Invitation of proposals on owning / building in partnership of 4 nos Chemical tankers
1. Brief Background: AAGL is executing order of 4 nos 12800 DWT chemical tankers for Sea
Tankers of Norway. Due to some reasons AAGL and the Sea Tankers decided to mutually
close the contract. AAGL is looking for suitable buyer who is interested to get the vessels
built on profit sharing basis or on fixed cost basis.
2. Intention of the advertisement: This advertisement is to invite the response of the
interested parties. If there are sufficient parties then based on the terms and conditions
expressed by the parties suitable tender will be made and the party will be selected
through a competitive bidding process.
3. Details of the vessel:
a. DWT: 12800 Chemical tanker
b. Number of vessels: 4 nos
c. Length: 128 m
d. Width: 20 m
e. Delivery: First vessel Dec 2009 and one vessels every three months after that.
f. Getting built at: Chanch, Amreli
g. Detail specification is attached as Annexure-I
4. Present status of the vessels:
a. All the critical equipments like main engine, propeller, gear box etc are either
ordered or already received
b. The complete steel for the vessels is already obtained
c. The hull for two vessels is already 50% and 40 % complete.
5. Kind of proposals expected: Following kinds of proposals in the order of preference is
invited from the interested parties.
a. Building on partnership basis: This is the most preferred option in which AAGL and
the party will build the vessels on a partnership basis and share the profits. The
detail concept is attached as Annexure-II to this document.
b. Fixed price contract: This is the next preferred option and in this AAGL and the
party will get into a fixed price contract.
c. Selling the WIP and Renting out the yard: This is the third option and will be
considered if other two options do not work out.
6. How to contact:
a. The interest parties can send their proposals / interest/ terms and conditions etc
b. Interested parties can also contact the MD in person at following address
Alcock Ashdown Gujarat Limited
7. Last date to receive the intentions: Since this is not a tender notice but just an invitation to
get the terms and conditions of the possible tender no sacrosanct last date is given. But
we would like to finalise the tender conditions by 20th Aug hence interested parties are
requested to send their terms and conditions before that.
8. Where to look for more details and clarifications:
a. AAGL would be the putting advertisement and other details, clarification etc on its
on its officials website www.alcockshipyard.com
b. An advertisement will also be posted in “General” category in the tenders section.
Interested parties may register their e-mail ids with our website in which case they
will automatically receive any advertisement or related document as and when it is
Specifications of 12800 T DWT IMO II CHEMICAL TANKER
1. MAIN DIMENSIONS
Length Overall 128.80 M
Length Waterline 123.40 M
Length Between Perpendiculars 121.00 M
Breadth Moulded 20.00 M
Depth Moulded 11.50 M
Draught (Scantling) 8.90 M
Draught, Design Load (Summer) 8.70 M
Freeboard Type Type “A “of ILLC
2. Suitability: This is a vessel suitable for carrying chemical and oil products having a flash
point below 60° C. The vessel shall have the capability of carrying seven (7) grades of
3. Products carried : -
a. Oil petroleum Products.
b. Chemical IMO II and III, D cargoes according to IBC code
4. CAPACITIES :The approximate capacities (100% full) shall be as follows : -
Sl.No: Tank Capacity
1 Cargo Oil Tanks 13500 Cu.M
2 Slop Tanks 430 Cu.M
3 Fuel Oil Tanks(excluding 2 settling tanks&2 service 640 Cu.M
4 Diesel Oil, including 2 service tanks. 80 Cu.M
5 Portable water tank 150 Cu.M
6 Lub oil tanks including settling, storage & service tank. 50 Cu.M
7 Hydraulic oil. 10 Cu.M
8 Sewage 6 Cu.M
9 Oil residue 10 Cu.M
10 Foam Tank 7 Cu.M
11 Water Ballast 5000 Cu.M
5. CLASSIFICATION:The vessel, including the hull structure, equipment, propelling machinery,
piping systems and electrical installation shall be built under the survey of American Bureau
of Shipping and in accordance with the latest Rules and Requirements of the Statutory
Authority for the services intended.
