internet computing experience under Rs 15,000

Would be nice if they improved their website. Right now hclnotebooks.com is down. Also, their brochures are massive PDFs, which could be a PITA to download for people with less bandwidth.

[Rudranathh]

HCL launches sub-14K laptops

If you remove the Excise duty + import duties + VAT from the 15000 Rs, you arrive at around 200 $ per laptop, while the much hyped OLPC laptop sells for $ 150. Remove private/public subsidies from the OLPC laptop and you are at the same ballpark.

Goes to show that Indian innovation can beat the crap out of even MIT hyped projects and also that the OLPC seems to be an overrated dud that the govt was right to pull out of.

From wiki of the $100 laptop

India has rejected the initiative, saying “it would be impossible to justify an expenditure of this scale on a debatable scheme when public funds continue to be in inadequate supply for well-established needs listed in different policy documentsâ€

[ArmenT]

New twist in India's old toy story

[bart]

HCL launches sub-14K laptops

If you remove the Excise duty + import duties + VAT from the 15000 Rs, you arrive at around 200 $ per laptop, while the much hyped OLPC laptop sells for $ 150. Remove private/public subsidies from the OLPC laptop and you are at the same ballpark.

Goes to show that Indian innovation can beat the crap out of even MIT hyped projects and also that the OLPC seems to be an overrated dud that the govt was right to pull out of.

Turns out the low-cost laptop wasn't created by HCL, its simply an Intel OEM device that HCL was rather deceitfully passing off as their own invention.

http://www.pcworld.com/businesscenter/a ... india.html

[Rudranathh]

Siemens plans expansion in Maharashtra; signs LoU
New Delhi | Tuesday, Jan 29 2008 IST

Global electronics and engineering firm Siemens and the government of Maharashtra have signed a letter of understanding (LoU) to support the company's expansion plans in the country.

The LoU was signed yesterday by Maharashtra Principal Secretary (Industries) V K Jairath, Siemens MD Armin Bruck and Siemens Director V V Paranjape. Siemens intends to develop additional manufacturing centres in Maharashtra for manufacturing power generation and railway transportation equipment.

The 11,000 crore company has a large presence in Maharashtra with its headquarters located in Mumbai and eight out of 18 factories situated in the state alone.

Besides, the company will also set up a research and development centre at Kalwa, near Mumbai with a headcount of 1,000 and an additional software centre in the state.

[bart]

NSN is coming up with a major new manufacturing facility in Oragadam near Chennai.

NSN = Nokia Siemens Networks, not to be confused with the Nokia factory in Sriperumbudur that makes handsets. NSN makes high end wireless telco gear, these are high margin, sophisticated products that will probably be manufactured by them in only one location worldwide and will pull in high end suppliers and subcontractors of Nokia as well.

[Singha]

offset reqs for landing the large BSNL deals probably forced their hands.

Alcatel is more clued in and assembles its kit via ITI which is kinda assured some chunk of Govt contracts. trust the french to be more conniving than germans or finns.

Alcatel also has some tieup with c-dot and does wireless work in chennai.

[bart]

It is partly that, but also the huge size of the Indian market makes it quite sensible to invest here. Reliance alone i believe tendered for 100 mil GSM lines.

However, it is not only that, now the manufacturers and the EMS industry are beginning to develop a healthy respect for Indian capabilities, helped by the fact that many key positions in their facilities abroad are held by Indians. I know of several cases where the customer (Nokia, etc) have specifically asked the EMS providers (Flex, Solectron etc) to move the production from their China plants to their India plants.

[jkarthik]

Darth Sidius: It is all going as I had Predicted....

all that remains is to connect the Pearl River Delta (chennai) to Zhongguancun (BLR) via a expway and industrial/tech townships. the road via vellor and krishnagiri is already 4 laned and in excellent shape ofcourse.

synergies have to attained, hinterlands have to be opened and worlds have to be conquered.

