1. Ramya Lakshminarayanan Vikram Singh Thakur
INDIAN SHIPPING COMPANY
Feasibility Analysis of
IWT in India
Team Members
Ramya Lakshminarayanan
Vikram Singh Thakur

2. Go-To-Market Framework
Existing Framework
Benchmarking
Go-To-Market Framework
ISC Strategy
Value Proposition
Executive Summary : ISC should enter Inland Waterway Transport
ISC is an established player in shipping in India
Mainly transports solid, liquid and gas bulk products, esp. fuel and dry cargo
Fleet of 29 ships – 8 Crude oil carriers, 12 Product Carriers and 8 dry bulk carriers and 1 LPG carrier at with avg DWT
Strong Clientele from Government to MNC’s
About ISC
Govt. has announced plans to develop inland waterways; feasibility analysis and DPRs underway
Being a market leader in shipping, ISC wants to explore entering IWT
Will it be a viable proposition?
What will be the Profitability?
What is the potential market size?
The Case Study
Comparison of India with global scenario to get big picture of IWT
SWOT and Porter’s Five Forces analysis to examine industry competition
Estimation of potential market size
Close look at Govt. of India initiatives w.r.t IWT
Profitability analysis
Entry Strategy for ISC
What will be the profitability?
The way forward for ISC
Our Approach
Indian Shipping Company
Convergence
11/8/2018

3. Go-To-Market Framework
Existing Framework
Benchmarking
Go-To-Market Framework
ISC Strategy
Value Proposition
What is IWT?
A stretch of water, not part of the sea, over which craft of a carrying capacity not less than 50 tonnes can navigate when normally loaded is called as Navigable Inland Waterways
Inland Water Transport (IWT) is a fuel efficient and environment friendly mode of transportation
Operating costs are lower than for corresponding volumes of movement by road, rail or air
A major advantage is that the main infrastructure – the waterway – is often naturally available, which then has to be “trained”, maintained and upgraded
Parameters
IWT
Rail
Road
Energy Efficiency
4000
500
150
Fuel Efficiency
105 85 24
Equivalent single unit carrying capacity
1 barge
15 rail wagons
60 trucks
Air Pollution
Low
Medium
High
Land Acquisition
Capital Required
Environment Friendly
High Volume
Fuel Efficient
Convergence
Indian Shipping Company
Convergence
11/8/2018
11/8/2018

4. Go-To-Market Framework
Existing Framework
Benchmarking
Go-To-Market Framework
ISC Strategy
Value Proposition
IWT – Indian Scenario
East India Steam Navigation Company’s steamer Stanley plying on Ganges in mid 19th century
India has about 14,500 km of navigable and potentially navigable waterways comprising rivers, canals, backwaters, creeks, etc.
It consists of the Ganga–Bhagirathi–Hooghly rivers, the Brahmaputra, the Barak river, the rivers in Goa, the backwaters in Kerala, inland waters in Mumbai and the deltaic regions of the Godavari - Krishna rivers
About 70 million tones of cargo is moved annually through these waterways using mechanized vessels and country boats
IWT was developed well in British India, however it suffered in 20th century when focus shifted to rail and road modes
The Inland Waterways Authority of India Act, 1985 empowers the Government to declare waterways with potential for development of shipping and navigation as National Waterways and develop such waterways for efficient shipping and navigation
Convergence
Convergence
Indian Shipping Company
11/8/2018
11/8/2018

5. Go-To-Market Framework
Existing Framework
Benchmarking
Go-To-Market Framework
ISC Strategy
Value Proposition
India’s Positioning
IWT contributes 0.5% of total cargo transportation in India
In contrast, USA stands at 8.3%, and China at 8.7%
Bangladesh tops the chart, at 24%
Only three out of six National Waterways (NWs) fully operational
Distribution of the Goods Transported on the Indian Inland Waterways in 2012
Source: UNESCAP
Indian Shipping Company
Convergence
Convergence
11/8/2018
11/8/2018

6. Go-To-Market Framework Porter’s 5 Forces Analysis
Existing Framework
Benchmarking
Go-To-Market Framework
ISC Strategy
Value Proposition
Threat of New Entrants
Capital-intensive industry
High asset specificity
High exit cost
Degree of Rivalry
Low industry concentration ratio, implying fragmented market with keen competition
High exit barriers
Historically slow market growth
Bargaining Power of Buyers
High, as other modes of transport offer better connectivity
Fewer buyers of IWT services, as Indian IWT is fragmented
Porter’s 5 Forces Analysis
Threat of Substitutes
High, as IWT does not yet have seamless connectivity at entry and exit points with rail, road etc.
Low switching costs
Bargaining Power of Suppliers
Not a supplier intensive industry, as most variable costs are covered under fuel and lubricants
Convergence
Indian Shipping Company
Convergence
11/8/2018
11/8/2018