6. The vessel shall be constructed and classed *A1 Oil and Chemical Carrier *AMS, *ACCU,
a. The vessel shall be of all welded construction, with the hull and superstructure of
steel as approved by Classification Society for all welded construction.
b. The hull shall be of round bilge form, flat bottom, bulb bow and bulb stern. The hull
shall have a smooth fair appearance free from objectionable distortion or
waviness and built mainly on the longitudinal framing system and sub-divided by
twelve (12) main watertight transverse bulkheads extending to the main deck.
c. The hull shall be divided into thirteen (13) watertight compartments. They shall be
i. Steering Gear Compartment/Water Ballast Tanks (P&S).
ii. Engine Room/ECR.
iii. H.F.O Tanks.
iv. Slop Tanks.
v. No.6 Cargo Oil Tank (P&S).
vi. No.5 Cargo Oil Tank (P&S).
vii. No.4 Cargo Oil Tank (P&S).
viii. No.3 Cargo Oil Tank (P&S).
ix. No.2 Cargo Oil Tank (P&S).
x. No.1 Cargo Oil Tank (P&S).
xi. Water Ballast Tanks (P&S).
xii. Bow Thruster Compt/Water Ballast Tanks P&S. m)
xiii. F.P Ballast Tank/Chain Lockers.
d. A forecastle deck shall be fitted housing the following:-
i. Bosun Store.
ii. Paint Stores.
e. The hull structure shall be designed and constructed for loading cargo of specific
gravity 1.55 t/m3 in all cargo tanks and slop tanks. Water ballast spaces shall consist
of fore peak, aft peak and the double bottom and double hull tanks in way of the
cargo area. Engine and machinery rooms and accommodation shall be located aft.
The vessel shall have good manoeuvring characteristics and shall be capable of
having a small turning circle and short stopping distance when at full load and speed
for operation in confined waters.
f. Propulsion shall be by a single medium speed marine diesel engine driving a
controllable pitch propeller through a reduction gearbox. A bow thruster together
with a high lift rudder shall be provided to give added manoeuvrability.
a. All materials and equipment used in building of the ship shall be new, the best of
their respective kinds, taking into account, cost, vessel capabilities, design,
performance, working environment, ease of maintenance and usage.
b. All equipment shall be standard units with readily available Manufacturers spare
parts. No special or non standard equipment shall be used in the construction of the
ship or the machinery.
c. Steel for hull construction shall be as required by Class and proof of Certificates shall
be produced. All stainless steel used for ladders, rails, platforms, brackets in cargo
tanks shall be of AISI 316L. Before fabrication, all steel plates and profiles shall be
grit blasted to SA 2.5 and shop primed as per selected scheme. Finish coats shall be
applied as per painting specifications.
9. Deck height at center line:
Main Deck to Forecastle Deck 2.50 M
Main Deck to Poop Deck 2.80 M
Poop Deck to Accommodation Deck 2.70 M
Accommodation Deck to Boat Deck 2.70 M
Boat Deck to Navigation Bridge Deck 2.70 M
Navigation Bridge Deck to Wheelhouse Top 2.70 M
The terms and conditions for the building of 12800 t Chemical Tanker on profit
AAGL is building four 12800 Chemical tankers at Chanch yard. Because of some unavoidable
reasons AAGL and the original owners Sea Tankers have mutually agreed to terminate the
contract. AAGL has decided to look for a new buyer and work on a partnership basis with him.
This note is prepared to give an outline of the arrangement. The buyer ( here after termed as
“OWNER”) will be chosen by way of a competitive bidding process. To arrive at a reasonable set
of conditions this concept note has been circulated for discussion purpose and the interest
bidders are requested to indicate their suggestions in conditions if any.