You've hit on my ultimate wet dream, singhaji. Imagine a 6/8+4 lane expwy connecting a string of manufacturing, textile, leather, granite, education, IT and designated green zones, and an ATR domestic air terminal at Hosur. That'll show the fri*king pandas something, and will add more value to Bangalore than what Devanahalli and other half-baked infrastructure schemes in Bangalore are doing this. Karunanidhi has been echoing this of late, perhaps to strengthen his North TN base and kick out PMK.

Sriperambudur/ Oragadam are already great sights now, mammoth breadbox factories all around. The whole stretch has potential to be thus transformed, that is ..if the above corridor dream can surpass the TN-K'taka political divide, Central Govt apathy, Vatal Nagaraj, Dr Ramadoss and the pseudo tree huggers/ antinationals and one woman independent countries like Arundati roy! Southern India can overtake Thailand in, like 5 years, man!

[Singha]

how is the connectivity into Chennai container port from the major highways funneling in from north, west and south ? NHDP in the good old days of khanduriji had spur schemes to 4 lane such stretches too.

[Rudranathh]

Orissa to get three more steel plants
29th January, 2008
The Orissa government Tuesday signed deals with private steel companies for three more steel plants to be set up in the state.

Steel and Mines Secretary U.P. Singh signed the memorandum of understanding (MoU) with officials of Pradhan Steel and Power Pvt Ltd, Atha Mines Pvt Ltd and Tecton Ispat Pvt Ltd at the state secretariat.

According to the MOUs, all the three plants would be operational in the next three years.

With these three MOUs, the total numbers MOUs the government has signed in past four years for steel projects has increased to 49, the official said.

[Gerard]

Fujifilm to set up facility in India

[Gerard]

Intel to invest over $ 1 bn in India

[SwamyG]

Imagine a 6/8+4 lane expwy connecting a string of manufacturing, textile, leather, granite, education, IT and designated green zones, and an ATR domestic air terminal at Hosur. !

That reminds me, somebody said land rate near TVS factory in Hosur is around Rs400/- sq.ft. Now that is darn cheap. I guess they must have left an zero at the end....based on all your talk...looks like I should buy something there.

[Gerard]

Boeing to form JV with Tatas for making aerospace components

[SaraLax]

Darth Sidius: It is all going as I had Predicted....

all that remains is to connect the Pearl River Delta (chennai) to Zhongguancun (BLR) via a expway and industrial/tech townships. the road via vellor and krishnagiri is already 4 laned and in excellent shape ofcourse.

synergies have to attained, hinterlands have to be opened and worlds have to be conquered.

You've hit on my ultimate wet dream, singhaji. Imagine a 6/8+4 lane expwy connecting a string of manufacturing, textile, leather, granite, education, IT and designated green zones, and an ATR domestic air terminal at Hosur. That'll show the fri*king pandas something, and will add more value to Bangalore than what Devanahalli and other half-baked infrastructure schemes in Bangalore are doing this. Karunanidhi has been echoing this of late, perhaps to strengthen his North TN base and kick out PMK.

Sriperambudur/ Oragadam are already great sights now, mammoth breadbox factories all around. The whole stretch has potential to be thus transformed, that is ..if the above corridor dream can surpass the TN-K'taka political divide, Central Govt apathy, Vatal Nagaraj, Dr Ramadoss and the pseudo tree huggers/ antinationals and one woman independent countries like Arundati roy! Southern India can overtake Thailand in, like 5 years, man!

NSK Becomes First Japanese Bearing Manufacturer to Open Plant in India
( 50 Crs initial investment, 80crs by 2010 / NSK -75% ABC-25% JV ratio)

Tokyo, Japan, February 15, 2008 - NSK Ltd. (NSK; Headquarter: Tokyo, Japan; President and CEO: Seiichi Asaka) and ABC Bearings Limited (ABC; Headquarter: Mumbai, India; Managing Director: Pradip Patel) are pleased to announce the completion and official opening ceremony on February 15th of their joint venture bearing plant located on the outskirts of Chennai City. The new plant in Chennai, a central industrial city in Southern India, will manufacture bearings for the automotive industry, targeting supply to both Japanese and local automotive manufacturers, as well as other foreign-owned companies located in India.