7. SWOT Analysis Go-To-Market Framework Value Proposition
Existing Framework
Benchmarking
Go-To-Market Framework
ISC Strategy
Value Proposition
HELPFUL
To achieving the objectives
HARMFUL
To achieving the objectives
Indian Challenges
Maintenance of the targeted LAD of 2m as a number of shoals form simultaneously during lean season.
Availability of adequate dredgers for talking the shoals.
Availability of technology for channel stabilization/ rectification
Remoteness of the area
Sufficient resources
STRENGTHS
WEAKNESSES
OPPORTUNITIES
THREATS
National Waterways come under the
Purview of Central Government
The focus is more on Road and Rail
which are considered better
IWT is a capital intensive industry
with high initial investment
National Waterways come under the purview of Central Government
Like Motor Vehicles Act, operation of inland vessels is governed by Inland Vessels Act, 1917
Talway survey of entire river
being carried out every fortnight
INTERNAL FACTORS
SWOT
Analysis
EXTERNAL FACTORS
3 National Waterways, 3 more
under process
Cargo movement by IWT showing increasing trend
Day navigation aids available in entire waterway
Reduction in the overall flow of water
in downstream regions due to other uses
Shallow water and narrow width of
channel during dry weather
Indian Shipping Company
Convergence
Convergence
11/8/2018
11/8/2018

8. Go-To-Market Framework River Inter-linking Project
Existing Framework
Benchmarking
Go-To-Market Framework
ISC Strategy
Value Proposition
Government Initiatives
To optimally develop and harness the potential of Inland Waterways in the country, the “Inland Waterways Authority of India (IWAI)” was set up under the Inland Waterways Authority of India Act in 1985
Development and regulation of inland waterways for shipping and navigation and for matters connected
Vessel Building Subsidy of 30%
Equity participation by Govt. in BOT Projects up to 40%
Viability Gap Funding up to 30 %
Tax exemption similar to National Highways
Enhancement in depreciation rate for inland vessels
Customs Duty concessions
National River Linking Project (NRLP) is estimated to cost ₹5.6 lakh crores. It has already begun as Ken and Betwa are being linked through a 221-km canal
Development of Allahabad – Haldia stretch of National Waterway 1 (River Ganga) to facilitate navigation by bigger vessels of (DWT) with help of World Bank
River Inter-linking Project
Convergence
Convergence
Indian Shipping Company
11/8/2018
11/8/2018

9. Go-To-Market Framework
Existing Framework
Benchmarking
Go-To-Market Framework
ISC Strategy
Value Proposition
Market Projections
Cargo transportation growth projected to undergo robust growth at 19 per cent CAGR from to
Steady rise in Central Gross Budgetary Support, Rs Crore in the 12th Five Year Plan
Promising potential demonstrated in relatively lesser developed pockets like tidal river canal system in Goa (Mandovi – Zuari – Cumbarjua system)
National Shipping Board has set a target to increase the modal share of IWT to 20 billion tonne km by 2025
Access to International trade with Bangladesh worth 5 bn$ annually as well as Myanmar
Access to abundant raw material wealth of Chotanagpur plateau region and food grains of Ganga valley region
Source: TRW Report, Ministry of Road Transport and Highway
Indian Shipping Company
Convergence
11/8/2018
11/8/2018

10. Go-To-Market Framework
Existing Framework
Benchmarking
Go-To-Market Framework
ISC Strategy
Value Proposition
Advantage ISC
IWT business a promising avenue for ISC to explore, given that the company has a strong legacy and is a market leader in shipping
We recommend entering the business with purchase of two vessels each of 350 and 600 DWT, as that is the maximum allowable DWT in inland water transport (Source: MOSPI)
This will be in line with the core competency of the company, by leveraging its strength in product carriers and dry bulk carriers
Focus on Raw materials such as Iron ore and Coal as well as Food grains
Pilot project – Transportation of coal from Raniganj and Jharia coal fields through NW-1
Indian Shipping Company
Convergence
11/8/2018

11. Go-To-Market Framework Indian Inland shipping company
Existing Framework
Benchmarking
Go-To-Market Framework
ISC Strategy
Value Proposition
Land Power and Environmental Approvals
Government Clearances
Insurance Company
State Government
IWAI / Concessioning Authority
Equipment & Ship Supplier
Concession Agreement
Insurance Policies
Project SPV /
Indian Inland shipping company
EPC Contractor
Fixed time EPC Contracts
Equity
Consultancy
Sponsor / ISC
Sponsor / IWAI
Technical and Financial Consultants
Shareholder’s
Agreement
This is us
Ensuring promoter is resourceful and experienced
Project Structure
Indian Shipping Company
Convergence
11/8/2018