1. Brief summary of the arrangement: The agreement will be that “OWNER” will provide the
advances and payments as per the terms laid down in this document. During the execution of
project , AAGL will get some percentage of the DIRECT COST as the monthly expense every
month and the NOTIONAL PROFIT as defined will be shared in a mutually agreeable percentage
(subject to a minimum percentage of 50 % to AAGL).
a. DIRECT COST: Anything that is DIRECT COST on the vessel is included in the “DIRECT
COST”. It will include following without any ambiguity:
i. All material costs
ii. All equipment and associated cost.
iii. Transportation cost of material and equipments.
iv. Charges related with customs, warehouses charges etc.
v. All consumables.
vi. Cost of all contractors.
vii. Design and other associated cost.
viii. Salary and perks of the project team that will be constituted exclusively or mainly
for this project after mutual discussion.
ix. Banking charges incurred by AAGL and the interest on the credit taken from
Banks by AAGL for this project. (This does not include any banking charges that
the OWNER may have to incur to arrange the fund)
x. Insurance charges incurred by AAGL
xi. Interest charges to be refunded to the Sea Tankers.
xii. All charges of Classification society.
xiii. Hire charges of any special equipment needed just for that vessel.
xiv. Any item/ equipment/ activity/ service that is attributable entirely or substantially
to the project and not explicitly covered under the responsibilities of AAGL in this
document. (This does not the cost incurred in infrastructure development at
b. YARD CHARGES:
i. Every month AAGL will get 5 % of the gross expenditure on the project in that
month as “YARD CHARGES”. Ex if the DIRECT COST in a particular month is
Rs 10 Cr then AAGL will get Rs 50 Lakh as YARD CHARGES.
3. Responsibility of AAGL: Following will be provided by AAGL:
i. Salary and other expenses of AAGL staff except of the dedicated team made for
ii. Yard facilities like storage facility, power, existing crane etc.
iii. Technical and overall supervision.
iv. Selection of vendors/ contractors
4. Advances payments
a. The advances received from the buyer will be termed as “ADVANCES”.
b. All the advances will be against the BG from AAGL.
c. This amount will be deposited directly in an escrow account to be created for the
operation of this arrangement.
d. All the advances will be at an interest of 10% per annum.
5. COST OF FINANCING : The cost of finance will be calculated at a simple interest of 10% per
annum for the advances received from the OWNER.
6. Calculation of NOTIONAL PROFIT:
a. The actual subsidy received on this project will also be included in the PROFIT.
b. Mathematically :
i. YARD CHARGES = 5% of DIRECT COST--------- to be given to AAGL
ii. ADDITIONAL FUNDS = The funds that AAGL will ask the OWNER to provide in
case it falls short of the funds after exhausting the existing credit facilities for this
iii. COST OF FINANCING = Simple interest @10% per annum on ADDITIONAL
FUNDS------------ to be reimbursed to OWNER at the time of calculating the
iv. NOTIONAL PROFIT= NOTIONAL SELLING PRICE + Subsidy- DIRECT COST-
YARD CHARGES – COST OF FINANCING
7. Sharing of PROFIT:
a. The NOTIONAL PROFIT will be shared as per the percentage figures offered by the
bidder in the bid document.
b. Since the delivery of the individual vessels will be staggered the respective share of the
AAGL will be calculated as per the accounting procedures and will be given to AAGL. For
the fourth vessel the profit sharing will be at the actual figures.
8. Selection of the OWNER:
a. The OWNER will be selected through a competitive bidding process.
b. The bidder will have to accept all the conditions fully and unconditionally.
c. The interested bidders will have to bid for two figures:
i. NOTIONAL SELLING PRICE ( With minimum of $ 25 Million)
ii. ASP (AAGL’s share of profit ), with minimum of 50%
d. The bidder for whom AAGL EXPECTED INCOME , as calculated by the following
formula, is highest will be chosen as the successful bidder.
