Gaurav Mercantiles Limited was earlier engaged in ship breaking, trading and investment. However, with the liberalization of imports, the trading activities were marginalized. The investment portfolio of the Company is also being diluted. Therefore, the company has been concentrating on ship breaking activities for several years now. However, we now propose to diversify to purchase of old factories for dismantling and sale thereof, as mentioned above also. From time to time, we may even undertake import and local trading of scrap and coal, as mentioned above, though this activity has not yet been commenced by us. The same is expected to push up the level of our operations as well as the operating results sizably.
The level of operations was kept lower in the past by a conscious decision of the management when the market conditions were volatile. This has been a consistent trait of our management. Besides. However, now, market conditions have stabilized. Besides, apart from ship breaking activities, the Company also plans to exploit potential in another scrap related sector. Several units of textile and machinery have come up for sale in recent past. In future, the company will also diversify to import of coal, which is being imported in large quantities of power sector and Steel Industry.
It has been observed by us in the past that the price sentiment in the ship breaking Industry fluctuates from time to time. As a result, our administrative & marketing set up remain unutilized for Somed part of the year. It prevents us from optimum utilization of our resources and optimize profitability. We plan to mix & match our ship breaking operations with purchase of scrap of old factories and import/trading of metal scrap and coal more actively. The present proposal has been compiled keeping in mind the said prospects.
The Government is fully seized of the value of the ship breaking Industry for our economy. This Industry used to generate ferrous & non-ferrous scrap of about 2.5 million tons p.a. which is equivalent to the production of an integrated steel plant & that too without using even one unit of electric power (in case of ship breaking activities) because the ship breaking operations do not involve consumption of electric power. Therefore, the Government policies have consistently remained favourable to the ship breaking Industry.
It has ensured steady growth of this Industry at Alang (which is the biggest Centre accounting for about 80 – 85% of the total ship breaking activities in our Country), Mumbai & Kolkata. Mumbai accounts for about 10-15% of the total production of the ship breaking Industry.
In the international market, Indian ship breaking Industry is the largest player and therefore, the international prices of scrapped Vessels, the chief input for the ship breaking Industry, used to fluctuate as per our domestic conditions. However, for last 6 – 7 years, China resumed ship breaking activities and was demanding about 2.0 million tons of scrapped Vessels every year. Smaller demand from Pakistan & Bangladesh also continued. In fact, now China has discontinued this activity due to internal issues. Pakistan is also not a regular buyer. However, Bangladesh continues to show good appetite for scrapped Vessels. This has put some pressure on the total supply of scrapped Vessels which resulted in increase in prices for the scrapped Vessels. The position is now better streamlined and the prices for the scrapped Vessels have been rationalized. The prices of melting scrap have also gone up sharply adding viability to ship breaking. However, the domestic conditions of the Indian Industry shall no longer remain the sole determinant of the international prices of scrapped Vessels unlike the past. Nonetheless, assured supply of scrapped Vessels of various kinds is expected to continue in adequate quantity for another 10 – 15 years.
As regards Mumbai Port Trust (MBPT):
(a) Plots have been carved out (18) to provide adequate working space for each ship breaking firm.
(b) Beaching & breaking permission is granted by MBPT on Ship to Ship Basis.
The productivity of ship breaking activities at Mumbai continues to remain at an appropriate level.