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Bharati Shipyard Limited

Mon, 11 Aug 2008 04:33:37 EST

Bharati Shipyard Limited - by gsnarayanan

Bharati Shipyard Limited was established in 1968 as a private company by seven share holders at Ranagri, located 365 Km south of Bombay off the Goa National Highway in Maharashtra, India. The shipyard is located in a sheltered lagoon i.e. it is covered by mountains from 3 sides and is slightly away from the open sea and is well accessible by rail, road and sea. The ship yard has been built on the latest technology both in materials and expertise with an aim to achieve the highest quality standards. The company has mastered the art of shipbuilding by adopting the latest art and scientific knowledge. Now the company is capable of highly manoeuvrable and power-packed Ocean Going Tractor Tugs, Cargo/Container Ships, and Tankers etc. At the beginning stages they were producing simple inland cargo barges, through sophisticated deep-sea fishing trawlers and state-of-art dredgers. The company became a private concern in 1976.

At present Bharati shipyard Ltd (BSL) is considered to be one of the leading private sector shipyards in India. The company has three shipyards located at Ratnagiri, Ghodbunder and Goa.The Company is also in the process of setting up one more shipyard at Mangalore SEZ. This shipyard would be capable of building vessels up to 60,000 DWT. The company has established renowned domestic and international customers like Reliance Industries, great Eastern shipping Nor Lines As (Norway), and M.K. Shipping BV etc.

A review of the shipping industry with reference to Indian shipyards

In India the private sector has more access to the efficient capital markets that enables them to raise funds to invest in new ventures. Indian shipyards have been generally concentrating on the building of offshore supply vessels (OSV), since the major shipbuilding countries like South Korea and Japan find it uneconomical to build OSVs owing to their large orders booked for the tankers and bulk segments and the industry look for newer shipyards to build OSVs in countries like India.

OSVs require a high degree of skill compared to the vessels in bulk segment. Skilled labour available in India gives an edge to companies like Bharati shipyards as compared to other players like China. Therefore with the growth of Indian exploration activities, due to rise in the crude oil price, and the lower labour costs the demand for OSVs is likely to go up.

Further the age profile of the global fleet is in an advantageous position to the Indian shipbuilding industry. The vessels that are older than 20 years or more are to be replaced by newly built vessels. Hence there is likely to be more demand in the near future from the global and domestic shipping companies. It has been estimated that about 60% of the existing fleet would require replacements in the coming years.

Growth profile of Bharati shipyard

Rs in crores

Year	2007	2006	2005	2004	2003
Sales	233.78	201.19	46.61	81.93	54.56
Var %	16.20	331.65	-43.11	50.16
Profit After Tax	73.18	51.07	27.36	6.00	1.18
Var %	43.29	86.66	356.00	408.47

It may be seen that Bharati shipyard has achieved a sustained growth during the past three years. The order values have gone up from Rs 350 Crores in December 2004 to Rs 2850 crore in February 2007. There seams to be a flow of repeat orders from clients like GE Shipping, Reliance Industries , Nor Lines As- Norway and Bourbon Investments in the past few years. . Now the company has sufficient work load till 2010 and is expected to have a strong revenue.

In order to meet the growing demands, the company is setting up a new shipyard with a capital expenditure of about Rs 450 crores. The Ratnagiri yard enables shipbuilding activities to be carried out throughout the year. BSL has recently expanded the capacity of the yard by 20%. The shipyard can now build 18 to 20 small vessels or 8 large vessels with a maximum capacity of 20000DWT. The Ghod bunder yard manufactures the hulls to meet the requirements of Ratnagiri yard. The Pinky Shipyard in Goa was acquired by BSL during 2005. This shipyard is being expanded by BSL to handle more than one hull at a time. The Greenfield shipyard at Mangalore is being setup would have a capacity to manufacture vessels up to 60,000DWT and also would include rig building facilities. .

The company’s ability to build higher capacity and complex vessels would enable it to dominate the market in the near future.