AAGL EXPECTED INCOME = 5% of $ 20 Million + ASP% of (NOTIONAL SELLING
PRICE + SUBSIDY - 110% of $ 20 Million)
Note: The DIRECT COST has been assumed to be $20 Million per vessel and the COST
OF FINANCING has been assumed to be 5% of the DIRECT COST. The actual figure
may vary in reality but since these are the best guesses at this point of time they have
been assumed to arrive at H1 party without any ambiguity.
i. Let us assume that
1. NOTIONAL SELLING PRICE = $25 Million
2. ASP= 50%
1. AAGL’s expected profit= (5% of 20+0.5*(25+ 4.09 – 110% of 20)) or
9. EMD: An amount of $2 million ( for the four vessels) will be kept as EMD. The same will be
treated as part of initial payment but bank guarantee given will be with the condition that it can be
en-cashed only after delivery of first vessel.
10. Status of subsidy for the project:
a. The scheme announced by GOI was for 5 years i.e. up to August’2007.
b. The subsidy was to be calculated at a rate of 30 % of Contarct Value or reasonable price.
c. This was a negotiated contract hence the subsidy was to be calculated on the
Reasonable price as to be decided by PRC. The Reasonable Price as decided by PRC
was Rs 234 Cr.
d. Application for claiming subsidy for 4 vessels ( 12,800 dwt Tankers ) was filed on
16.11.2006. This is much earlier than closing date of the scheme i.e. August ‘2007.
e. Yard has resubmitted a request for in principle approval for Rs 70.26 Cr as the claim for
subsidy to the ministry on the basis of cost decided by PRC.
f. The submission of price reasonableness certificate issued by “ price reasonableness
committee ( PRC ) “ ,DGS , Mumbai was also submitted to the Ministry on 24 July 2007.
This is also well before the closing of the scheme i.e. Auguest’07. Letter / certificate
issued by PRC dtd.23rd July 2007 enclosed for reference.
g. Accordingly for the purpose of this agreement we can assume the subsidy as $ 4.09
Million per vessel.
h. The above information is being provided as per the records available with AAGL and the
same will be provided to the bidders on demand. The bidders are requested to verify the
correctness of the documents themselves. AAGL also does not take any legal
responsibility of the opinion stated above regarding the admissibility or otherwise of the
i. The bidders are requested to take calculated risk after taking legal opinion based on the
j. Since yard had taken the order when the scheme was in force and the yard has
submitted all the papers and formalities well within time and no objection has been
received from the ministry AAGL strongly believes that the entire money is legally due to
AAGL. But AAGL does not guarantee that the subsidy amount as stated above will be
11. Operation of the agreement
a. Since even during the operation of the contract there will be need of close interaction
between OWNER and AAGL and it may not be possible for OWNER to remain physically
present , he can for his own convenience appoint someone as OWNERS
b. OWNER can delegate any or all power to their representative but this will not dilute its
contractual responsibility of OWNER in any way.
12. Operation of accounts:
a. AAGL and OWNER will open an escrow account and will be operated jointly.
b. Since the BG of the advances will be given by AAGL the ownership of all the money will
remain with AAGL.
c. In case the BG’s are invoked the account will cease to be Joint account and will
automatically become Singly Operated account in the name of AAGL.
d. The subsidy amount if received will be deposited in above account if the BG is not
invoked at the time of receiving the subsidy.
13. Selection of vendors and contractors:
a. The selection of vendors / contractors will be done by competitive bidding process.
OWNER representative can remain present at any stage of selection of sub-contractors
and vendors. But the final selection of vendor / contractor will be done as per the
prescribed rules of the company.
b. If OWNER wants all the high value purchases will be done through e-tendering. OWNER
will be provided a view password subject to technical feasibility.
14. Initial payment:
a. To close the contract with the original owner AAGL has to pay the advances paid by the
Sea Tankers for this project along with an interest of 6%.The OWNER will pay this entire
amount due to the banks within 15 days of finalization of the agreement.
b. A detailed analysis will be done later on jointly by both partners regarding the expenses
made so far in this project. If it is found that some of the expenses have been done apart
from what is envisaged in the “DIRECT COST” the same will be put under “YARD
c. If such “YARD CHARGES” exceeds more than 5% of the “DIRECT COST” then the
same will be treated as additional payment to AAGL and will be charged at a rate of 12%
per annum. It will be adjusted with “YARD CHARGES” in subsequent months.
d. If such “YARD CHARGES” comes out to be less than 5% of the “DIRECT COST” then
the difference will paid to AAGL as per the provisions of this agreement.
e. If such “YARD CHARGES” is not paid by the OWNER within 15 days then an interest of
12% per annum will be charged additionally.
