Sectoral Study of Shipbuilding in Bangladesh by ZaheedHussain

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									                      Sectoral Study
                                of
     Shipbuilding Industry in Bangladesh
including the Feasibility Study for 10,000 dwt
                   Capacity Shipyard




                            Prepared By:

               Engr. Zaheed Hussain (BSc.BE Mech)

                          Dr. Abdur Rahim

 (Associate Professor, Naval Architect and Marine Engineering, BUET)
                                                 Table of Contents

1.0 INTRODUCTION ...................................................................................................................... 3
2.0 GENERAL MARKET SITUATION IN SHIPPING ................................................................. 5
    2.1 POSITIVE OUTLOOKS ................................................................................................................. 5
    2.2 HIGHLIGHTS IN THE SHIPBUILDING MARKET ............................................................................... 6
    2.3 SHIPBUILDING INDUSTRY OF CHINA ........................................................................................... 9
    2.4 SHIPBUILDING INDUSTRY OF VIETNAM ..................................................................................... 10
    2.5 SHIPBUILDING INDUSTRY OF INDIA .......................................................................................... 11
    2.6 THE BANGLADESH SCENARIO .................................................................................................. 12
       2.6.1 Bangladesh entering into global shipbuilding.................................................................. 13
       2.6.2 Promoting shipbuilding in Bangladesh............................................................................ 15
3.0 SHIPBUILDING PROCESS IN RECENT TIME ................................................................... 17
    3.1 BACKGROUND ........................................................................................................................ 17
    3.2 INNOVATIVE METHODS OF SHIPBUILDING ................................................................................ 17
    3.3 THE SHIPBUILDING PROCESS ................................................................................................... 18
    3.4 PREPARATION FOR PRODUCTION.............................................................................................. 19
       3.4.1 Design and engineering – two steps ................................................................................ 19
       3.4.2 Production Planning....................................................................................................... 19
       3.4.3 Procurement –three main areas ...................................................................................... 19
       3.4.4 Prefabrication ................................................................................................................ 19
       3.4.5 Block Assembly............................................................................................................... 20
       3.4.6 Grand Blocks.................................................................................................................. 20
       3.4.6 Hull Erections ................................................................................................................ 21
       3.4.7 Completion and Testing .................................................................................................. 21
    3.5 NEW SHIPYARD PLANNING PROCESS ....................................................................................... 21
    3.6 NEW SHIPYARD DEVELOPMENT PROCESS ................................................................................ 22
    3.7 STUDY FLOWCHART ................................................................................................................ 22
4.0 OVERVIEW OF THE SHIPBUILDING PROCESS............................................................... 23
5.0 SHIPYARDS IN BANGLADESH ............................................................................................ 25
    5.1 PRODUCTION BASE .................................................................................................................. 27
    5.2 FEASIBILITY STUDY FOR 10,000 DWT CAPACITY SHIPYARD ...................................................... 28
       5.2.1 Capacity and Product Mix .............................................................................................. 28
       5.2.3 Technology Factor.......................................................................................................... 28
       5.2.4 Land and location........................................................................................................... 29
       5.2.5 Building.......................................................................................................................... 29
       5.2.6 Proposed Machinery (Local & Imported) ........................................................................ 30
       5.2.7 Installation and Machinery ............................................................................................. 31
       5.2.8 Operation of Machinery (Plant) ...................................................................................... 31
       5.2.9 Auxiliaries and Utilities .................................................................................................. 32
       5.2.10 Raw Materials .............................................................................................................. 32
       5.2.11 Transportation.............................................................................................................. 32
       5.2.12 Furniture and Fixtures.................................................................................................. 33
       5.2.13 Quality Control............................................................................................................. 33
       5.2.14 Repair and Maintenance ............................................................................................... 33
       5.2.15 Stores and Repairs........................................................................................................ 33
       5.2.17 Residue and waste disposals.......................................................................................... 34
       5.2.18 Technical and managerial personnel and labor ............................................................. 34
       5.2.19 Construction Schedule .................................................................................................. 35
6.0 CONCLUSION ......................................................................................................................... 35




                                                                                                                                                2
1.0 Introduction

Shipbuilding is an industry that most developing countries strategically choose
as a long term development plan. 80 per cent of the world shipbuilding
activity has shifted to Asia, mainly Japan, Korea and China. There has
been increase in demand for container ships due to containerization of the
cargo, especially dry bulk. IMO regulations of banning single hull tankers have
created a demand for new double hull tankers.

Bangladesh is also considering development of shipbuilding industry as a part
of governmental plan. The government is going to develop a National
Maritime Development program with a vision to make Bangladesh a
leading player. A draft policy for the maritime sector is being formulated to
give a boost to all maritime sectors, including shipbuilding and ship repair.

Implementation of tonnage tax regime in shipping has created demand
for new ships and marine vessels. Due to recent government policies,
private shipyards, especially small and medium-sized shipyards, have
been able to procure substantial orders, both domestic and export.
There has also been considerable interest in the private sector to invest
in shipyards, which has emerged as a good investment opportunity.

Bangladesh shipbuilding has just not been able to cash in on this trend even
though its wage structure as well as available technical expertise,
geographical location, etc., should have made it one of the major
players. With the government support to the shipbuilding industry, it is
expected that it will not be very difficult to compete with foreign counterparts.

Presently, Bangladesh's strength lies in construction of small and medium
size ships. Bangladesh should become a destination for the world's
requirement of small and medium size ships and marine vessels. Bangladesh
with its intellectual capital should become a centre of excellence for
design and research and development for the world shipbuilding industry.

Shipbuilding is a capital-intensive process that requires extensive resources.
It is labor-intensive because it requires a skilled workforce who has
experience in mechanics, electronics, electrics and steel engineering. Its
technology also has the convenience to transfer to more complicated
industries, strong chance to induce more development, and the great
advantage of providing many jobs and generating hard currency. Because of
these powerful impacts on a nation’s industry, shipbuilding has often been
one of strategic long term development plans among developing countries,
and this is not an exception for Bangladesh.




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Shipbuilding, not only requires high technology but is also a very labor
intensive process requiring highly skilled workers. In order to develop a skilled
workforce, Bangladesh implemented a governmental industrial policy which
emphasized workforce training. As a result of training, Bangladesh has
developed skilled welders, pipe-fitters, electricians and other labors suitable
for shipbuilding or other industries. Competitively, Bangladesh is well
prepared to enter other industrial markets. When it comes to well educated
professionals, Japan, once a dominant country in the shipbuilding industry, is
today ranked third behind South Korea and China. Japan produces only 300
graduates annually from six educational institutions. Of these graduates, only
21 % of them are working in shipbuilding industries. In contrast to Japan,
South Korea and China, Bangladesh has a strong supply of marine
engineering graduates. More than 60% of these graduates are working in the
shipbuilding or related fields abroad,

With rising labor cost shipbuilding have slowly moved away from “high wage”
countries to countries with a lower wage structure. Therefore, we have
observed the decline of shipbuilding capacity in Europe coinciding with the
growth of Japanese shipbuilding in the past. However, with rising labor cost in
the late 1980s, Japan was forced to scale down its shipbuilding activities and
Korea emerged aggressively. As per latest reports, China is taking away an
increasingly larger market share of the new building contracts.

Since 2000, South Korea has kept the leading position in the industry and
seems to be dominant until in the middle of the 2010’s. South Korea’s biggest
strength is design capability and technological superiority which should enable
them to promptly reflect customer needs. In addition, a relatively abundant
workforce, openness to innovation, strong R&D investment and the
development of the related industries will also play key roles to remaining
competitive in the industry.

Meanwhile, China has become the second largest shipbuilder in the industry
since 2006. A China’s soaring economic growth has been a big push for the
shipbuilding and related industries as well. As of January 2007, China has
51% orders place worldwide, which includes an 81% share of the low end
vessel mark China is now threatening not only South Korea but also all
shipbuilding countries with price competitiveness, aggressive capacity
expansion and technological cooperation with western countries.




                                                                               4
2.0 General Market Situation in Shipping
Shipping has experienced good times since 1997. Most shipping sectors have
been going through an expansion rarely seen before, especially in the
segments of container, LNG and cruise shipping. At the same time, order
books have been well filled for most of the shipyards worldwide and an
expansion of shipbuilding capacity has been ongoing, first in Korea and now
in China. Even major European cruise shipbuilders have nearly doubled their
capacity during the past few years.

