Ship shape: Pipavav Shipyard gearing up for Offshore & Defence vessels

PIPAVAV, Gujarat: Men and machines are racing against time to complete the construction of India’s largest dockyard Pipavav Shipyard while simultaneously working on building four Panamax size vessels.

Pipavav Shipyard is located on the west coast of India adjacent to major sea lanes between the Persian Gulf and Asia. Pipavav Shipyard will be capable of ship construction and repairs for a range of vessels of different sizes and types upto 400,000 DWT including naval vessels and coast guard vessels, as well as the fabrication and construction of products such as offshore platforms, rigs, jackets and vessels (but excluding sub-sea pipelines) for oil and gas companies.

Pipavav Shipyard is gearing up to focus into defence and offshore oil sectors.

Pipavav Shipyard has commenced construction of four, Panamax Bulk Carriers the first of which is expected to be delivered in April 2010, with subsequent deliveries expected to occur at intervals ranging from one to three months thereafter.

Pipavav Shipyard is divided into two distinct units having a combined area of 491.54 acres. The dock site itself is an Export Oriented Unit(EOU), and is located on land measuring 103.92 hectares (approximately 256.79 acres). For purposes of the fabrication , block making facilities being set up at the Company’s SEZ unit measuring approximately 95 hectares (approximately 234.75 acres) of land. The SEZ Unit and the EOU unit are linked by a 4.5 km dedicated road that was developed by the Company in 2008.

Pipavav Shipyard has set up integrated infrastructure using advanced ship building technology by way of deploying modern equipment / systems backed by software such as Primavera , Cadwin etc.,, apart from two Goliath cranes (currently under installation) having a span of 148 meters, height of 75 meters with lifting capacity of 600 MT each (combined lifting capacity of 1200 MT in one go) and ELL cranes etc., The dry dock, admeasuring 662 meters in length and 65 meters in width, is capable of accommodating very large ships of up to 400,000 DWT. With this, Pipavav Shipyard believes that leveraging advanced design and production technologies should give it the flexibility to manufacture a wide variety of vessels and offshore structures in a cost-efficient manner.

Pipavav Shipyard is building vessels on a modular basis. Steel plates are purchased from India and abroad and transported to our fabrication facility (Block making site) in the SEZ Unit where they are prepared and then assembled into pre-outfitted blocks. Blocks of up to 350 tonnes are transported to the dry dock site where they are assembled into the vessel hull, outfitted with propulsion systems, superstructure and other components and prepared for launch. After launch, the vessel goes through final outfitting and finishing in preparation for sea trials and commissioning.

Pivavav Shipyard has orders for a total of 22 Panamax size vessels and 12 OSVs from ONGC. It has also submitted bids for seven naval vessels - five naval offshore patrol vessels and two cadet training ships.(for further information please refer to DRHP)

The Pipavav Shipyard was originally promoted by SKIL and Grevek Investments. These original promoters have been joined by Punj Lloyd through its acquisition of 129,361,538 Equity Shares of our Company, which represents approximately a 22.29% interest as of the date of this Red Herring Prospectus. SKIL has a track record of promoting infrastructure projects in India, and is experienced in owner-managed construction of infrastructure projects including the Pipavav Port, which received its first vessel in 1996, the Pipavav Railway and the Pipavav Link Road. Punj Lloyd is an engineering and offshore construction company in India providing integrated design, engineering, procurement, construction and project management services for energy and infrastructure projects.

Pipavav Shipyard is led by a team of qualified and experienced managers, both from India and abroad, who are focused on different aspects of shipbuilding. The company has also executed cooperation agreements with various companies that have substantial experience in the shipbuilding business.

For instance, it has entered into agreements with KOMAC, a Korean ship design consulting firm, to provide our Company with ship design/ drawings. It has also entered into agreements with PILS Co. Limited of South Korea, a procurement and logistics firm, for the procurement of certain components/materials for production.

Pipavav shipyard also executed a technical assistance agreement with SembCorp Marine, Singapore, a company which operates shipyards and offshore construction and fabrication facilities. In November 2007, SembCorp acquired an equity stake of 17,500,000 Equity Shares in our Company, representing approximately a 3.02% shareholding interest..

As a co-promoter, Punj Lloyd has agreed to conduct all of its offshore business (excluding the construction and fabrication of sub-sea pipelines) in India through Pipavav and is expected to provide the company with access to opportunities in the Offshore Business industry, which includes business opportunities in the fabrication and construction of offshore platforms, rigs, jackets and vessels for the oil and gas industry.

The Pipavav Shipyard enjoys strategic location advantages, favourable marine conditions and is located adjacent to the Pipavav Port, a modern seaport which was promoted and constructed by Gujarat Pipavav Port Limited, which was promoted by SKIL. The Pipavav Port is now owned, operated and managed by the A.P. Møller Group of Denmark following its acquisition of GPPL. The Pipavav Port has connecting rail and road links, including a 273 km railway completed in 2003 and a link road completed in 2001. Due to its proximity to the Pipavav Port, the Pipavav Shipyard is positioned to benefit from its infrastructure facilities, such as approach channel and navigation facilities, roads, rail besides logistics & transport.

Its subsidiary, E Complex, is involved in the development of a sector-specific Special Economic Zone (SEZ), as stated earlier. Pipavav Shipyard Limited has established a unit in the SEZ developed by E Complex. This SEZ Unit was approved on January 8, 2008 and was established to carry out the fabrication and block assembly activities within the SEZ in order to benefit from certain advantages available to companies that operate within such SEZs. The E Complex facilities and the Pipavav Shipyard are linked by a 4.5 km dedicated road that was developed by the Company in 2008.

Quality Assurance

On October 14, 2008 Det Norske Veritas, Netherlands (“DNV”), awarded to us Management Quality Certificate No. 39820-2008-AQ-IND-RvA conforming to Quality Management System Standard ISO 9001:2000 in connection with all our activities related to design, development and construction of ships and repairs, maintenance and overhaul of ships and offshore structures.

Pipavav Shipyard has over 400 full-time employees and is in the process of recruiting more.