ABG Ship Yard

Wed, 06 Aug 2008 01:30:48 EST

ABG Ship Yard - by gsnarayanan

ABG Shipyard Ltd group was established in the year 1985 as Magdalla Shipyard Pvt. Ltd, with the main objects of carrying Shipbuilding and Ship Repairs. Now the company has become the largest shipbuilding yard in private sector of India. The corporate office of the company is in Mumbai and the registered office and the yard are situated at Surat located in Gujarat. The ship yard has modern ship building facilities such as a ship-lift facility with a capacity of 4500 tons, side transfer facilities, CNC plasma cutting machine, Bending rolls, Hydraulic press, cold shearing machine, frame bending machine and steel processing machinery. The facilities include a fabrication shop and a blasting shop. The manufacturing processes adopted by the ship yard are of world-class standards certified for ISO9001:2000. Multiple Building Berths are provided in the ship yard. There are two dry-docs incorporating the Computerised Synchronous Ship lift Platform. The Graving Dry dock is served by 80-T Goliath Crane of span 50 m and height 35 m. There are also cranes of 150 T capacity, 60-T capacity manufactured by Tata P&H, 50-T crane of HM make, and another 80-T crane. The "Ship lift Facility” has provided the yard a tremendous logistical advantage and flexibility by enabling simultaneous building and repairing of many vessels. These facilities have enabled the shipyard to execute many prestigious Shipbuilding and Ship-repair contracts against stiff International Competition in both Export and Domestic Markets. The company has constructed and delivered various types of vessels like Interceptor Boats, Self Loading and Discharging Bulk Cement Carriers, Floating Cranes, Articouple Tugs and Flotilla, Split Barges, Bulk Carriers, Newsprint Carriers, Offshore Supply Vessels, Dynamic Positioning Ships, Anchor Handling Tug Supply Vessels, Multi-purpose Support Vessel, Diving Support Vessels, etc. It has so far delivered about eighty eight vessels for leading companies in India and abroad.The reputation of the company has grown in to many folds in the quality at competitive prices and delivery periods, since the vessels produced in the ship yard have performed very well. Dredgers, Ethylene Carriers, Bulk Carriers, Offshore Supply Vessels and Coast Guard Vessels have been successfully repaired and refurbished in the Ship Repair Division. During 2007, the company has signed a Memorandum of Understanding (MOU) for acquisition of Vipul Shipyard (Vipul) situated adjacent to the Company's existing shipyard at Magdalla Port, District-Surat, and Gujarat

The following are some of the notable contributions of the company:· 2 Nos. of interceptor Boats (45 knots vessels) in Aluminium hull with Water Jet Propulsion to the Indian Coast Guard.· 2 x 4000 DWT Cement Carriers for Cement Ambuja International, Mauritius.· 4 x 50T Bollard Pull SRP Tugs for Wijsmuller, Holland (An A.P.Moller & Co.)· 4 x 60.8M Anchor Handling Tugs / Supply Vessels & 1 x 42M Well Head Maintenance Vessel (Aluminium Hull) for Halul Offshore, Doha, Qatar.· 1 x 50M Well Test / Supply Vessel and 1 x 56M Well Test / DPS-2 Vessel for Al Mansoori Production Services, Abu Dhabi.· 3 x 47M - 80T Multipurpose Vessel for Lamnalco Group, Sharjah.· 4 x Utility Vessel for Zamil Operation & Maintenance Company Ltd. · 1 No. 60.8M Diving Support Vessel - DP1 Halul Offshore Co., Doha · 1 No. 83.5M Dynamic Positioning - DP2 Type Vessel with Diesel Electric Propulsion for Consolidated Contractors Construction Co., UAE.

The following are some of the pending orders with the company:· 2 Nos. 53M - 90T B. P. ASD Vessels from Lamnalco Group, UAE.· 1 No. 90M Pipe Lay Barge, 5 Nos. 61M Anchor Handling Tug Supply Vessels and 1 No. 78M DPS-2 Diving Support Vessel from Maridive, Egypt.· 3 Nos. 94M Pollution Control Vessels for Indian Coast Guard.· 4 Nos. Articoupled Barges for Essar Shipping.· 4 Nos. 63M Anchor Handling Tug Supply Vessels from Sea tankers Management Co. Ltd., Norway · 1 No. 60.8M Offshore Supply / Supply Vessel from VROON B. V., Netherlands.· ABG Shipyard Ltd has also got a prestigious order for 500 passenger vessel from the Administration of Andaman and Nicobar Administration, Port Blair, which is under construction presently.· During the year 2006, the company secured order from Lamnalco, Cyprus and order from Vroon BV.· The Company has secured a repeat order, from Gujarat Ambuja Cements Ltd (GACL) for construction of 1 No. Self Loading & Unloading vessel of 4000 DWT Bulk Cements Carrier at a price of USD 9.90 Mio. Approximately. · During the year 2007, another repeat order has been received by the company from Lamnalco Ltd, Cyprus for 2 vessels amounting to USD 34.20 million. · ABG Shipyard Ltd has bagged a prestigious order for the construction of 3 units of sub-sea multi purpose vessels from Sealion Shipping Ltd on behalf of Toisa Ltd. These vessels are designed for a world class subsea and ROV support duties. The total order size is approx. Rs. 585 cr (US $ 136.65 Mio)Stocks and FinanceDuring the year 2005, the company entered in to the financial stack market by offering 85 lakh equity shares at Rs 155-185 per share.The fundamentals are given below:

