SCI in rumoured JV talks with STX

State-run Shipping Corp. of India Ltd (SCI), the county?s biggest shipping firm by fleet size and revenues, is in talks with South Korean shipbuilder STX Shipbuilding Co. Ltd for a joint venture as India looks to scale up its shipbuilding capacity to tap into a global shipbuilding boom.

“SCI has started discussions with STX for a joint venture shipyard in India, but nothing has been finalized as yet,” said an unnamed industry source. S. Hajara, chairman and managing director of SCI, said the company is “talking to many partners and will finalize one at an appropriate time.” He did not confirm talks with STX and declined to name the potential partners. An STX spokesperson, too, declined to comment on the subject.

The Union government plans to build two international-size shipyards, one each on the east and west coasts, with investments from private firms to boost India?s shipbuilding capacity as part of its $12.4 billion (Rs49,500 crore) national maritime development programme. It isn?t known whether SCI?s talks with STX are for one of these yards.

STX, the world?s fifth biggest shipbuilder by orders, has filed a so-called expression of interest to develop, construct, operate and manage the proposed mega shipyards on India?s eastern and western coasts. The exact locations of the two yards are yet to be decided.

The two shipyards proposed by the government will have a capacity to build and repair ships, initially, of up to 175,000 dwt. The yards can be expanded further to construct ships of up to 300,000 tonnes, which may be container ships, liquefied natural gas carriers, very large crude carriers and large dry bulk cargo ships. The yards will also be able to repair and refit about 70-80 ships of different types in a year.

SCI had earlier said it was exploring the possibility of entering the shipbuilding business by teaming up with a foreign firm. “Entering shipbuilding is a backward integration of our existing business of owning and operating ships,” said Umesh C. Grover, the Mumbai-based firm?s director looking after its technical and offshore business. Globally, many shipping companies, including the world?s biggest container shipping firm Maersk Line, either hold stakes in shipyards or control shipbuilding facilities. “Shipbuilding business provides value addition to our existing business,” Grover said.

STX also has a majority-owned ship-owning firm STX Pan Ocean Co. Ltd that runs a fleet of 59 ships. Last year, STX bought a 39.2% stake in Norwegian shipbuilder Aker Yards, which specializes in building cruise, ferry, offshore and other niche vessels, for $800 million.

SCI had earlier said it would invest around $3 billion in the next three-five years to buy ships for replacing its ageing fleet. It has placed orders with Korean yards such as Hyundai, Daewoo, STX and China?s Jinling Shipyard for building 28 ships, which are estimated worth $1.3 billion.