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            october 18, 2019

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Busworld 2019


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Yards face cancellations


The slump in global trade following the US meltdown may lead to cancellations of about 15 per cent in shipbuilding orders with the shipyards in the country, which is worth at least Rs 3,750 crore, it is feared.
At a time when this sector is facing a financing crunch as banks had stopped lending to the sector, orders for at least about 35 ships to be built in the yards are facing cancellations.
The yards in the country have orders for around 250 ships, a Mumbai-based shipping consultant disclosed.
However, Indian shipyards are expected to fare better than their global peers because most of their orders relate to the construction of offshore vessels, where cancellations are comparatively less. The bulk of the cancellations are for dry bulk carriers.
Orders at Indian shipyards are estimated to total Rs 25,000 crore.
Companies most likely to be affected are new entities.
The last five years saw a mushrooming of shipping companies, many of which placed orders for new vessels that they are now not in a position to take deliveries.
To further complicate the matter, banks have stopped extending loans to Indian shipbuilders and were servicing only creditworthy clients.
Due to the recession, shipping companies were finding it difficult to survive and have started cancelling orders, severely affecting the shipbuilding industry, an official lamented.
According to Exim News Service, the shipping boom of the last five years saw huge investments coming into this sector. However, slots were not available at big shipyards and waiting periods were up to four years. As a result, many small shipyards came up without proper infrastructure to cater to this rising demand.

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