NSK is the No.1 manufacturer of bearings in Japan, and the No.3 manufacturer globally. NSK has used its expertise in precision machining technology, refined through years of bearing manufacturing, to diversify into automotive products, and precision machinery and parts. Since the 1960's, NSK has been aggressively developing its overseas markets, currently having 57 overseas production bases in 13 countries.

Robert Bosch in tie-up with Igarashi Motors
Chennai: The €46-billion global automotive component major Robert Bosch GmbH has established a joint venture with the Chennai-based Igarashi Motors India Ltd (IMIL) to develop and manufacture DC motors and systems for wiper, HVAC (heating ventilating and air conditioning), engine cooling and window lift applications. Bosch will hold 51 per cent shares, while the rest will be with IMIL. Run-up to Budget 2008-09

The spokesperson of Robert Bosch GmbH told Business Line that the joint venture company would be headquartered in Chennai and “the target market for JV’s products is India. However, we do not rule out the possibility exporting the product in the long-run. Concrete plans are yet to be discussed.â€

[SaraLax]

L&T bags Rs 1,443-cr Dutch order

L&T in talks for $100 million Dutch shipbuilding contract
[quote]
“Yes, L&T is negotiating with a dutch shipowner for a new building order. But, I cannot tell you the name of the shipowner, the number of ship order being negotiated or the value of the contract,â€

[SaraLax]

German firm to manufacture machine tools in India

Gildemeister AG, the euro 1.6-billion ($2.3 billion) German maker of turning and milling equipment, is planning a production facility in India to meet the growing demand for machine tools by a vibrant domestic manufacturing industry.

'We have earmarked an initial budget of euro 10 million (Rs.590 million) to set up a manufacturing base in India to roll out a range of CNC (computer numerically controlled) metal-cutting machines, lathes and tools/dies, with an installed capacity of 400 units per annum,' Gildemeister board member Thorsten Schmidt told IANS here.

'As our machines can be used for dual-use technologies, we are waiting for clearance from the German government to go ahead with our India plans, including transfer of technology. We hope to set up the plant by 2009-10,' he said.

The Bielefeld-based company has short-listed Bangalore, Pune and Delhi as possible locations for setting up the production facility and prepared a blueprint for building a modular plant for capacity expansion in future.

In the run up, Gildemeister has floated its Indian subsidiary - DMG India - to set up a technology centre in Bangalore, with an upfront investment of euro 7 million (Rs.413 million) to provide customised solutions to its customers in the Indian sub-continent and South Asia.

[bala]

Ancient Mahabalipuram was the land of the 7 pagodas, fabulously wealthy - from world wide trade, one of the richest regions in the world, inspired leadership of the Kings, outstanding architecture. The area around Chennai is humming with activity and becoming a manufacturing tour de force of India. With the SEZ being operationalized very soon, more synergy will be brought into play and it is only a matter of time when a corridor spanning east-west (chennai-bluru) and north-south (all the way to puducherry) will flourish. Of course the infrastructure for all of this must be in tune with fast bullet trains dedicated freight corridors, 8 lane highways, 3 runway airports, etc.

[bart]

Thiruvallur district means somewhere past North Chennai near the AP border, right?

[Vipul]

RIL to set up $5b semiconductor unit.

[Rudranathh]

India attracts Rs 28,000 cr in semiconductor sector

[Rudranathh]

‘India needs 3-4 fabs to face global competition’

[Vipul]

Daikin plans manufacturing unit in Rajasthan.

[Vipul]

Kalyani Group to set up Steel plant in W Bengal.

[Sanjay M]

Nussbaum: India Represents Low-Cost Innovation


This means not only is India cheap for getting innovation done, it also means that India innovates for those who are in the cheaper, low-end of the market.

[bart]

http://news.in.msn.com/business/article ... id=1261920

Hyundai, Renault, Ford may turn Chennai into car export hub

[sanjaychoudhry]

Taiwan cabinet fund may team up with private sector for India industrial park

TAIPEI (XFN-ASIA) - The National Development Fund, which is controlled by Taiwan's cabinet, plans to team up with the island's private sector to jointly develop an industrial zone in India, the Ministry of Economic Affairs (MoEA) said.