15. Exit clause:
a. Both partners can short close the agreement only with mutual agreement except
otherwise as mentioned in this document.
b. In case of change of ownership of AAGL the changed owner will have right to terminate
the agreement after refunding the entire amount provided by the OWNER. In addition to
this an interest, calculated in the way it is calculated in a nationalized bank with an annual
rate of 16%, will also be reimbursed.
c. AAGL will also have right to terminate the agreement in case the fund flow is less than
80% of the ADDITIONAL FUND requirement of the month as projected by AAGL, for two
consecutive months. In such a scenario AAGL will have right to terminate the agreement
after refunding the ADDITIONAL FUND received from the PROJECT PARTNER as
defined in this document. COST OF FINANCING will be refunded to the PROJECT
PARTNER at a simple interest of 6% per annum.
16. Project execution and monitoring :
a. A dedicated project management team will be formed with mutual discussion. The
personnel and their salary will be decided jointly by AAGL and the OWNER. Their Salary,
perks, travel and other charges will be included in the DIRECT COST as defined in this
b. Full Technical powers will be delegated to the Project Leader heading the team but no
financial power will be delegated. The financial decisions pertaining to these vessels will
be taken strictly as per the AAGL rules.
c. A web based project monitoring system may be established. A copy of all the
correspondences with the vendors can be sent to OWNER. Wherever needed OWNER
can suggest in any decision pertaining to these vessels.
17. Status of the project:
a. Engine for one vessel is already with us whereas for second vessel the LC has been
issued and it is also likely to arrive at yard shortly. The firm order for other two engines is
b. Other critical machines for first two vessels are either ordered or already with us.
c. Material etc is already with AAGL.
d. Paint envisaged is epoxy but is still not done and there is a possibility of changing it to
marine grade to make it suitable for other products.
e. Design issues are already over.
f. Hull construction for first two vessels is around 50% and 40 % over .
18. Clarifications: Following clarifications are being made to avoid any difference in opinion in
interpretation of the above conditions:
a. The cost of Salary , perks, travel charges will be borne by the partner to whose rolls the
person belongs even if he is working or undertaking any activity exclusively for this
b. The status of the progress and subsidy is being mentioned without any legal
commitment. The OWNER is expected to verify the information himself at his own cost.
c. The OWNER will be reimbursed the interest on the advances provided by him as
specified in this document. Apart from this all other charges for arranging the funds at his
end will be borne by the OWNER. The same in no way will be included in DIRECT
Some possible questions and their answers
1. What is the Benefits to owner:
a. Owner will get first vessel by DEC 2009 and subsequent vessels every three months
b. Monetary benefit:
1. Direct cost = $ 20 Million
2. Subsidy is received as per the earlier “Reasonable Price” ie $ 4.09
Million per vessel.
ii. The cost of financing per vessel amounts to 5% of the direct cost.
iii. In such a scenario:
1. The notional direct profit for OWNER
a. = 50 % of (25 + 4.09 -5 % of 20- 5% of 20- 20)
b. = 50% of $ 7.09 Million per vessel
c. =$ 3.54 Million per vessel
iv. So effectively OWNER lands up getting the vessels at $21.5 million per vessel
and make a neat profit of $3.5 Million per vessel assuming the selling price at
v. If owner is able to sell the vessel at $ 26 million then you make additional profit of
$1 million per vessel.
vi. This is net profit as the cost of financing @ 10 % per annum is already being
reimbursed. For the above calculation is has been approximated to 5% of the
direct cost. If this money is also included in return then the returns comes out to
be $ 4.54 per vessel.
vii. Out of this even if you share $1 million with your representative then also you are
making a good money.
viii. We are not rigid about the figures and all the figures mentioned can be changed
to accommodate the concerns of the three parties.
