The client, an international private equity investment company was considering private placement in a privately held domestic ship-building company. However, the client faced challenges as the ship-building company was a leading private player with over 2 years of orders due for delivery and more than 50 percent international orders. The global ship-building industry had an all-time high of orders. It also was concerned about the Indian government supporting the industry with subsidies only till 2007. Ship builders in developed nations like EU and US were not competitive in the main-stream ship-building segments and EU dominated passenger ships and cruise ships, while the remaining US industry survived due to the regulatory protection and defense orders.
To landscape the ship-building industry for the client, UC Strategy adopted the following approach:
- Analysed historical and future ship-building deliveries
- Identified demand trends across various vessel types –
- Cargo Vessels – Dry Bulk Carriers, Tankers, Container Carriers, etc.
- Off-Shore Vessels – Tugs, Barges, OSV, Dredgers, etc.
- Analysed and assessed the following demand drivers –
- Oil Prices and Oil exploration
- Trade growth and Port development
- Fleet age and charter rates
- Current order book
- Regulation of the driving phase of single hull oil tankers
- Established correlation between oil prices, oil exploration and off-shore vessel demand
- Analysed correlation between global trade, fleet growth and utilisation
- Analysed the supply scenario –
- Current order book across various countries and players
- Trends in market share
- Ability to compete in various segments
- Regulatory barriers
- Recommended investment strategy and identified key risks
The client received a detailed insight into the ship-building industry in the country.