Shipping and shipbuilding cycles, of course, depend very much on the world
economic situation and consumer behavior, but also on more specific
developments such as oil consumption in the Western world, automobile
industry production patterns, paper consumption, leisure market and holiday
spending, etc. However, shipping and shipbuilding tend to accelerate these
cycles.


2.1 Positive Outlooks

LNG demand is expected to increase, as shown in figure 1.1.




                        Figure 1.1: World LNG Tanker Production


With environmental issues getting more attention, demand for cleaner energy
arises and is expected to boost more orders of LNG carriers steadily for
years. As of today, South Korea is the dominant nation that produces and has
the most advanced technology to build LNG carriers. Capturing nearly 78% of
world orders, South Korea is strategically emphasizing LNG carriers based on
higher technology, shorter construction periods and highest credibility.



                                                                          5
China has also made inroads in LNG carriers and in the long run, plans to
lead the market. Hudong Zhonghua, Jiangnan Changxig, Nantong COSCO
KHI, and Dalian New Shipyard, all have LNG carrier building ambitions. As
LNG requires advanced technology and more man hours per DWT to build,
China’s strategy for LNG carrier production is to build LNG for its own
domestic supply before they embark on competing in the international market
with South Korean and Japanese peers (Gabe Collins).



2.2 Highlights in the shipbuilding market

Order activities of the world’s shipping industry in 2006 are tremendous. As of
July 1st 2006, 5,305 ships totaling 273.4 mill dwt (deadweight tons)
and 118.7 mill cgt (compensated gross tons) were on order. Compared to
figures at mid of 2005, this is an increase of 20.6 per cent, with respect to dwt
and 20.5 per cent in terms of cgt. Orders for tankers are as high as never
before in the past 30 years. As of July 1st, 2006, 2,061 tankers equivalent to
136.9 mill dwt were on order. This is an increase of 37.0 per cent compared to
figures of July 2005 (dwt). During the past four quarters, 830 tankers totaling
46.2 mill dwt were placed in the order book.

In 1987 the total order book stood at 21 mill gt whereas it counts 187 mill gt
(Gross tons) today. Within the latest three months the order book increased
by 10 mill gt. New orders contracted between April and June 2006 sum up to
853 ships and 18.1 mill gt, being a little less than the total order book 20 years
ago. From day to day it becomes more difficult to find the justification for
building so many new ships. The tonnage on order now represents already a
high percentage of ships in service; it is 34 per cent of the tanker fleet, 20 per
cent of the bulk carrier fleet, 46 per cent of the container fleet and 28 per cent
of the total fleet.
Currently, there has been a boom in shipbuilding industry across the world.
The current boom in the shipbuilding industry started in 2002-2003 and has
expanded so fast that the yards were taken by surprise. Order books started
spiraling and the owners were finding it difficult to get to yard to receive
orders.

Demand for new orders has spiraled in the recent years because of several
reasons:

1. Newer regulations have made it almost impossible to have the older ships
   upgraded and thus have to be replaced by newer ships.
2. Increasing price of fuel have made shipping business extremely
   competitive and older energy inefficient ships are finding it increasingly
   difficult to sustain in the business.
3. Globalization has lead to increase in the international shipping. For
   example, trade between the Eastern and Western Europe has increased
   several folds because of expansion of European Union and deregulation.



                                                                                6
Although, China is currently a major shipbuilding nation but with labor cost
going up the country is shifting its role from small sized to medium and large
sized ships. Vietnam is also moving fast as a shipbuilding country. In fact,
emergence of Vietnam is largely a result of efforts by European countries like
Denmark to relocate their shipbuilding industry to low labor cost countries, a
train Bangladesh has missed because of dishonest political leadership. The
fact is known to many in Bangladesh and also in other parts of the World.
India is another rising giant in shipbuilding industry and receiving orders worth
hundreds of millions of dollars.

The demand for shipbuilding presently greatly surpasses the capacity of the
shipyards. As a result shipbuilding capacities are rapidly increasing fast in the
China and also in Vietnam.

The figure 1.2 below shows the current demand-supply gap in the
international shipbuilding market. It also show that ships deliverable in 2008
was still not ordered. Ships are delivered 12-18 months from the date of
signing of contract. The duration depends upon the size and complexity of the
ship, where the ship is being built etc. This means that the vessels will not be
available when desired by the owners. The actual situation is, in fact, more
severe. In the current overbooked market, shipyards are signing contracts
much in excess of their actual capacity. This will inevitably result in delayed
delivery and the owners are well aware of the future. Still, they accept the
reality and the option of signing now at an overbooked yard is better than not
signing at all.




           Figure 1.2: The current demand-supply gap in the international shipbuilding market


About 12% the demand deliverable in 2008 and about 22% of 2009 will
remain unordered. The situation for the subsequent years is even worse.
Because of the overbooking at the yards, the actual situation will be worse.
Thus a wide gap between capacity and demand will remain for quite some
years more.


                                                                                                7
A status report on the Chinese shipbuilding industry is available at the same
website. A review of the document will reveal that there are many Chinese
shipyards that are yet to be ready for production but have already signed
contracts till 2011. This is another clear indicator of the huge demand supply
gap in the industry.

Bangladesh has the potentially of utilizing this opportunity because of several
distinct advantages:

•   Availability of low cost manpower.
•   Availability of a large pool of welders and technicians from the local
    shipbuilding industry.
•   Ability of the workforce of Bangladesh to learn quickly.
•   Brave entrepreneurs etc.

In fact, the shipyards in Singapore are largely manned by the Bangladesh
workforce and they are liked by their employer because of good skill and
dedication. In fact, being a country heavily dependent on ships for inland
shipping as well and the large size of the inland shipbuilding industry,
Bangladesh should have been the forerunner in the international market,
especially in the booming scenario. At present, there are only two shipyards in
the country which is capable of catering international orders:

•   Ananda Shipyard and Slipways Ltd. located in Narayanganj on the River
    Meghna.
•   Western Marine Shipyard Ltd., located in Chittagong on the River
    Karnaphuly.

Both yards are full of international orders and booked of the next 4 years and
still receiving inquiries from overseas buyers. It is only the land available with
them that has prevented them from further exploiting this opportunity. There
exists an opportunity for a much bigger role for Bangladesh to play in the
shipbuilding industry. Other local shipbuilders, Highspeed Shipbuilding and
Heavy Engineer Company Ltd. have also recently signed contracts for
building ships for European buyers.

In this background, it is imperative that the Government plays the necessary
supporting role in the matter. There is a need for a thorough assessment of
the prospect in the current scenario, identify the measures to be adopted and
the support to be provided, evaluate the competitors’ as well as own strengths
and weaknesses in short, medium and long term perspective.
A review of the status of the competing countries is presented here followed
by status of Bangladesh. Finally, few steps are recommended to facilitate
tapping the potential of the country in the sector.




                                                                                8
2.3 Shipbuilding Industry of China

China is currently a major shipbuilder in the world. The country is now
dominating in the small and medium sized container and cargo ships and
slowly entering large ship building market.

The strengths of the Chinese shipbuilding industry are:

• The shipbuilding industry is benefiting from the strong industrial and
communication infrastructure the country has developed in the recent few
decades.
• Being a strong economy, fund available is easier for the entrepreneurs for
setting up a new industry. This is reflected by the large numbers of shipyard
set up in the recent years in the private sector as detailed in the report
referred to above. Banks are extending funds for the purpose.
• China is a country with the highest population in the world. Obviously,
manpower availability is easy and wages are low compared to many countries
with as strong economy as China.
• Implementation of a shipbuilding project requires support from bank.
Unlike other manufacturing industries, shipbuilding contracts are executed
mainly from advances received from the owner in phases, right from signing
of the contract. The advances are paid against bank guarantees and the
owners insist on guarantees issued by a first class international bank.
Because of size of the economy, the owners are happy with guarantees
issued from many Chinese banks. Also, first class foreign bank are more
comfortable working with Chinese companies making business easier both for
the buyer and the shipyard.
• China has a large industrial base and many machinery and equipment
used in ships are produced in the country. Direct and indirect costs as well as
time required for procurement is less and this favors the shipyards in being
competitive both in terms of time and money.
• With growth of the economy, Chinese companies are investing in shipping
business and they order ships with Chinese shipyards. Similarly, China has a
strong influence in every segment of the regional market and the benefits are
derived by the shipyards as well. Because of the rapid growth, China is
revered in the world economy and Chinese industries have earned stronger
credibility compared to its other competitors in the shipbuilding sector.
• China is also expanding her R&D activities in ship design and shipbuilding
sector and that will be yielding benefits for the industry for quite some years to
come.
• Services ancillary to the shipbuilding industry, especially detailed design
market is being gradually taken over by the Chinese design houses from
European ones. This is increasing the competitiveness of the Chinese
shipbuilding industry.