Financial Year	2004	2005	2006	2007	2008
Net Profit(Rs cr)	12.91	44.75	83.68	97.45	119.13
Shares (in cr)	1.30	3.25	5.09	5.09	5.09
EPS(Rs)	9.93	13.77	16.43	19.14	23.39
% Growth		38.65	19.35	16.45	22.24
P/E (x)	25.07	18.08	15.15	13.01	10.64

Future growth possibilities· Booking It is understood that the company has orders in excess of Rs 2350 crores. Currently the order book position consists of 50 vessels which are likely to be executed in the coming two years time period. Thus ABG shipyard has the possibility of fast growth in revenues.· Indian Demand likely to go upIt is estimated that the average age of a vessel is about 16 years to19 years. It is expected that there will be a huge replacement demand in the next 4 to 5 years as a result of replacement demand. It has been estimated the at least 60% of the existing fleets would require replacement in the next five years. With this in view ABG is expanding its capacity by setting up a new ship yard at Dahej The new yard would have capacity to build vessels up to 120,000 DWT. · Exploration activities and demand for offshore vehicles:There is a possibility of increase in domestic exploration activities with the setting up of several oil rings This will increase the demand for offshore vessels used for transportation of oil.· The Government of India is providing a major support to the domestic ship building Industry by setting up a project Sagar Mala for developing the Indian maritime sector. This project is aimed at capacity expansion/modernisation and creation of new ports along the Indian coastlines. This would create additional demand for new ships.

Q1 results as on July 30, 2008

The unaudited results for the quarter ending June 30, 2008 indicates a profit after tax of Rs 470.129 million as compared Rs 334.038 million for the quarter ended June 30, 2007. Total Income has increased from Rs 2066.647 million for the quarter ended June 30, 2007 to Rs 2800.900 million for the quarter ended June 30, 2008.

Major concerns At present the Government of India is giving 30% subsidy to domestic ship builders. The discontinuation of this subsidy can result in substantial reduction in profit margin for the company. ABG is facing a stiff competition in domestic as well as international players. The domestic companies include the Cochin Ship yard, Bharti Ship Yard. The Chinese and South Korean companies pose a major challenge to ABG in the international sector.

Varun Shipping Company

Sun, 03 Aug 2008 04:47:12 EST

Varun Shipping Company - by gsnarayanan

Varun shipping company is the largest Indian company in the LPG carrier segment. It contains a total fleet strength of 20 vessels that includes 3 crude carriers, 4 offshore vessels, a product carrier and 12 LPG carriers. The company has been extending their shipping services in the LPG, crude Oil ,off shore and other products. The VSC International Pvt. Ltd based at Singapore is wholly owned by the company. Varun shipping has spent more than 1300 Crores (in Rupee) on fleet expansion by acquiring LPG, crude oil and offshore Vessels.

The company earns its revenue through a pool arrangement by placing its vessels with a common pool like Exmar. Ships from various ship owners are pooled and hired to prospective clients. The marketing is taken care of by the pool management and the revenue earned by the pool is divided among the members of the pool. The sharing pattern depends upon various factors like the carrying capacity, specifications and age of the vessel. Varun shipping has worked with various companies in India like Indian Oil Corporation, HPCl, BPCL and Reliance industries.

The Company’s role in the Shipping Industry

Varun Shipping makes a dominant presence in the Shipping industry. The company has control over 81% of the total LPG shipping in India. The company also has been recognised as the second largest global player in the medium sized refrigerated LPG carrier segment by owning about 16% of the fleet. The company’s medium sized gas carriers (MGC) are used for specific regional routes on which deployment of large gas vessels is technically unfeasible. The MGCs are also used for transporting ammonia, which are normally transported in small quantities. It is expected the Varun shipping would record a sustained growth in the coming year since the MCG rates have been observed to be stable along with those of LGCs. Varun shipping has already entered in to an expansion plan by increasing the fleet size from 14 vessels in 2005 to 20 in 2008. As a result of this we can expect a revenue growth of 10.9% from Rs. 684.5 crores in 2007 to Rs. 826.59 crores in 2009.

