Cochin Shipyard Ltd and the Cochin Port Trust signed a contract for setting up a ship repair facility by the yard in the port area.
According to the contract, 42 acres will be leased to CSL for setting up of the international ship repair facility at Willingdon Island.
The contract was signed by Paul Antony, Chairman, Kochi Port, and K Subramaniam, Chairman and Managing Director, CSL, here on Monday.
Milind Deora, Union Minister of State for Communication, Information Technology and Shipping, presided over the function.
The Minister described the moment as a bringing together of two entities under the Shipping Ministry with the potential of extending the benefits to both the organisations. It would help in the growth of the ship repair industry of the country, he said.
The ship repair project is one of the three identified PPP (public-private partnership) projects for the port to be awarded in 2012-13.
The other two projects are the multi-user liquid terminal project at Puthuvypeen and the general cargo terminal Q8-Q9 at Ernakulam Wharf.
According to the agreement with CSL, the port will get the upfront premium, the value of the assets handed over, the guaranteed revenue quoted by CSL every year for the 30-year period and the lease rental for the land and water area allotted to them at the TAMP notified rates from time to time.
In addition, 243 employees currently working in the dry dock and the workshop area will be deputed to CSL.
The port had issued a tender in June 2012 to set up the international ship repair facility on its land. The shipyard bid successfully for the project.
The yard is planning to put up a modern ship-lift system in the island at an estimated cost of Rs 490 crore over a four-year period. This is besides the upfront premium, value of assets, annual guaranteed amount, annual lease rental for land and water area payable to the port.
CSL will be using the facility for the repairs of small ships up to 130 metre in size so that the existing ship repair facility in the yard can be dedicated to value added repairs of larger ships.
The projected revenues from the new facility are expected to be around Rs 980 crore by the end of the 30 year period in 2043. The investment in this facility is landmark one being the first major investment of CSL in ship repair facility.
In order to sustain momentum of growth, the shipyard has been looking for expanding its operations. One of the areas of potential growth identified was ship repair where CSL holds a premier position in India.