                                                                                9
However, the Chinese shipbuilding industry has it own weaknesses as well
which are:

• China is experiencing a rapid economic growth and this will inevitably
increase wages, a major input in the shipbuilding. It may be recalled that it is
the labor cost factor that has resulted in shipbuilding industry to migrate from
one country to another. As a result, China will be moving from small to larger
ships, from simple to complex ships in the near future.
• China is currently a growing economic strength but in some cases, her
strength is her weakness. In the current market, ships owners perhaps have
no choice but to go to China since they have no alternative. Although Chinese
society has a tradition of entrepreneurship, but the current demand has made
most of the Chinese shipyard conceited in dealing with the owners. They are
responsive towards owners’ instructions and desires. The owners are not
really happy and as soon as alternatives are available, they will be giving a
second thought.


2.4 Shipbuilding industry of Vietnam

Vietnam is an emerging power in the shipbuilding industry. Although starting
in early 2000’s, the country has made enviable advances in the sector.
Support from development partners like Denmark worked as the stimulant, an
opportunity missed by Bangladesh.

The strengths of the country in this sector are:

• The country has already gathered good experience as a shipbuilder
building vessels as large as 50,000 DWT.
• With the advances in the shipbuilding, industries and services ancillary to
shipbuilding have grown in the country. This is expected to grow further in the
near future and it will have a positive cascading effect on shipbuilding
industry.
• The country has already been identified as a shipbuilding hub. There is no
question of credibility of Vietnam as a shipbuilding nation.
• Although, the country is posting healthy growth for the last few years, there
is little possibility that the labor cost will increase anytime soon to scale that
will render the shipbuilding industries uncompetitive in the global market.
• The Vietnamese government is extending support to the sector. As an
example, to ensure smooth supply of steel to shipyards, the Government of
Vietnam is planning to set up a steel production plant in the country with
Chinese collaboration.




                                                                               10
The weaknesses of the country in shipbuilding are:

• The technology in Vietnamese shipbuilding is still rudimentary
characterized by low efficiency, poor quality and weak management.
• Knowledge of English is very poor in Vietnam and thus a language barrier
exist hampering communication.
• Vietnam does not have strong education or R&D facilities in the field of
ship design or shipbuilding. However, skill development programs are
available.
• Banking sector is still weak to deal with transactions worth millions of
dollars of payment from the owner and import worth same scale.


2.5 Shipbuilding Industry of India

India is an emerging nation in the shipbuilding industry. It is, however, an
irony that a country with such a strong infrastructure, high management skill
and huge manpower available, the country was so late in entering the race.
At present, the country possesses the following advantages in the
shipbuilding industry.

• India is a big economy and thus the shipbuilding industry enjoys the
benefits of scale.
• The Indian government offered a subsidy for export shipbuilding for 10
years which has already expired. However, re-introduction of the subsidy is on
cards. The shipyards are thus better poised in the competitive world.
• The country is quite advanced in technology and managerial and the same
can be utilized in shipbuilding.
• Being a big country with a large economy, India has a good acceptance in
the international market and thus the entrepreneurs will not find it difficult to
obtain credibility with the buyers even as a new shipbuilder.
• Indian banking sector is also large and thus funding for any industrial
enterprise is available. It may be recalled that shipbuilding is a capital
intensive as well as labor intensive industry. Banking service for shipbuilding
requires guarantees to be issued by banks acceptable to the foreign buyers.
There are Indian banks with global standing. This is an advantage to Indian
shipbuilding industry.
• India is a country with quite advanced R&D facilities and activities in many
fields. Ship design and shipbuilding is not an exception. This will help the
Indian shipbuilding industry to be more efficient and market responsive.
• Although a late comer in the commercial shipbuilding, India has a good
experience in building naval ships. The country has its own frigate class, the
‘Giri’ Class. The country is also contemplating or working on building
conventional diesel electric submarine and attack carrier. The experience will
be an added advantage to the shipbuilding industry.




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The country possesses some weaknesses in the shipbuilding. These are:

• The country is yet to emerge as a major shipbuilder.
• Although, India has a large population but availability of high skilled
construction labor is not so high. There are abundant white and blue collared
professionals and a large population of ‘very poor’ but little in-between. It is in
between these two extremes that skilled people for shipyard come from. In
fact, the shipbuilding industry in India is already largely manned by workers
and technicians from Bangladesh.

The country has experience rapid economic growth. This will result in thicker
concentration of white and blue collared professionals. Wages will increase
and getting skilled workers for shipbuilding may become difficult. With labor
coming from Bangladesh, country like India may not be able to maintain the
competitive edge.


2.6 The Bangladesh scenario

Considering the development of shipbuilding in other countries, Bangladesh
has to take the challenge of entering the shipbuilding industry. The potential
strengths and weaknesses must be identified for the better understanding of
the prospects of shipbuilding industry in Bangladesh.

The strengths of the country in the sector are as follows:

• Bangladesh has a quickest learning workforce perhaps in the entire world.
Thus, they are in high demand in countries like Singapore. They are diligent,
hard working, and intelligent and dedicated. Right wages in due time is only
they ask for.
• In addition to the skilled labors, shipbuilding requires efficient foremen and
engineers. Again, Bangladesh can boast to have these skills as well.
• Bangladesh has a large inland shipbuilding industry. Although the workers
are not to the international standard, it will take little to elevate these welders
to international standard, an advantage available with no other country.
• In the recent few years, the country has experienced many bright
professionals emerging in industries and business houses equipped with
modern tools. Shipbuilding is a complex function and a successful
shipbuilding required a good planning exercise to ensure that every element
of the ships is built not only perfectly but also in a coordinated sequence.
Management professionals and engineers of the country are quite capable of
performing the same with some training or education.
• The professionals of the country possess better skill of communication
compared to many competing countries, especially China and Vietnam. This
will help smooth interaction with the ship owners and impressing the owners
will be easier.




                                                                                12
• Although the industrial entrepreneurship history of the country is recent,
but the entrepreneurs have demonstrated extraordinary capability in this job.
Most of the entrepreneurs of the country are first generation businessmen and
they have risen to a level which can perhaps not be seen in any country of the
world, rich or poor. This skill and courage will facilitate in taking Bangladesh to
the centre stage of shipbuilding in a span of 5-10 years.

The weaknesses of the country in this respect are as follows:

• Shipbuilding has not yet been identified as a potential industry. Policy
planners, government officials, bankers are not generally aware of the sector
and the potential. However, lately things appear to have started changing.
• Being a poor country, there is always a dearth of capital, especially when
the scale of investment is to the tune of 50-100 crore. The risk is considered
to be too high both for the entrepreneur and the banker.
• Because the industry is not understood by the bankers, the usual
response to such investment proposal is lukewarm and is treated in the same
format as in the case of other exportable such as garments industry. Thus
banking support that the shipbuilding sector enjoying in the current policy is
poor by shipbuilding industry standard.
• In many countries including China and India, shipbuilding industries have
enjoyed state subsidies in the incubation stage. No such support is available
in Bangladesh. Shipbuilders in the country complain that this is like a newborn
being pushed to fight with a young man.
• In one way, shipbuilding industry is similar to the ready made garment
industry in that all raw materials are imported and the local industry puts these
components together. However, the shipbuilders are not allowed to generally
duty free import of the pieces required for building ships. Applications for duty
free import are dealt on case to case basis. This creates difficulties for the
shipbuilders and results in cost as well as time overrun. Moreover, the
customs officials deal with shipbuilding materials in the same manner as they
deal with garments industry. But the number of items in shipbuilding is
enormous compared to the garments where the list is very short. Although,
unlike the garments industry, there is no opportunity to sell the imported items
in the local market, the customs officials are just careful and try to go by the
rules creating difficulties for the shipbuilder.


