‘We Want to Make JNP a Multi-purpose Port’

Cmde K Subramaniam,
Chairman and MD, Cochin Shipyard Limited
The withdrawal of Subsidy Scheme undermines the competitive strength of Cochin Shipyard. Granting infrastructure status to the Ship Building Industry in the country would make the funds available at nominal rate of interest and provide tax benefits, articulates Cmde K Subramaniam, Chairman and MD, Cochin Shipyard Limited, in an interview with Sneha Sinha from SMP World.

What impact has the discontinuance of shipbuilding subsidy scheme brought on the shipbuilding industry in India, and on the company in particular?
The Shipbuilding Subsidy Scheme expired in August, 2007. The withdrawal of the scheme led to an immediate down turn in the shipbuilding industry. The share of Indian Yards in Global Order Book that was previously rising suddenly saw a marked downfall. The new orders that rose sharply from 0.01 million DWT in 2002 to about 3.19 million DWT in 2007 took a sharp drop.

The withdrawal of Subsidy Scheme undermines the competitive strength of Cochin Shipyard. The Subsidy component in the turnover of the company fell down from 11612.37 lakhs in the year 2009-2010 to 1747.26 lakhs in the year 2010-2011. During the period the company failed to secure any commercial international shipbuilding orders.

The Indian share in the Global shiprepair market is quite less compared to the Indian shiprepair industry of the world market. Please throw some light on the probable reasons for the same.

The Indian share in the Global ship repair market is low due to various reasons, the chief among them being lack of facilities to dry dock large vessels. Further to ensure prompt and effective ship repair an enabling environment to position spares and service specialists is essential. The working group on 12th plan has identified various reasons for lack of development of ship repair industry such as labour issues, lack of investment and levy of service tax on ship repair, etc. All these factors undermine our competitive strengths and prevent us from emerging as a global player.

What measures according to you should be undertaken for the country to be self sufficient in its ship repair requirements? In order to become self sufficient in ship repair the government should initiate an investor friendly environment, which are given as under:

• Allotment of sufficient land at nominal value under SEZ Scheme.
• Service tax to be exempted to bring the industry at par with global yards.
• Soft loan to be extended for setting up of new facilities/ augmentation of existing facilities.
• Encourage clustering of ship building and ship repair industry.
• Create an enabling environment to source spares and requisition service specialist speedily.

Should the Ship Building Industry in the country be granted Infrastructure status and be declared as a strategic sector? What benefits can the measures bring to the industry?
Declaration of Ship Building Industry as infrastructure would go a long way in reviving the industry. The most important advantage would be availability of funds at nominal rate of interest and tax benefits, which will improve the competitiveness of the industry.

Please highlight the opportunities and threats for the ship building industry both indigenously and overseas.
The chief opportunities in the ship building industry are:
• Construction of vessels for deep water exploration and production.
• Indian Navy augmenting its blue water capabilities.
• Maritime trade shifting towards South East Asia and South Asia and hence there is increasing demand for ships here.

The threats of the industry are as follows:
• Withdrawal of subsidy along with very steep taxes has undermined the industries competitive strength.
• Lack of ancillary industries pushes up the cost.
• Global slowdown of the order book position.
• The tax disincentives which prevent development of domestic industry at the expense of imports.

What measures are being undertaken by the company to deal with global competitive environment, in terms of technology etc?
Cochin Shipyard had been constantly upgrading its technology and uses the Tribon, CAD- CAM Software for design development. The Yard also uses the "State of Art" Equipment like "CLC Plasma Cutting Machine”, "Marine Paint Coating Shop", 100 tonne and 150 tonne transporters and cranes of different capacity. Cochin Shipyard has also been successful in absorbing technology for building high end platform supply vessels of clean design.

What current projects are you currently engaged in?
The present order book position of the Shipyard consists of 29 vessels for industry and defence section.

What is the USP of the yard of the Company?
The vision of the company is to emerge as one of the world’s top 10 integrated building repair and training services company. In order to achieve this, the shipyard has focused on delivering high quality ships on schedule. The track record of the shipyard in terms of quality is enviable. We have delivered high quality niche vessels to discerning owners around the globe. The focus on quality and timely delivery has been the USP of Cochin Shipyard.

What are the future growth prospects of the company?
Cochin Shipyard is hopeful of expanding operations both in ship building and in ship repairs. The yard is focused in both commercial ship building and also defence vessels. In ship repair the yard commands a 60 per cent share of the domestic market. The yard is looking at moving into repairs to offshore platforms (jack up rigs).

The yard plans to augment its marine training activity too. The yard has invested in developing its human resource by constant training. The R & D initiatives have enabled the shipyard to improve productivity and enhance production. Investment in infrastructural upgradation has paid rich dividend in reducing down time.