India's Cochin Shipyard Expands Repair Business
Many shipbuilders are looking for alternate sources of income in a down market. State-owned Cochin Shipyard in Kochi, India turned a profit last year, unlike many yards around the world – but it still wants to grow, and it sees potential in strengthening its ship repair capacity.
Cochin worked on nearly 90 existing vessels last year, and it wants to create a “ship repair hub” with a proposed International Ship Repair Facility. The new yard would give it capacity for an additional 75 small and medium vessels a year; Cochin expects to win permit approvals and award a construction contract soon, with completion towards the end of the decade. Total cost is expected to run about $450 million.
It has also been searching for off-site growth opportunities in other ports – with mixed results. An internally-commissioned economic study on a proposed yard at Kandla recently concluded that the project was not viable as envisioned due to the location, which is in an area of heavy tidal variation. "The study has categorically said that it’s financially infeasible to have it there,” a source told The Hindu. India's Shipping Ministry has intervened to ask the port authority at Kandla to look for another site. Cochin has also previously looked at expansion in the Andaman Islands, Chennai and Vizhinjam, but has backed away from all for varied reasons.
The Indian government supplies a large portion of the yard's business (Cochin is a leading builder of naval and coast guard vessels) and it is also the firm's owner. In November, Prime Minister Narendra Modi's cabinet proposed a small IPO for the yard, a plan revived last month with an RFP for merchant bankers to manage the offering. Madhu S. Nair, the yard's director, says that the sale will be held the end of this year or early next and will help finance Cochin's expansion. Part of the offering may be made available to yard employees at a small discount.
Overall, India's government plans to divest state-owned assets worth an estimated $8.5 billion this year.