2.6.1 Bangladesh entering into global shipbuilding

There is a general consensus that shipbuilding industry presents both an
opportunity and challenge to Bangladesh. In this background, the government
must take up actions and programs for necessary support to the sector.
Before deliberating on the same, it will be useful to discuss the requirements
of the industry.




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The shipbuilding industry is characterized by the following features:

• It is a capital intensive one. Typically a shipyard consuming 10,000 tons of
steel annually (usual index to denote the size of the shipyard) is Tk. 50 crore
excluding the land. Typically, the yard will be able to produce 4 units of 10,000
DWT vessels. However, for bigger vessels, dry dock will be required and the
investment will exceed 100 crore. In spite of many attempts of automation, the
shipbuilding industry has remained heavily dependent on labor. Thus to
ensure quality, the labor has to be highly skilled.

• Ships are built under international standard. The agencies appointed for
quality assurance of ships are called the ‘classification societies’. The quality
assurance starts on day 1 of the designing process and each and every item;
machinery, equipment and materials has to be produced under quality
controlled manufacturing process. The ship construction process is also
closely monitored by the surveyors of the classification society. In short, a
ship built under classification supervision is same whether it is built in
Bangladesh or in Europe. Thus the shipyard must be equipped for this quality
in terms of quality assurance and quality control measures and system. The
manpower also needs to be appropriately trained for the same.

As mentioned earlier that in the shipbuilding industry, unlike other industries,
each and every step and procedure is rigorously supervised by the inspection
agency. The shipyard must clearly understand the procedure and respond
accordingly.

Like many other aspects, shipbuilding is different from most other industries in
terms of time required for return on investment. The investment in shipbuilding
has a long gestation period. A shipyard is not ready until at least 9 months of
an investment decision and availability of fund. In the case of dry dock, it may
be as long as 2 years. Moreover, shipbuilding contracts requires the ship to
be delivered in 12-18 months time. With our experience and exposure, we
should not consider delivering ships in less than 15 months.

Quality construction requires high skill to be employed. These skills also need
to be updated to catch ever increasing statutory requirement for shipbuilding.
Thus manpower skill development is a continuous process in a shipbuilding
industry.




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Ships are complex structures and to put the things in right order and in right
sequence strong planning and plan implementation is required in every stage
beginning from procurement to delivery. In order to implement the planning,
proper monitoring and control is required in every stage to cope with the
difficulties and phenomenon that may render the production activities out of
control.

Rules and regulation governing shipbuilding and ship operation are regularly
updated and the same has to be complied no matter where the ship is being
built or operated. This is governed by the International Maritime organization,
an organ of United Nations. Regular updating of knowledge is required to offer
the client the right things and to build the vessels as per rules and regulations.


2.6.2 Promoting shipbuilding in Bangladesh

In view of the prevailing market and the potential the country possesses,
certain measures need to be taken by the government to facilitate growth of
the sector. These are elaborated below.

The first thing that perhaps is needed to do be done is to make the sector
visible to the entrepreneurs, policy planners, government officials, financing
institutions etc. Precisely, this will require amendment to rules, procedures
etc.

Such an enormous opportunity in the sector will not continue for long. Some
other nations will take over. Thus, shipyards need to be developed rather
quickly. To facilitate the same, government may allocate some fund to be
made available to the prospective entrepreneurs under terms and conditions
appropriate for the industry. However, there are persistent records that such
funds are misused and diverted for more lucrative investment with short
gestation period. Thus any such measure needs to be controlled carefully but
at the same time with minimum bureaucratic hassles.

As elaborated earlier, the import of materials, equipment and machinery to
build ships to export order should be made easier by allowing Green channel
for all import related to shipbuilding. Under this arrangement, the customs
inspection of such goods may be carried out at the yard rather than the port to
avoid time delay and cost overrun.

Shipbuilding contracts are executed with advances received from the owner
from the very contract signing step. However, bank guarantees are to be
issued for receiving the payment and the contract requires the guarantee be
issued by any first class international bank. Local shipbuilders do banking with
local banks and thus the guarantee is to be endorsed by a foreign bank. The
cost is around 4% on each side. The guarantees are issued for a long period
since shipbuilding contracts are typically for 18 months. The builder has to
incur a cost of around 15% of the fund received. To increase competitiveness,
this rate must be reduced. The finance ministry and Bangladesh Bank may
explore means of doing the same.


                                                                               15
Shipbuilding requires skilled manpower and the skill need to be developed on
a regular basis. To start with, the country needs to develop a large number of
qualified welders passing the examination of classification societies. Skill
development is a mandated function of the Bureau of Manpower Employment
and Training (BMET). Unfortunately, shipbuilding industry requires a standard
much higher than what BMET can perhaps deliver. Moreover, to cope with the
requirement for the emerging shipyards of the country and keeping in view the
strict quality required, BMET will require massive increase in capacity and
infrastructure. In this background, government may consider an alternative.
Some fund may be allocated by the government for the skill development. The
shipyards may be asked to absorb the trainees. Funds may be provided to the
shipyards for the training works. The classification society may be requested
to extend the service of certification at no or nominal charge. These certified
welders can work either in the shipbuilding industries of the country or abroad.
In any case, they will be adding either to GDP or to remittance.

Prospective entrepreneurs are finding it difficult to get appropriate land for the
purpose. Lands available on the River Meghna are perhaps appropriate for
building slipways for launching vessels of up to 10,000 DWT. For building
larger vessels, dry docks need to be built. Government may identify places
appropriate for shipbuilding industries and develop the area with road, gas
and other utility connections. Alternatively, the entrepreneurs may themselves
arrange their electricity provided gas is made available.

Government may consider offering subsidies to export shipbuilding industries
as government is doing in case of some other exportable or some other
countries offering to their shipbuilders.




                                                                               16
3.0 Shipbuilding process in recent time

3.1 Background

Today, most of the world's shipbuilding is based on principles such as
structural building in blocks, block outfitting to a maximum degree,
modularization of outfitting into units, utilization of prefabrication in pipe work,
ducting and cable trays, pre-assembly of pipe packages, and outfitting of units
such as cabins, cold rooms, etc. All this requires concurrent design,
engineering and installation. Coordination of design and procurement has
become a central and demanding task. Delivery of equipment in the correct
phase for outfitting is crucial. Even more important is that the information be
received in time for the design, which means that procurement handling is
driven by design. Some shipyards therefore have moved the procurement of
major design-dependent items to their design and engineering office, rather
than having them procured by a separate purchasing office. E-commerce is
starting to play a role in this and could have a more centralized role when
combined with a product model and database.

Class and authority approvals play an important role, though less central than
that of suppliers and subcontractors. This is the case for both design and
installation phases. Delivery of important and essential information throughout
the process remains the biggest stumbling block. The number of parties
involved in one area or system often reaches six to nine, with some
overlapping and others following one another. The total number of parties
involved in a cruise ship can easily approach 300-400. Therefore, the role of
information management is crucial.


3.2 Innovative Methods of shipbuilding

The generally accepted mode of shipbuilding is that a ship is assembled in a
dry dock, which is then flooded with water allowing the completed vessel to
sail out to sea. Thus, building a larger ship requires a larger dock. VLCCs can
be built on land and then propelled the completed hulls on to a submersible
barge with hydraulic jacks. Vessels are then towed into deep water out to sea
where the barge sinks beneath them before returning to their mooring for final
touches.




                                                                                 17
3.3 The Shipbuilding Process

Shipbuilding is an assembly process, involving hundreds of thousands of
individually prefabricated parts and items of machinery, equipment and outfit.
The secret of efficient shipbuilding lies in how efficiently we can put them all
together. Technological change has transformed shipbuilding from a project-
oriented construction process to a mass-production manufacturing process.




                              Figure 1.3: Project Milestone




                           Figure 1.4: The shipbuilding process




                                                                             18
3.4 Preparation for Production

The biggest difference between shipbuilding today and shipbuilding 30 years
ago is that today we spend a much greater proportion of our total effort
preparing for production.

As a result, modern shipbuilders take much less time to build a single ship
and they produce more ships from a single building position than old-style
shipbuilders.