The industrial zone is aimed at accommodating Taiwan firms seeking to establish a presence in India, amid concerns over new rules in China, according to a statement from the ministry.

India and Southeast Asian nations are attracting increased investment from Taiwan as China has imposed new labor laws and adjusted the tax on foreign firms, the ministry noted.

According to the statement, the cabinet fund will assist local firms in developing 1,000 hectares of land in India's Andhra Pradesh state for industrial use and another 200 hectares for housing purposes.

The cabinet fund will invest up to 40 pct in the prospective venture, which may have initial capital of one bln twd.

http://www.forbes.com/markets/feeds/afx ... 95019.html

[Sanjay M]

http://www.business-standard.com/common ... =0&chkFlg=

[quote]Auto part firms thrive on sourcing deals
Swaraj Baggonkar / Mumbai February 27, 2008
The multi-billion dollar auto component sourcing industry in India has brought relief to many domestic component suppliers in the form of improved margins and long-term supply contracts.

Global auto majors such as Daimler, General Motors, Ford, Volkswagen, Renault, Nissan and Honda have been buying higher quantities of components from India, which has resulted in the margins of component firms improving 8-10 per cent.

As of the last financial year, auto component sourcing has touched $3 billion in India and is expected to double by next financial year-end. Many such auto majors have set up an India purchase office, which buys inexpensive Indian components to cater to their huge overseas plants.

Such sourcing has provided Indian players with the opportunity to charge a premium that varies between 5 and 10 per cent. Many foreign car makers prefer to make engineering changes to the components before incorporating them in their engines and other parts.

Some of the more common components sourced include axle bar, propeller shaft, crank shaft, cylinder heads, bearings and cylinder blocks. Foreign firms get a 25-30 per cent cost advantage through such deals.

M Radhakrishnan, joint managing director, Autoline Industries, said, “We are supplying original equipment makers (OEM) such as GM, Ford, Nissan and Honda. Not only have the margins improved due to premium pricing, but volumes have grown significantly, too. These players get a benefit of 20 per cent cost reduction for our products.â€

[Gerard]

With chip hopes fading, India looks to systems manufacturing

[SaraLax]

Saravana Global charts Rs 200cr expansion

Saravana Global Energy Ltd (SGEL), manufacturers of high-voltage insulators, is embarking on a major expansion programme under which the company is setting up a new manufacturing unit for high-voltage hollow insulators in Chengalpet district of Tamil Nadu on an investment of Rs 200 crore.
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SGEL has secured Rs 100 crore in funding from NYLIM Jacob Ballas India Fund III by offering a minority stake. The company will use the proceeds to fund the establishment of the new plant, while the remaining portion of the project cost will be funded through a combination of internal accruals and debt.
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Chennai-headquartered SGEL has been supplying to Areva, Siemens, ABB, BHEL and Crompton Greaves, its large domestic customer, among others. It posted revenues of Rs 65 crore in 2006-07 and expects to end the current fiscal with revenues of Rs 125 crore.

ebm-Nadi to put up second unit

ebm-Nadi has invested Rs. 30 crore on land and machinery to put its second unit near the existing factory at Erukkenchery on the outskirts of Chennai. According to a release, the new facility will go on stream in January next year.

Modine Thermal seeks tie-up for engine-cooling systems

The company was set up in India as a 100-per cent subsidiary of US-based, $1.6-billion Modine Manufacturing Company (MMC), to make powertrain cooling systems to support the requirements of domestic commercial vehicle and off-highway vehicle manufacturers.
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The 8,000 sq meter facility coming up at SIPCOT industrial area in Sriperumbudur would commence production by October this year, and run to full capacity, employing 250 people, by 2009, he said.

The company is currently developing powertrain cooling modules, and aluminium oil coolers for a couple of commercial vehicle and off-highway vehicle manufacturers.

[Gerard]

Nycomed intends to move chemical production to Indian joint venture

[Gerard]

BMW raises manufacturing capacity

[SaraLax]

Leyland ups investment in Uttaranchal by Rs 1,000 cr

Despite a slowdown in the auto sector, Ashok Leyland, the flagship company of the Hinduja Group, has decided to double investment in Uttaranchal from Rs 1,000 crore to Rs 2,000 crore as a part of its expansion plan.