12. Go-To-Market Framework
Existing Framework
Benchmarking
Go-To-Market Framework
ISC Strategy
Value Proposition
For 600 DWT Ship
Capital Cost
₹ 48,664,000.00
41%
(-) Vessel Subsidy
30%
Actual Cost
₹ 34,064,800.00
29%
Insurance
₹ ,459,920.00 1%
Repairs and Maintenance
Crewing
₹ 43,797,600.00
37%
Victuals
₹ ,255,712.00 4%
Fuel at Sea
₹ 32,118,240.00
27%
Total
₹ 118,156,192.00
100%
For 350 DWT Ship
Capital Cost
₹ 30,415,000.00
41%
(-) Vessel Subsidy
30%
Actual Cost
₹ 21,290,500.00
29%
Insurance
₹ ,450.00 1%
Repairs and Maintenance
Crewing
₹ 27,373,500.00
37%
Victuals
₹ ,284,820.00 4%
Fuel at Sea
₹ 20,073,900.00
27%
Total
₹ 73,847,620.00
100%
Indian Shipping Company
Convergence
11/8/2018

13. Go-To-Market Framework Transportation Network
Existing Framework
Benchmarking
Go-To-Market Framework
ISC Strategy
Value Proposition
Coal fields
Berth Loading
11.7 6
Mid stream grab loading
IWT
5.2
Haldia Port Trust
Farraka barrage loading points
Road
Malda Ghat
Transhipper
2.9
Rail
Raniganj and Jharia Coal fields
Berth Loading
Rail
6.1
Allahabad IWT
Patna barrage loading points
Indrapuri Barrage
Mid stream grab loading
Road
IWT
26.4
7.8
Bokaro Steel and Coal
Transportation Network
Convergence
Indian Shipping Company
11/8/2018

14. Go-To-Market Framework
Existing Framework
Benchmarking
Go-To-Market Framework
ISC Strategy
Value Proposition
Maintaining Profitability and Sustainability
Growth Ratios
Mar '10
Mar '11
Mar '12
Mar '13
Mar '14
Net Sales  -
-33%
-28%
24% 1%
Net Profit
48.80%
20.59%
25.26%
8.41%
8.29%
ROE
28.09%
7.34%
6.31%
2.80%
2.87%
D/E
0.62
0.68
0.66
0.63
ICR
9.46
3.70
5.25
2.79
3.48
Depreciation/Average Fixed Asset
3.26%
2.78%
2.34%
2.51%
Total Asset Turnover
0.11
0.08
0.10
Decreasing trend in sales and net profit seen over last two to three years due to erosion in profitability of existing business
IWT business a promising avenue for ISC to explore, given the company’s strong position of cash and bank balance
Depreciation shield can be raised because of acquisition of new assets which is around 25% (WDV)
Forming a Joint Venture with IWAI to leverage its knowledge in Inland Waterways Transportation by giving them an Equity Stake of 10%
The new company formed as an SPV would be called as Indian Inland Shipping Company with ISC as holding company with equity of 90%
To be Headquartered at Kolkata
Hiring Competent Personnel from National Inland Navigation Institute (NINI) at Patna
Vessel building Subsidy of 30% to lower the Initial Capital required
Total cost incurred on procurement of ships would be Rs. 38,40,07,624 which can be easily funded from the Cash and Bank balance of ISC
Hub & Spoke Model
Convergence
Indian Shipping Company
11/8/2018

15. Go-To-Market Framework Indian Shipping Company
Existing Framework
Benchmarking
Go-To-Market Framework
ISC Strategy
Value Proposition
Early Mover Advantage
Use of alternative fuels like petro-diesel and EN-590 for greater fuel efficiency at lower emissions
Optimization of IWT Operations through following means:
E - Navigation
Using water-level information for schedule calculations
Tracking and tracing ships, estimating reqd. sailing speeds for better fuel consumption (not yet commonly used, except for container trade)
Terminal planning and ship scheduling
Voyage Planning
Maximize benefits from tides and currents, esp. at narrow tidal passages
Adjusting speed and departure time for J-I-T loading and unloading
Promotion programs for improving operational efficiency
(successful example: VoortVarend Besparen – ‘proactive fuel saving’ executed in the Netherlands)
Indian Shipping Company
Convergence
11/8/2018

16. Indian Shipping Company
REFERENCES
UN ESCAP Report - Manual on Modernization of Inland Water Transport for Integration Within a Multimodal Transport System
(Ministry of Statistics and Program Implementation)
Convergence
Indian Shipping Company
11/8/2018

17. Convergence
11/8/2018