For example, a Korean or Japanese shipbuilder can deliver as many as ten
big ships a year from a single building position. As a result, modern
shipbuilders get a much higher return on their investment in fixed assets and
can spread their fixed costs over a much larger volume of business.


3.4.1 Design and engineering – two steps

• Functional design is the detailed specification of all structure, material and
equipment, meeting all the relevant regulatory requirements.
• Production engineering is the development of all the detailed drawings,
sketches, instructions and other documentation needed by the shipyard to
build the ship.


3.4.2 Production Planning

•   Build strategy: how are we going to build this ship?
•   Scheduling: when are we going to build it?
•   Resource allocation: what manpower/facilities do we need?


3.4.3 Procurement –three main areas

•   Major and long-lead-time machinery and equipment
•   Commodity materials, such as steel, pipe, cable and paint
•   Subcontractors


3.4.4 Prefabrication

Hull Steel:

•   JIT delivery of plates and structural shapes to a storage area
•   Blasting and painting with a primer
•   Cutting, marking, shaping, labeling
•   Manufacture of two-dimensional subassemblies (panels)


                                                                             19
Outfit:

• JIT delivery of pipe and other material to warehouses.
• Cutting, marking, shaping, labeling, palletization.
• JIT delivery to the appropriate work stations for attachment to or
installation on hull structure.


3.4.5 Block Assembly

Flat-Panel Blocks:

• Three-dimensional assemblies of flat panels.
• Pre-outfitted: everything that goes into them –piping, vent ducting, cable
trays –is installed in the shop.
• Fully painted except at the butts.

Curved-Panel Blocks:

• Three-dimensional assemblies of both flat and curved panels –involving
the complex shape of the hull structure fore and aft and requiring computer-
set jigs.
• The processes are the same as for flat-panel blocks but are much more
complex.

Equipment Modules:

• Three-dimensional, self-supporting, self-erecting assemblies of equipment,
mounted on foundations or temporary skids.
• Everything in a module is tested and operational: only the external
connections remain.


3.4.6 Grand Blocks

Blocks may be combined into “mega blocks, giga blocks and even tera
blocks" that weigh as much as 3,000 tons or more, especially if they are to be
assembled in a floating dock.




                         Figure 1.5: Assembly in a floating dock




                                                                           20
3.4.6 Hull Erections

The big three Koreans each have at least one “mega dock” in which five or six
ships can be erected simultaneously: “goliath” cranes span the dock and the
area alongside it.
As the blocks are set in place and aligned, the butts between them are welded
up and the tanks and other internal spaces are inspected and tested.
The dock is flooded about once every five or six weeks. Two or three of the
ships in the dock are then floated for the first time and their hull integrity is
checked. The other two or three, which were floated the last time the dock
was flooded, are towed out and moored at a pier. The dock is then pumped
dry and erection of two or three more ships is started.
In this way, one mega dock can produce 20 to 25 ships a year.
Single ships are also erected in smaller graving docks, in floating docks, and
on land-level facilities.


3.4.7 Completion and Testing

Most big ships –tankers, bulkers and containerships –are 90% to 95%
complete when floated out of the dock. Final outfitting and system testing is
conducted once the ship is afloat and at a pier.

Trials are then carried out to confirm each ship’s performance characteristics:
a naming ceremony usually precedes delivery. LNG carriers are different: they
are only 60% to 65% complete when floated out of the dock, because the
cargo containment system cannot be installed until the hull is complete.

Final outfitting and system testing of LNG carriers is conducted in parallel with
the installation of the cargo containment system. Trials of LNG carriers
include rigorous testing of the cargo system with actual LNG, in addition to all
the standard procedures.


3.5 New Shipyard Planning Process

The main areas to be focused for the new shipyard planning are:

•   Optimize: the facilities and layout
•   Economize: the capital expenditure
•   Maximize: the production efficiency
•   Minimize: the building cost (yard and ships)




                                                                              21
3.6 New Shipyard Development Process




3.7 Study Flowchart




                                       22
4.0 Overview of the shipbuilding process
The hulls of the vast majority of commercial ships are constructed from steel.
A small number of specialized types (notably some fast ferries) are built from
aluminum. Composites (fiber or glass reinforced plastic) are very rarely used
in commercial ship construction. Shipbuilding can broadly be classed as an
assembly industry. The traditional view of the process is that it divides into two
parts: Steelwork – the pre-fabrication, assembly and erection of the steel
structure of the ship. Outfit – the installation of the systems, equipment and
fittings into the ship. Traditionally the two parts of the process were
undertaken sequentially, with outfitting starting once the steel structure had
been finished. Increasingly since the 1960s the two stages have been
undertaken as far as possible in parallel to improve efficiency.

The basic unit of the ship’s structure is a steel panel constructed from plate to
which steel bars are welded to give adequate stiffness. The majority of panels
in a ship will be flat but a proportion has to be shaped in two or three
dimensions to provide curves. Steel plates and bars are cut to a pre-
determined shape prior to fabrication, with the cutting process being
automated in a modern shipyard. Much of the flat panel production can also
be automated using ‘panel assembly lines’ that require little human
intervention to produce large quantities of fabricated steel.

Flat and curved panels are joined together to form three-dimensional
steel assemblies. As much outfit equipment and fittings as possible are
incorporated into these assemblies at the earliest stage since the cost
of outfitting increases significantly as the shipbuilding process proceeds.
Assemblies may be further blocked together before final erection in the
building dock or on the building berth (also referred to as ‘slipway’). Most
leading shipbuilders now build in docks. The limit on the size of block that can
be erected is determined by the capacity of the dock or berth cranage.
Fundamentally, the larger the block that can be erected at this stage,
the more efficient the shipyard can potentially be.

One of the key bottlenecks in the shipbuilding process is the capacity for
painting. Traditionally this was the last activity undertaken after all other work
had been completed. As with other processes, painting is now undertaken at
an early stage and as much as possible is completed prior to erection of the
blocks. Ideally, painting should be undertaken in controlled conditions to
minimize the curing time of the paint.

Shipbuilders have made significant investment in recent years in painting
facilities to improve quality and reduce waiting time for paint to cure. The steel
and outfitting work on the ship will be completed as far as is practical in the
dock before the dock is flooded and the ship floated out (the modern
equivalent of launching from an inclined slipway). After float-out, the systems
will be commissioned and tested and the ship will complete a series of trials
before delivery.




                                                                               23
The cycle time for production depends on the efficiency of the shipyard and
the product concerned. The typical production period for a bulk cargo ship
may be of the order of six to nine months and for a cruise or LNG ship up to
two years or more. Whilst it has been possible to automate some
shipbuilding processes, in particular at early stages of production,
shipbuilding remains a relatively highly skilled enterprise. It also remains labor
intensive with the number of man-hours required for the production of a ship
typically being of the order of 0.3 to 1.5 million. The major skills used include
steelworker, welder, pipe worker, mechanical fitter, electrician, sheet metal
worker and joiner/outfitter.

The shipyard is likely to carry most of these skills itself but a proportion of the
production work will be subcontracted to specialist companies. Typically,
subcontracting will cover installation of air conditioning, hydraulic systems and
painting.

The balance of skills, in particular between steel working and outfitting
trades, varies by type of ship. The characteristics of the shipbuilding facilities
also vary by type and size of ship. For example, a shipyard set up to series-
build tankers, with high volume throughput and a predominance of steelwork,
will be less efficient at building niche ship types with a high outfit work
content and low throughput. This is not to say that such ships can not
be built in the same facilities but it may be difficult to achieve this mix
economically without significant investment to avoid disruption to the
main production flow.

In addition to the production capabilities of a shipyard (incorporating the
characteristics of physical facilities and the balance of workforce skills),
management and organizational skills are of paramount importance in the
shipbuilding process. A typical ship will involve the assembly of millions
of parts and the logistical skill of a yard in planning work and controlling
material flow is one of the keys to its effectiveness. Design skills are also
a key to efficiency. Design at all levels of detail can have a major effect on the
efficiency of the production process, as well as the operational efficiency of
the finished ship.

Finally it should be noted that the ‘smoke-stack’ and ‘sun set’ labels that are
often applied to shipbuilding in the popular press are misleading.




                                                                                24
5.0 Shipyards in Bangladesh
Dhaka Dockyard & Engineering Works is one of the leading shipyards in
Bangladesh, Southeast Asia. It provides shipbuilding and repair services at a
competitive price within the shortest time period to the highest quality
standards from a company that understands and cares for its
customers. Their services offer a complete range of design, build and after
sales support packages to meet the requirements of the most discerning
clients.