In a new plan submitted to the State Industrial Development Corporation of Uttarakhand (SIDCUL) here, Ashok Leyland said it was interested in buying another 17 acres at Pant Nagar for a manufacturing facility at an investment of Rs 1,000 crore.

The company has already bought 175 acres at Pant Nagar for manufacturing commercial vehicles and engine parts. The company would be manufacturing 40,000 annually, according to sources.

The company has also promised to provide employment to 2,200 persons, mostly locals.

The company bought the land from the state government at Rs 1,500 per sq metre. Now, SIDCUL is planning to charge an enhanced rate of Rs 2,500 per sq metre, according to sources. A decision regarding the land allotment would be taken shortly, sources said.

A slew of auto manufacturers is setting up new facilities in Uttarakhand to avail of tax benefits announced by the Centre in 2003.

Tata Motors, Bajaj Auto, Hero Honda and Mahindra & Mahindra are among some of the top companies that are setting up shop in the state.

Hero Honda was first off the ground with a plan for a Rs 1,200 crore plant in Haridwar. The company has bought 275 acres for the plant.

Tata Motors, along with a host of its parts suppliers, is investing Rs 1,859 crore for its manufacturing facility in the Pant Nagar industrial estate. The company will be producing Ace trucks there, for which it bought 1,000 acres.

Pant Nagar has also attracted an investment of Rs 500-600 crore from Bajaj Auto, which would establish a manufacturing unit for producing motorbikes.

NM Tyres to set up Rs 400-cr tyre plant

NM TYRES, a sister concern of Israel’s Alliance Tire Company, proposes to set up a greenfield project in Tamil Nadu for production of bias and radial off-highway tyres, predominantly meant for exports to customers in Europe, North and South America and Australia It specialises in the development, production and sales of off-highway tyres, clocking an annual sales of $200 million.

The plant, with an installed capacity of 42,000 tpa, envisages an investment of over $100 million. The plant is located at Gangainkondam-SIPCOT special economic zone, established to cater engineering, tyre and rubber sector, sources told ET.

The emerging SEZ is slated to be inaugurated on Friday, they said. Alliance Tyre Company and NM Tyres are 100% owned by WP Holdings II BV of Netherlands, which has been promoted by the Mahansaria family from India, together with American private equity player Warburg Pincus. An area of 115 acres has been allotted for the project, which is
expected to go on stream by March 2009. The specialised tyre manufacturing facility will serve the export market 100%, they said, adding that the greenfield project for production of bias and radial off-highway tyres, will mainly be exported to customers in Europe, North and South America and Australia. Phase II of the project, which will scale up its annual capacity to 56,000 tonnes, is proposed to be taken from year 2010.

The project will generate employment to 1,200 people and the ground-breaking ceremony is scheduled to take place within the next three weeks, sources said. The machine supplies by a Taiwanese company and L&T, have already begun, they added.

This project combines the deep industry knowledge and expertise of the Mahansaria family together with financial strength and global reach of the Warburg Pincus Group, and aims to develop its companies into a world leader in the field of off highway tyres. Achieving a global consolidated annual turnover of $ 500 million by 2012 is the objective, sources further said.

RUBBER STORY

• The tyre plant, with an installed capacity of 42,000 tyres per annum, envisages an investment of over $100 m

• The plant is located at Gangainkondam-SIPCOT special economic zone, established to cater to engineering, tyre and rubber sectors

• An area of 115 acres has been allotted for the project, which is expected to go on stream by March 2009

• Phase-II of the project, which will scale up its annual capacity to 56,000 tonnes, is proposed to be taken up from 2010

KE-Burgmann to double Chennai plant capacity

Buoyed by a Rs 70-crore order on hand, expansion joints manufacturer KE-Burgmann Flexibles India is looking at doubling the Chennai plant capacity. Customers like Reliance have already started using KE-Burgmann products, prompting the city-based wholly-owned subsidiary target a turnover of Rs 25 crore by 2010.