Varun shipping has increased its offshore activities by acquiring two high end offshore vessels which are being employed for deep sea oil exploration in the North Sea, Bay of Bengal and Atlantic Ocean. These vessels, with highest pulling power, are on ling term charter with Reliance Industries. The contribution from these vessels is expected to increase from 4% during 2007 to 20% in 2009.

Varun Shipping has been one of the best dividend paying companies in the shipping Industry. It is to be pointed out that Varun shipping has been consistently paying dividend for the last 23 years.

Comparison of performance with other companies present in the shipping Industry:

The company has a robust financial and past earning record.

	GE Shipping India INR		SCI India INR		BW Gas Norway UD$		Exmar NV Netherlands US$		Varun Shipping India INR
FY	2009	2008	2009	2008	2009	2008	2009	2008	2009	2008
EPS	72.1	61.30	28.99	19.67	1.23	1.81	1.36	1.12	17.51	15.39
P/E	7.20	8.5	8.11	11.95	10.07	15.3	21.29	25.85	4.23	4.81
M-Cap	2.72	3.19	2.19	2.58	2.26	2.33	1.85	2.07	1.34	1.43

A review on the growth of Varun Shipping Company

Varun Shipping Company was started in the year 1971 as a private limited company and subsequently converted in to a public limited during 1972. Initially, the company owned six ships and operated to meet the industrial requirements. The fleet was augmented by adding three more ships during 1987to 1988.Two more ships were added in 1992 while three old ships were disposed off.

The company achieved appreciable profit during 1993 by adding two more vessels and deploying the existing vessels for movement of national and international cargo.

During the year 1994 the Company undertook to further expansion of its fleet initially with an investment of Rs.200 crores and an additional investment of Rs.100 crores in the next stage. The Company also acquired ships that would help in movement of special cargoes for Indian trade.

During 1996, the company acquired an LPG carrier which is a specialized vessel for movement of LPG and other chemical gases after disposing off two of its smaller ships to its Singapore subsidiary and another product tanker to a finance Company.

During the year 2002 the company bought a 1983-build tanker with a 7,335 dead weight tonnage (DWT) on bare-boat charter-cum demise (BBCD) basis. Also acquired its fourth LPG Carrier. The new vessel had a cargo carrying capacity of 24130 m³. In 2004 t Varun Shipping acquired its fifth LPG carrier making it the owner of India's largest LPG fleet accounting for 65 per cent of the total LPG tonnage at present operating under the Indian flag. One more LPG Carrier was added in 2005.

In 2007 - Varun Shipping Company had purchased its second 16000 BHP Anchor handling and Towing Supply Vessel with Bollard Pull in excess of 180 Tons. In the same year a Very Large Crude Carrier (VLCC), which is claimed to be India's largest LPG carrier was added to the fleet of Varun Shipping.

Financial market

The company entered in to the stock market by issuing 55, 21,811 numbers of equity shares of face value RS 10 during 1988.

- 1992 -130, 30,390 No. of equity shares allotted (prem. Rs.10 per share) in conversion of Part `B' of debs.

- During the previous year, the company came out with rights-cum-public issue of convertible debentures amounting to Rs. 52.12 crores.

During the year 1994, 13, 29,000 shares of Rs.10 each were issued to SCICI Limited (SCICI) as fully paid up at a premium of Rs. 10 per share by way of conversion of rupee term loans of Rs. 26.58 million.

During the year 1997, the Company invested an amount of Rs. 48 million in the capital of Varun Shipping & Industries Limited by acquiring 4,800,000 No. of equity shares of Rs. 10 each at par. Also on 31st March in the same year, the Company issued Redeemable Preference Shares of Rs. 2 crores on private placement basis.

During the year 2001 Varun shipping launched a rights issue of Rs 36.26 crore to fund its $40-million fleet addition plan. The issue involved 3,62,61,591, 14 per cent unsecured fully convertible debentures of Rs 10 each for cash at par, aggregating Rs 36,26,15,910, in the ratio of one unsecured fully convertible debenture for every one equity share held on February 9, 2001

Company address

Varun Shipping co Ltd.,

Laxmi Building
6, SHOORJI VALLABHDAS MARG,
Ballard Estate
Mumbai - 400038