Elated after winning India's first container vessel order worth $360 million from the global container shipping giant CMA CGM SA, state-run Cochin Shipyard Ltd said the focus will be on delivering the six ships per the contractual timeline and quality as the world watches India's ability to adhere to this critical aspect of shipbuilding, often cited as an area of concern for fleet owners looking to place orders for mainline cargo vessels in India.

"Delivering the ships on time and as per quality are very important things," Jose V J, Chairman and Managing Director, said in an interview to ET Infra.

"We have no other option but to deliver on time when we are dealing with such giant clients; their monitoring and supervision will be like that," Jose said in his first media interview after taking additional charge of CMD of the Mumbai-listed shipbuilder on February 1.

"The first of the six ships will have to be delivered in 36 months from the signing of the contract, followed by two ships every year," he said by phone from South Korea where he was on an official visit.

The order for building six LNG-powered feeder container ships, each with a capacity to carry some 1,700 twenty-foot equivalent units "will be a game changer for Cochin Shipyard", he said, explaining the reason behind his observation.

"CMA CGM is one of the world's top three container lines. After we gain confidence in building these six feeder container ships, they have expressed willingness to place orders for big ships at Cochin Shipyard, provided we deliver these six ships on time and quality," Jose stated.

Acknowledging Prime Minister Narendra Modi's role in winning the order, Jose said that the French container carrier wanted a South Korean shipbuilder to be associated with this contract.

"We already have a tie-up South Korea's HD Korea Shipbuilding & Offshore Engineering Co Ltd (HDKSOE), one of the world's top shipbuilders. The main equipment for the ships will be imported from South Korea, supplied by Hyundai and the ships will be designed by KOMAC. The vessels will be powered by engines from Everllence (formerly MAN Energy Solutions) manufactured in South Korea by Hyundai under a licence agreement with Everllence. Thus, the ships will be built in India with South Korean design, main equipment and technical support from HDKSOE,” Jose said.

The initial plan of CMA CGM was to place an order for four firm and two optional ships at Cochin Shipyard.

"We told them that we can give the best price if they gave a firm order for six ships. So, they placed a firm order for six ships with each ship costing $60 million," Jose disclosed.

Cochin Shipyard, though, will get an average 23.1 per cent extra from the government as state aid for building each ship under the Shipbuilding Financial Assistance Scheme. This is because the LNG-powered container ships will come under the specialised vessel category, entitling the yard to get state aid of 15 per cent on the first ?100 crore and 25 per cent on the balance value of the ship, translating into an average subsidy of 23.1 per cent per ship," Jose said.

Cochin Shipyard will cut steel (signifying the start of construction) for the ships only after a year.

"The engine has a big lead time; they will arrive only next year; accordingly, we are planning the steel cutting," Jose disclosed.

Cochin Shipyard's chief executive travelled straight to South Korea to discuss details about constructing the ships with support from HDKSOE after signing the contract with CMA CGM in New Delhi on 18 February.

"When we came to HDKSOE, they were saying that CMA CGM is building many 24,000 TEU capacity ships in South Korea, including at Hyundai. But despite securing many orders from CMA CGM for large container ships, no contract was signed personally by its Group Chairman, Rodolphe Saade, with them. Hyundai expressed surprise that for the feeder ships order, Saade flew down to India and signed the contract personally with Cochin Shipyard," he narrated.

They were quite surprised. In fact, officials from Hyundai had also come down to New Delhi to witness the signing of the contract with CMA CGM. For the first time, they saw the Group Chairman of CMA CGM signing a shipbuilding contract himself, a formality typically entrusted to senior executives, thereby giving a strong signal to the global shipping industry on India's emergence as a potential alternative," Jose added.

Local shipyards have to capitalise on the ?69,725 crore package approved by the Union Cabinet last year to revitalise the country's shipbuilding and shipping industries, Jose said.

"We can't expect anything more from the government. Whatever was in our wish list, they have given us everything. Now, it's up to the shipyards to take it and grow on the global stage," Jose added.

Source: ET Infra. Com 

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