Leading Indian private sector shipyard, the Gujarat-based ABG Shipyard, has bagged a maiden defence order to the tune of $ 215.55 million from the Indian Navy for the construction of two naval cadet ships. The contract has been given following the Commerce Ministry's grant of a license to build warships, submarines and propulsion systems last month to ABG Shipyard.
The license has been granted to the ABG Shipyard facilities in Surat and Dahlej in the state of Gujarat. ABG Shipyard is the second private sector shipyard to have been granted such a license and it can build weapons and equipment for the Indian Navy besides warships and submarines. The other private sector shipyard with such privileges is Pipavav Shipyard.
As for the maiden defence order worth $ 215.55 million from the Indian Navy to ABG Shipyard, it entails the construction of two naval ships which will be used for providing basic training to the naval cadets and trainees. The ships will be used for carrying out disaster relief, search and rescue operations and will have the capability to carry light helicopters. The vessels will be approximately 110 metres in length and will be designed to achieve a maximum speed of 29 knots. The first naval vessel is due for delivery after 45 months and the second ship, six months after that.
ABG Shipyard will carry out the construction of the two vessels at its Surat and Dahej yards which have the latest infrastructure in place. With an experience of delivering 140 vessels worldwide, ABG Shipyard is now gearing up to meet the challenges of the defence sector. ABG Shipyard feels that defence shipbuilding holds great potential in the future as orders for construction of commercial ships are few and far between. Added to this, even the tanker and the dry bulk market has been stagnant.
Currently, ABG Shipyard’s order-book including the latest order stands at roughly $ 3.30 billion and the firm hopes to add around $ 666.66 million of orders in this fiscal. ABG expects to deliver over 20 vessels this year, including five bulk carriers and several others to the offshore suppliers. The company has delivered 16 vessels in 2010/11, the highest by any shipyard in India.
ABG Shipyard expects its current fiscal sales to grow by about 30% led by a buoyant offshore segment. According to a study by Frost & Sullivan, the Indian shipbuilding and repair market is estimated to double from its 2010 revenue of $1.6 billion in the next five years. The main reason for this will be the increasing role of Indian shipbuilders and repairers in the offshore supply vessels (OSVs) segment. Private sector players like ABG Shipyard already have substantial experience in building and repairing OSVs.