Facilities include:

• Expertise and experience to build and to repair a diverse range and
capacity of vessels.
• A Full Set-Up of Carrying out Ship’s Afloat Repair / Engine, Electrical
Works, Refrigeration, Trawl Winch etc.
• Employ the latest processes and project management systems to ensure
that customers’ requirements are met.
• Export and locally distribute all marine items including ship’s spare parts,
Engines, Gen-set and equipments as per requirement.
• Specialist skills in the overhaul of all engine and engine components.
• Services of Diesel Engine and Generator Set are offered.

Khulna Shipyard is a commercial enterprise of BN, over the years has been
developed into a leading ship building and repair organization. It also
undertakes marine services as well as manufacturing of engineering items in
order to support country’s industry including power sector. The Shipyard
works directly under the NHQ. Its purpose is to help the customers in
their maritime operations through the effective repair/maintenance boats
and vessels.
Facilities include:

• Ship Building and Repair.
• Overhauling and Repair of Boiler, Turbine, Diesel Engine, Pump,
Compressor, Generator, Transformer, Heavy Electrical Motor, Crane,
Electrical Fittings, Workshop Machinery, Dredging machinery etc.

Ananda shipyard is the largest shipbuilding and ship repairing yard in
Bangladesh, has recently signed a contract for twelve 5500 dwt multi-purpose
vessels (MPVs) ordered by a German ship owner. All ships will be classified
by Germanischer Lloyd. Steel cutting for the first six vessels will take place in
May 2008 and delivery is expected for March 2011. Ananda Shipyard and
Germanischer Lloyd have already been working together for several years.
The cooperation started in 2004 when the shipyard commenced construction
of two aluminum and steel-bodied fast patrol vessels under GL class for the
Bangladesh Coast Guard. Additionally, two of three multi-purpose vessels
(2900 dwt) ordered by Danish owner Sea Consult are currently under
construction at Ananda, as well as six small passenger ferries for the

                                                                              25
Government of Mozambique. These as well as four 6300-dwt-MPVs presently
on order will also be classed with GL.

Ananda Shipyard & Slipways Ltd

Production Facilities

•   Design office           Computer aided design, CAD/CAM
•   Lofting Hall            80m x 16m
                            Lifting capacity 2 x 3000 tons,200m slipway
•   Slipways
                            fitted with 150 tons gantry
                            2 x 100m x 24m x 17m fitted with 5 ton, 10 ton
•   Shipbuilding hall
                            & 20 ton EOT
•   Fabrication hall        85m x 18m fitted with 2 ton EOT and CNC
                            Cutter
•   Aluminium boat building 100m x 15m x 10m (high) fitted with 2 ton
    hall                    EOT
•   Open ship building area 15,000 sq meters
•   Welding/Cutting         Automatic cutting, gas welding, Arc, MIG, TIG
•   Surface preparation    Sand blasting plants
•   Painting               Powered spray
                           Fitted with lathes, shaper, milling, radial
•   Machine shop
                           grinding etc.
•   Electrical shop        60 sq meters
                           Suitable for overhauling up to 600 BHP diesel
•   Diesel shop
                           engine
•   Foundry shop           Cast steel, cast iron, gun metal
                           Fitted with horizontal saw, bend saw, circular
•   Carpentry shop
                           saw
•   Warehouse              100m x 20m
•   Power Source           1000 kw
•   Standby in house power 50 KVA, 125 KVA, 450 KVA (3 nos)
    plant
•   Capacity               8000 tons of steel/year or 2 nos 1400 TEUs
                           Container ship Maximum size 20000 DWT or
                           170 m x 30 m

The second order landed by a Bangladeshi shipyard was when Western
Marine in Chittagong signed a contract to build up to 5 multipurpose vessels
(4,100 DWT) to be delivered to a Danish ship consortium by end-2010. The
two orders have positioned these shipyards as serious players in the
international shipbuilding industry in strong competition with Chinese and
Vietnamese shipbuilders. In order to live up to the highest international
standards to design ship and to obtain international accreditation from
bureaus such as “Germanisher Lloyd” and “Norske Veritas” it will be


                                                                         26
important for the shipyards to be able to import various fittings and
components necessary for the ships to reach an international standard,

To live up to export requirements, it will be essential that a mechanism can be
introduced for facilitating an easy clearance of such fittings and components
when imported. A “Green Channel” like in the textile industry could probably
provide necessary flexibility for the involved parties. Successful shipbuilding
ventures will have a tremendous positive impact on job generation,
technology transfer and export revenues, and help Bangladesh to create
another ‘thrust’ sector like export-oriented readymade garments and
textiles and IT.

Modern shipbuilding makes considerable use of prefabricated sections. Entire
multi-deck segments of the hull or superstructure will be built elsewhere in
the yard, transported to the building dock or slipway, and then lifted
into place. This is known as Block Construction. The most modern shipyards
pre-install equipment, pipes, electrical cables, and any other components
within the blocks, to minimize the effort needed to assemble or install
components deep within the hull once it is welded together.


5.1 Production base

Bangladesh’s ambition is to develop the shipbuilding industry not only to meet
the domestic demand but also to make it a key export industry of the country.
As a result, the percentage of export turnover in the total turnover of the
industry will be increased and this trend is expected to continue in the coming
years.

There is therefore a good market for technology transfer in manufacturing and
supplying relevant machine, equipment, components related to ship building
and repairs. To have a foothold in this market quickly, forming a strategic
alliance with a local shipyard is likely a good option and early comers will
definitely have advantages over their competitors. A number of foreign
material and equipment manufactures including Danish companies have
chosen this way.

A significant long-term potential for Danish shipbuilding -related companies
can be expected for the period 2008-2010 when new high-capacity vessels
and oil tankers are planned to be constructed. However, there is a strong
competition especially from the regional suppliers like Japan, Singapore,
South Korea and China who have been traditional trading partners to
Vietnam. In additional to this, Poland, Norway and Finland have also quite
active in the market.




                                                                            27
5.2 Feasibility Study for 10,000 dwt capacity Shipyard

The project is a purely export oriented industry and thus there is a highest
importance on the sector.


5.2.1 Capacity and Product Mix

Capacity

Unlike process industries, the details of products are not specified in advance.
The capacity of the project should be a maximum 10,000 DWT vessels.
Within this range, the project will be able to take orders of sizes, technical
complexities etc. as asked for by the owners. However, the capacity of
shipbuilding industries is defined by the tons of steel handled. The yard is
proposed to have an annual capacity of handling 5,000 tons of steel. Pricing
of the product (ships) is also based on tons of steel consumed. Presently, it is
typically USD 5,000 per ton of steel. The final figure depends upon the
complexity of the ship ordered.

The yard will not handle any local contracts firstly because prices of contracts
will be very small compared to export orders and secondly because this will
distract the concentration of the management. Because of the very different
complexities, management required for execution of works, communication
with the clients etc. the work culture will suffer.

The attainable capacity has been estimated based on experience of the
promoters in ship repair industries and after consultation with other experts in
this discipline.


5.2.3 Technology Factor

Whether the technology considered is new or proven

The technology used for shipbuilding varies significantly with the equipment
available and the size of the ship. It has been decided that the shipyard will
adopt the block construction method. In this method, the ship will be
segregated into smaller blocks of size suitable to the capacity of the
equipment available. The blocks are to be built in the fabrications sheds and
when finished is to be brought to the shipbuilding hall for assembling and
launching. It is envisioned that a block size of 30-40 tons will be appropriate
for the size of the vessel and the equipment will be chosen accordingly. The
main benefit of the block construction method is the maximum utilization of
down hand welding and fabrication under sheds which ensures best quality of
welding and the welding being free from rains and dusts of the open
environment.




                                                                             28
As such, the technology is well proved and adopted allover the world for such
type of ships. The two shipyard of the country working with foreign orders
have adopted the same production method for execution of the contracts.

Alternative/optional technologies and a brief on each

As described above, this technology has been selected after consideration the
alternatives available such as slipway construction, panel construction etc.
One other important factor is this a good number of Bangladeshi engineers
and technicians have gained good experienced with this method an all
shipyards in Singapore are using block construction method and thus any
other method would result in non-availability of skill, both at home and abroad.