2. Who was the original owner and why did they close the contract
a. The original owners of these vessels were Sea Tankers of Norway
b. Officially they have not specified any reason for closing the contract and the contract is
being closed on mutually agreed terms.
3. What were the problems and why it led to a situation that the owners had to close the contract
a. When the order was taken the scheme of subsidy was in place and the costing, cash flow
and credit facilities were taken considering the subsidy admissible.
b. Unfortunately the subsidy was not received because of some problem at the Ministry of
Shipping and Transport, Government of India.
c. At the same time there was a move to disinvest the company and the attention of
management got diverted on that process.
d. Unfortunately the bids could not qualify on technical grounds and no decision to disinvest
or otherwise could be taken by GoG.
e. The problem was compounded by the fact that there was a huge demand for technical
persons in this sector. Because of the uncertainty of the future of the company coupled
with huge market value there was a mass exodus of good technical persons.
f. This led to some delay in the project.
g. Because of the delay our bankers our bankers got jittery and they started dragging their
feet and were reluctant to provide even the already committed facilities.
h. With no subsidy in sight and delay in the project the Bankers based on their set norms
decided not to support the project further at the prevailing selling prices.
i. Accordingly the Sea Tankers were approached but they decided to cancel the contract
without specifying any reason. It is not possible to specify the reason for this decision but
we believe that it is done mainly on grounds of principle and probably they do not want to
start bad precedent. If they do so their other clients may also ask for similar demands.
4. How one can be sure that these problem will not be get repeated?
a. The competency of any Ship yard mainly depends on the competency of the senior
management. Any Shipyard or for that matter any organization is bound to some problem
or other at some point of time. It cannot be avoided. The main point is that whether the
senior management is willing to or is capable of finding a way out or not. On this account
there is perceptible change from the past.
b. Learning from the experience and going into the detail of the problem GoG and the AAGL
board has already taken lot of decision. Lot of powers have been vested with MD and this
has led to quick decision making.
c. Lot of experienced and energetic people have joined the company. The company has
also revised the salary structure to a great extent and is matching the market values.
d. The yard is a totally changed yard and has all the steps needed to avoid such a situation
e. Apart from this the whole concept of the arrangement proposed is devised in such a way
that it takes care of all the possible problem quite efficiently.
i. Technical competency:
1. Full technical powers have been vested on the technical team to be
formed for the execution of this project. This takes care of the concern of
the technical competency. Where ever the OWNER feels that the
technical team is weak he can get it augmented as per his wish.
ii. Financial issue:
1. It was never a case that the bankers did not have faith in the profitability
of the project. They were convinced with the ultimate profitability. The
only problem was that whether AAGL has enough cash to meet various
stages or not? And if there is a gap how to take care of it? It was not
possible for them to take risk beyond the acceptable level as per the RBI
2. With the proposed arrangement since the OWNER will be filling this gap
the banks would be willing to support AAGL to the extent possible.
5. AAGL is not willing to delegate any financial power to the technical team. Being a PSU will it not
delay the process of decision making?
a. It is true that AAGL is not willing to delegate any financial power to the technical team but
we can assure you that this will not lead to any undue delay on following grounds.
i. All the major equipments and contracts have already been ordered/ awarded.
Hence the quantum of decision making is not much.
ii. Over the last few months the tendering process and the subsequent decision
making has become considerably fast. All the tenders are being worded in
unambiguous way and all the terms and conditions are being indicated
beforehand. This is leading fast decision making.
iii. So it is not that being a PSU the decision making has to be slow. With clear
intentioned management and with competent “OWNERS” there is no reason we
cannot finalise any tender within two weeks.
iv. The fact that AAGL is a PSU and is bound by certain set of rules and procedure
cannot be denied. Any effort to circumvent this procedure will eventually
complicate the situation and lead to a loss making situation for everyone. The
best course would be to accept it and find the most efficient way of working with
it. And this is definitely possible. AAGL is willing to agree to any modalities as
long as it does not violate CVC guidelines.