A member of the euro 5-billion EBI group, the investment in Indian operations has touched euro 4 million. The company started design and manufacturing fabric compensators or non-metallic expansion joints at the Chennai facility in March 2001, KE-Burgmann CEO Peter L Nielsen told reporters here on Thursday. Believing in the “leadership through technologyâ€

[SaraLax]

Maharashtra in pact with Cummins for unit in Satara

Mumbai, March 15 The Maharashtra Government has attracted Rs 1,776 crore in the latest round of investments.

On Saturday, seven memorandum of understanding were signed by the Industries Department for setting up diverse manufacturing facilities in the State, which will come up in the next three years.

Over last the three years, 93 mega projects have been approved by the State Government, which has attracted an investment of Rs 1.14 lakh crore.

Addressing presspersons on the occasion, the Maharashtra Chief Minister, Mr Vilasrao Deshmukh, said that the majority of investments were coming up in relatively backward districts such as Aurangabad, Nagpur and Satara.

It will give a boost to the industrials climate in these regions and help ancillary industries.
Employment

The projects will provide direct employment to 2566 persons, he said.

Cummins group signed three MoUs with a total investment of Rs 900 crore.

The group would be setting factories in 150-acre area near Phaltan, Satara for producing engines for trucks and buses and generator sets.
Land acquisition

Mr Anant Talaulicar, Chairman and Managing Director of Cummins India Ltd, said that land acquisition for the site has been completed. About 30 per cent of the produced goods from Phaltan facility would be for the export market.

The site will eventually add more plants for all Cummins group companies, he said.

Malu Papers Ltd would be setting up an Rs 267-crore paper manufacturing plant in Saoner in Nagpur district. Ball Packaging Europe, beverage can manufacturing major would be setting up its plant with an investment of Rs 260 crore in Waluj, Aurangabad.

In Pune district, Universal Construction Machinery and Equipment Ltd would be setting up a plant with an investment of Rs 232 crore and Arihant Domestics Appliances Pvt Ltd with an investment of Rs 117 crore.

Mr Damodarlal Malu of Malu Papers said his Saoner facility would use recycle paper for paper manufacturing. The environmental impact analysis for facility has been completed, he said.

Cummins to invest Rs 850 cr in Maharashtra

# A unit for manufacturing B series of bus and truck engines will be established at an investment of Rs 400 crore

# A plant for diesel and gas gensets will come up for Rs 250 crore

# Cummins’ fully owned subsidiary will start a diesel engine production unit at a cost of Rs 200 crore

[SaraLax]

Shipbuilding: Setting sail to favourable winds

The shipbuilding industry in India has just set sail and appears headed for a promising future with an order book of almost Rs 24,000 crore or $5 billion.The surging order book along with expansion plans that are on track and strategies to move up the value chain in terms of bigger vessels and offshore segments, augur well for Indian shipbuilders.

While ABG Shipyard and Bharati Shipyard are the only listed players dedicated to this business, a number of companies such as Larsen & Toubro, Mercator Lines and Adani Group have entered this lucrative segment. A few others are also likely to tap the capital market in the near future, given the need to rapidly expand capacities to meet demand.
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What has driven so many Indian players into the ring? Apart from the global business potential that is currently seen, the Government’s subsidy for the sector may have been a key factor that drove a number of companies to tap into the potential.

The subsidy scheme, which expired in August 2007, provided a 30 per cent incentive for ocean-going merchant vessels more than 80 meters in length that are sold domestically.

More importantly, a 30 per cent incentive is also available on all ships sold to foreign firms, irrespective of ship size.

To put it simply, a company receiving a Rs 500-crore order from a foreign company would be eligible for Rs 150 crore by way of a cash subsidy from the Government (which is received with a lag), the objective being to encourage a sector that is both labour and capital-intensive.

Representation has been made by the shipbuilders’ association to revive this subsidy.

The Ministry of Shipping has also proposed a 20 per cent subsidy scheme. Clearly, with a huge import component and orders for low-end vessels, the sector may not paint a very bright picture if the proposal is not accepted.

[Gerard]

Larsen & Toubro flexes its engineering might