5.2.4 Land and location

40 acres of land will be suitable for this size of shipbuilding industry.
Considering the location and suitable draft, the value of land has been
considered at Taka 1,00,00,000.00 per acre. There remains a development
cost to prepare the land suitable for this industry which has been estimated at
Taka 1,96,02,000.00. This cost is based on general concept and is not based
on any definite plot plan.


5.2.5 Building

The major buildings and structures required for the project is listed below:

    •   Shipbuilding hall
    •   Fabrication shed
    •   Machine shop
    •   Sand blasting plant
    •   Galvanizing shed
    •   Diesel engine shop
    •   Electrical shop
    •   Foundry shop
    •   Pipe Shop
    •   Power station and switchgear room
    •   Carpentry shop
    •   Warehouse
    •   Office building construction

The buildings are to be of steel construction so as to accelerate the
construction process. Adequate provisions have been made in the proposal
for the same. Details for the cost for such construction are shown in the
financial analysis.




                                                                               29
5.2.6 Proposed Machinery (Local & Imported)

Shipbuilding is a machinery intensive industry and a lot of heavy machinery is
required for the purpose. Typically, the following machinery will be required:


     •   Arc welding machine
     •   Bench grinder (double)
     •   Bilge Pump
     •   Chain pulley block
     •   CNC plate cutting machine
     •   Cutting machine with abrasive disc
     •   Electric cables
     •   Electric lights
     •   Electric motors
     •   Electric overhead traveling crane (10 tons)
     •   Electric overhead traveling crane (25 tons)
     •   Electric overhead traveling crane (5 tons)
     •   Electric panels and switchboards
     •   Electrical switches, fuses, circuit breakers etc.
     •   Flat pickup truck
     •   Fork lift
     •   Gas cutting and brazing torch
     •   Gas regulators
     •   Generating set
     •   Hand tools
     •   Hydraulic jack
     •   Hydraulic press
     •   Hydraulic shear
     •   Oxygen and Acetylene pipes
     •   Paint spray unit
     •   Paint thickness measuring machine
     •   Pipes
     •   Plate bending roller
     •   Power tools
     •   Sand blasting nozzles
     •   Shot blasting and priming plant
     •   Ultrasonic thickness measurement machine
     •   Welding electrode drying oven




                                                                           30
5.2.7 Installation and Machinery

The major items of the machinery where installation is important are:

   •   CNC steel cutting machine
   •   Electric overhead traveling cranes
   •   Slipway winch
   •   Presses and bending machine

As regards installation, CNC machines come with detailed installation manual.
Commonly an installation engineer service is offered with the equipment and it
is the responsibilities of the supplier to install and test run the equipment. The
two modern shipyards of the country is equipped with the machine and
operating without major problems.

For the electric overhead traveling cranes, steel structures are to be erected
allowing the cranes to travel in lateral as well as transverse directions. Crane
supply is commonly associated with the supply of the drawings of the legs,
beams etc of the structure and also the procedure for the erections. Such
cranes are used in other industries as well and thus the skill is available.

Slipway winches are available in package form. Critical areas in installation
are the sub soil foundation, fixings, sheaves, wires, ropes, pulleys etc. The
basic principles are simple but careful design and implementation is essential
for proper installation. Expert engineers are to be employed for the purpose.
The design should be checked by a second engineer. As such, there are
many winches installed in scores of shipyard in the country and thus the
issues are clearly understood by the engineers and foremen.

Heavy machinery such as presses and bending machines simply requires
foundation of proper strength to support the dead load as well as operation
leads of the equipment. Competent civil (geotechnical) engineers will be
employed for design and supervision.


5.2.8 Operation of Machinery (Plant)

The machinery is to be operated by skilled technicians recruited from within
the country, especially from shipbuilding industries. If necessary, some
training programs are to be arranged to operate especially delicate
machinery. The overall responsibility of the operation is to rest on the senior
engineers having experience in shipbuilding/repair industries. The HRD
protocol will include the required training and upgrading from time to time.




                                                                               31
5.2.9 Auxiliaries and Utilities

Water                Negligible

Power                 72,000 kW-h (estimated from low capacity PDB
                      lines to be maintained for emergency purpose
                      and off peak operation)

Gas                  800,000 m3 of gas for generator

Process steam        Nil

The costs for these items are duly incorporated in profitability of the project.

Gas

To ensure smooth production, the proposed project should have its own
power plant (2 x 400 kW). The generators will consume 800,000 m3 of gas
annually. In addition, LP and Acetylene gas will be required for cutting steel
plates and other cutting as well as fabrication purposes. The estimated
amount of LP and Acetylene gas combined will 250,000 liters.


5.2.10 Raw Materials

In fact, a list of raw materials required for building a ship is a very long one.
This include steel plate, steel profiles and sections electrode, paints, thinners,
pipes, valves, chains, anchors, insulation as the major ones. However, all
these are imported from abroad and none of these are available in the local
market. These raw materials will be important pursuant with the specification
clauses of the shipbuilding contracts. The procurement department of the
project will take care of the procurement of raw materials as well as
machinery and equipment.


5.2.11 Transportation

Arrangements for transportation of raw materials and finished goods (own and
hired) and its expenses.

As elaborated above, the raw materials are to be imported and the project is
to be well connected by both roads and waterways with the Chittagong port,
no especial transport arrangement will be required.

The finished product is the ship which will proceed on its own keel.




                                                                                   32
Requirement for general purpose/staff car and cost thereof

Some general purpose passenger vehicle will be required for operation of the
project. These are two minibus, two cars and 1 Jeep. As such no goods
transportation trucks will be required. However, a small passenger launch
may be required if accessibility by road is not comfortable.


5.2.12 Furniture and Fixtures

Some furniture’s and fixtures will be required in the workshop and offices.
Adequate provisions have been made for the same in the feasibility analysis.


5.2.13 Quality Control

Quality control is a major requirement in shipbuilding. The ships to be built will
fulfill requirement for operation almost in any sea of the world. The Quality
Assurance Protocol and Quality Control Protocol have been elaborated in the
technical management section of the report.



5.2.14 Repair and Maintenance

Regular maintenance and repair of each of the machinery will be required.
Preventive maintenance schedules will be prepared for the same. Effective
mechanism for breakdown maintenance will also be developed so that each
and every breakdown in addressed in shortest possible time.


5.2.15 Stores and Repairs

Amount of spares is to be provided along with the initial machinery supply.
Some spares will be available with the initial supply of the capital machinery.
However, the types and sizes of machinery are no diverse that perhaps there
is no common standard applicable for all.

Arrangement for stores and spared for subsequent years and costs
thereof

Spares are to be arranged firstly for the preventive maintenance schedule and
secondly a buffer stock for breakdown repairs. The spares are to be ordered
once in three months as per schedule.




                                                                               33
5.2.16 Safety provisions

Safety is a major requirement of the ship owners and they are not ready to
order ships to a yard with inadequate safety procedure in place. That it has
been considered import to Adopt a Safety protocol of the yard as elaborated
earlier in the report. However, some basic features of the procedure are
elaborated below.

Ship repair and shipbuilding are jobs with potential safety hazards. Adequate
safety provisions are to be made. Use of helmets is to be made mandatory.
The workers and engineers are also to wear safety gloves. Eye protection will
be made compulsory for machine operators. Fire fighting systems are to be
made available at each and every corner of the plant. Portable air blowers are
also to be arranged to facilitate air supply into any confined place where the
workers may have to work for repair of the machinery, equipment or hull. Ship
repair operation may face situations like oil spillage, exposure to toxic or
poisonous gases, especially in petroleum tanks. Gas freeing arrangements
are to be ensured in such situations. Disposal of bilge or other polluting
materials are to be regulated by relevant rules and requirements.


5.2.17 Residue and waste disposals

The process of shipbuilding itself does not resulting in much quantity of
residue or waste. However, ships under repair may have to discharge
residues a waste, in many cases as a result of the repair operation. Such
disposals are sometime extremely polluting. These are to be disposed off as
per rules and regulations, especially the procedure described in the
international shipping and shipyard regulations and national laws governing
waste disposal.


5.2.18 Technical and managerial personnel and labor

Number of technical and managerial personnel and labor is required and also
the availability of such persons.

