Shipbuilding subsidy: ABG can claim Rs 1,700 cr, Bharati Rs 1,000 cr

ABG Shipyard can claim Rs 1,700 crore as shipbuilding subsidy from the Government, followed by Pipavav Shipyard (Rs 1,050 crore) and Bharati Shipyard (Rs 1,000 crore) over the next four-five years.

Larsen and Toubro can claim Rs 375 crore, Tebma Shipyards Rs 270 crore and the Government-owned Cochin Shipyard can claim Rs 255 crore, according to sources in the know.

The Government, in the last week of February, approved a move to disburse about Rs 5,100 crore as shipbuilding subsidy to domestic shipyards for orders secured till August 15, 2007. The subsidy will be disbursed when the shipyard concerned delivers the ships to its customers. So, in case a buyer cancels his order due to any reason, the shipyard will not receive any subsidy for that order.

ABG Shipyard has deliveries lined up till 2013, for which it can claim the Rs 1,700 crore subsidy. "Based on our current delivery position, a subsidy of Rs 120 crore is already due. The Rs 1,700-crore subsidy is for orders that will be delivered till 2013," Mr Dhanajay Datar, Chief Financial Officer, ABG Shipyard, told Business Line.

ABG currently has an order book of Rs 11,400 crore and says that till date it has not seen any move to delay or cancel orders from its buyers.

Bharati Shipyard, meanwhile, has already delivered vessels for which the Government has to disburse subsidies of "about Rs 300 crore."

"Most of the vessels, for which we can claim the Rs 1,000-crore subsidy will be delivered by 2011 and some by 2012," Mr V. Kumar, Managing Director, Bharati Shipyard, said.

On whether Bharati Shipyard has seen any order cancellations from its buyers for these ships, Mr Kumar replied in negative. "We have seen some delays in payments but no cancellations," Mr Kumar said.

Meanwhile, there is Pipavav Shipyard, which secured orders before August 15, 2007, but has not started delivering as yet. The domestic shipbuilders have also demanded extension of shipbuilding subsidy beyond 2007.

Source: HBL