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Sembcorp Marine’s Sembawang Shipyard raises stakes in Kakinada JV

Posted to Sembcorp Marine’s Sembawang Shipyard raises stakes in Kakinada JV (by on August 8, 2011

Singapore based Sembawang Shipyard raises its stakes in Kakinada’s joint venture for ship repairs and ship building

Sembcorp Marine’s wholly owned subsidiary Sembawang Shipyard has exercised its option to increase its shareholding in Sembmarine Kakinada Ltd (SKL), a joint venture between Sembawang Shipyard and Kakinada Seaports Limited, from 19.9% to 40% of the joint venture’s initial investment of US$50 million, making it the largest single shareholder of the joint venture facility. The Technical Management & Services Agreement to operate and manage SKL will also be extended from the current 5 years to 10 years.


The increase in the shareholding of Sembmarine Kakinada Ltd, a joint venture set up in November 2009, is in line with Sembcorp Marine’s strategy to establish and grow a hub in India to cater to the growing needs of its customers operating in India and South Asia. SKL is an integrated marine and offshore facility strategically located in the East Coast of India, one of the world’s key oil and gas exploration areas. Located between Vishakhapatnam and Chennai Port, the shipyard is well placed to cater to offshore drilling units and merchant vessels trading or operating along the Eastern coast of India.


With the setting up of this shipyard and repair facility, the only one on the East coast of India, ship owners no longer need to go to Singapore or other overseas ship repair yards to get their vessels repaired,” said Y. S. Prasad, CEO, Kakinada Seaports Ltd. “Sembawang shipyard has moved lot of equipment from their Singapore facility to SKL thus making it into a full-fledged repair facility. As with Sembcorp Marine, plans are underway to make SKL into a full-scale marine and offshore engineering firm, specializing in a full spectrum of integrated solutions in ship repair, shipbuilding, ship conversion, rig building and offshore engineering & construction. 


About future orders he informed that inspectors from the Indian Navy had recently visited SKL and found the capabilities and competence fitted well within Navy’s norms. Similarly, representatives from the Shipping Corporation of India had visited the repair yard and are convinced that it will be able to handle the repairs of their offshore vessels.”


Ong Poh Kwee, Managing Director of Sembawang Shipyard said “SKL is well positioned to capitalize on the huge development and long-term growth potential of the offshore industry in India and South Asia. Through our increased stake holding and long-term commitment, SKL will be able to leverage on the capabilities and expertise of Sembcorp Marine and in particular Sembawang Shipyard for sustainable growth. We are confident that SKL is on track to become a one-stop integrated offshore service facility by the end of 2012, catering to the growing needs of our customers operating in India and South Asia.”


SKL, which operates within the vicinity of Kakinada Seaports, will be developed in 3 phases to offer ship owners and offshore operators a one-stop integrated offshore service facility for the repairs and servicing of offshore vessels and ships, new-buildings, oil and gas riser/equipment repairs as well as platforms and modules fabrication by the end of 2012.


Construction of the first phase of SKL’s development is well underway. Complete facilities include blasting and painting shops, specialized offshore to equipment service shops for riser and tubulars repairs, mechanical & electrical, piping & outfitting and multi-purpose workshops as well as a 630-metre repair pier are in place. In December 2010, SKL successfully completed the repairs for Aban II, a jack-up rig owned by Aban Offshore Ltd, India, on time and in accordance with the owner’s stringent quality and HSE standards.


SKL will be ready to undertake full docking and repair works by the first half of 2012 when its 15,000-ton lifting capacity floating dock is commissioned. SKL’s shops and ground are also geared up for fabrication and shipbuilding.


Barring unforeseen circumstances, Sembcorp Marine expects positive contributions to its earnings from the joint-venture facility in the future. However, the above investment is not expected to have a material impact on Sembcorp Marine’s earnings and net tangible assets per share for the current financial year ending 31December 2011. The additional investment will be funded from Sembcorp Marine’s own internal resources.


Sembawang Shipyard, a wholly-owned shipyard of Sembcorp Marine Ltd, has one of the largest integrated ship repair and conversion facilities in Southeast Asia. Besides the traditional sectors of tankers and bulkers, Sembawang Shipyard is a recognized specialist in the niche markets of FPSO/FSO conversions, offshore vessels conversions and new-buildings, complex lengthening conversions, passenger ship conversions / refurbishment, chemical tankers, liquefied gas carriers, offshore rigs and navy ship repairs.




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