The total number of personnel, when operating in full capacity is shown in the
financial analysis. The policy of the recruitment of the keen personnel is
elaborated in article 1.3 above. Other engineers, foremen, technicians and
workers are available locally. Recruitments are to be made upon on the job
interviews and each employee is to work at least 3 months on probation. Their
jobs are to be regularized upon satisfactory completion of the probation
period. If deemed useful, an employee may be given the opportunity to work
up to 6 months on probation to establish his worth.

Training requirement and costs thereof

Training is a regular feature in a shipyard as part of HRD as described in the
report. The cost is included in the overhead.


                                                                           34
5.2.19 Construction Schedule

Major physical works required

The slipway construction: Construction of the workshop sheds, office
buildings, boundary walls are to be taken up once the layout design, structural
design and system, and design of the same has been prepared. This is
expected to the 6 months time.

Thus the total construction is expected to be completed within 6 months.

Total implementation time

The project is expected to require 12 months to go into commercial operation
when the ancillary system, will be in place.


6.0 Conclusion

Detail analysis reveals that Bangladesh is green field for medium scale
shipbuilding industry. It will not only generate revenue but also will fulfill the
growing demand in the global market today. Foreign entrepreneurs are invited
to come forward for joint venture approach to implement this project which is
technically viable and financially rewarding.




                                                                               35
Annexure
                                           Fixed Cost


                                             Cost in                          Total Cost
   Item                                      F/C USD    Eqvt. Tk.   L/C       in TK '000'

01. Land :
   40 acres land @TK100,00,000/acre                                 400000
   land development cost                                             19602         419602

02. Building & other civil works :
    Building 16000 sft + Other civil works                          183985         183985

03. Imported Machinery & Equipment :
    Cost of machinery                         2846369     199246                   199246
    L/C Comm, Import License (6.5%)                                  12951          12951

04. Local Machinery & Equipment :
   (Including attached local machines list)

05. Cost of Installation
     Civil, Mechanical & Electrical                                   1000           1000
     Gas Line Construction                                             500            500
     Security Deposit for Gas                                          349            349
    Security Deposit for Power                                          25             25
06. Safety Equipment
07. Trial run exp.                                                     500            500

08. Vehicles                                                         10000          10000

09. Miscellaneous Exp. :                                               400            400

10. Furniture & Fixture :
Office Equipment/Other Assets :
    (Incl. Fax, Telephone, Photocopier, Intercom,
      Air cooler, computer, Fire extinguisher etc.)                   1134           1134
11. Pre operating Expenses                                             250            250

12. Consultant's Fees :
    Drawing, plan etc.                                                  800          800
13. IDCP @12% on loan amount                                          30195        30195
Total                                        2846369     199246     661691       860937
Yearly Sales Estimates :

Name of the Product             Unit    Quantity                Unit Price   Total Tk.
                                                                 in Tk.       in 000'

Annual steel consumption        Tons        5000

Contract price per ton       US$
     US$     5000                                                  350000

Yearly Revenue                              5000                   350000       1750000




                           Requirements of Raw Materials

Item                            Unit    Quantity   Unit price   Unit price   Total Tk.
                                                    (US$)        (in Tk.)    ( in'000' )
Imported
Steel                           Ton         5000        1071        75000        375000
Electrode                       Pkt        35000           8          550         19250
Paint                            ltr       20000          26         1800         36000
Thinner                          ltr       20000          17         1200         24000
Grinding disc                   nos.       40000           2          150          6000
Paint brush                     nos.       10000           4          300          3000
Welding holder                  nos.         500          18         1250           625
Welding cable                   mtr          500          11          800           400
                                                   Sub Total:                    464275
Local
Oxygen                         bottle      25000           9          600          15000
LP Gas                         bottle      12500          29         2000          25000
Sand                            cft        75000           0           18           1350
                                                   Sub Total:                      41350
Cost of engine & Equipment
for the vessel 35% of Contract value                                            612500
                                                                TOTAL         1118125
                               Wages & Salaries
Name of the Post                                  No. of   Monthly    Total Tk.
                                                  person    Salary     in 000
Co-ordination Officer to the Managing Director      1         35000           420
Yard Manager                                        1        100000          1200
Co-ordination Officer to the Yard Manager           1         25000           300
Manager Finance and Accounts                        1         60000           720
Chief Accountant                                    1         40000           480
Accounts Officers                                   2         30000           720
Accounts Assistants                                 4         18000           864
Financial Planning Officer                          1         50000           600
Cost Accountant                                     1         50000           600
Stores Officer                                      1         20000           240
Store keeper                                        4         15000           720
SUB TOTAL                                           15                      6864
Manager Commercial and Planning                     1        60000          720
Senior Commercial Officer                           2        40000          960
Commercial Officer                                  2        30000          720
Planning Engineer                                   3        25000          900
SUB TOTAL                                           8                      3300
Security Officer                                   1         12000          144
Senior Security Guard                              4          8000          384
Security Guards                                    12         5000          720
SUB TOTAL                                          17                      1248
Department Manager                                  2        70000         1680
Deputy Manager                                      15       50000         9000
Engineer                                            45       35000        18900
Plant Operators                                     30       20000         7200
Plant Attendants                                    90       16000        17280
Workshop Foreman                                    30       16000         5760
Workshop Technicians                                90       10000        10800
Workshop helpers/attendants                         90       10000        10800
SUB TOTAL                                          392                   81420
Senior Officer Executives                          3         35000          1260
Junior Executives                                  6         20000          1440
Office Attendants                                  12        12000          1728
Other staffs                                       12        12000          1728
SUB TOTAL                                          33                      6156
Foreman                                             10       25000         3000
Mechanic                                            10       25000         3000
Technician                                          10       25000         3000
Fitters                                             30       25000         9000
Welder                                              60       16000        11520
Helper                                              60        8000         5760
Ancillary workers                                   48        2500         1440
SUB TOTAL                                          228                   36720
GRAND TOTAL:                                       693                  135708
                        Other Manufacturing Overhead
                    Water, Power & Fuel Requirements
Water :

Sources of Water                                               Own Deep Tube Well
Annual Requirements in Liter                                                 750000
Costin TK of water per litre
Total cost                                                    Taka                    0

Power :
Sources of Power                                                               PDB/REB
Connected load in Kw                                                                 50
Maximum Demand in Kw                                                                 35
Peak Hour                                                                             4
Off-Peak Hour                                                                        16
Cost per Kwh in peak hour                                                          5.04
Cost per kwh in off peak hour                                                      3.25
Demand charge per month in Tk.                                                       50
Service Charge per month in Tk.                           :                          60
Cost of Power in Peak Hour                                                          300
Cost of Power in Off-peak Hour                                                      600
Demand Charge                                                                        30
Service Charge                                                                        1
VAT 15%                                                                             135

Total cost                                                                        1066

Fuel Lubricants :
Item                                      Unit     Quantity Unit Price       Total Tk.
                                                             in Tk.           in'000'
Grease                                     Kg.          100    160.00                 16
Lubricating Oil                           Liter         500    150.00                 75
Gas for Generator                         cum        800000       5.00              4000
CNG for Vehicle                                                                      720
Total                                                                              4811

Stores & Spares :

On Machinery Cost                 0.50%    1.00%      1.50%          2.00%       2.00%
                                    996     1992       2989           3985        3985

Repair & Maintenance : (As per Annexure)

On Machinery Cost                 0.00%    0.50%      1.00%          1.50%       2.00%
On Building Cost                  0.50%    0.50%      0.50%          0.50%       0.50%

Rent, Tax & Insurance :

1% on Fixed cost of the project   1.00%    1.00%      1.00%          1.00%       1.00%
                    General, Administrative & Selling Expenses

                                                                               Taka in "000"

                                  1st yr     2nd yr     3rd yr        4th yr         5th yr
Directors Remuneration              240         240       240           240            240
Salary (Administration)            2772        2911      3050          3187           3326
Post, telephone & telegraph         120         150       170           200            200
Stationery & Printing               100         120       130           140            150
Traveling & Conveyance              120         132       145           159            174
Depreciation & Write off               0        694       694           694            694
Advertisement                       200         150       150           150            150
Audit Fee                             30         30         30            30             30
Miscellaneous Expenses              120         180       200           225            250

Total                              3702       4607       4809          5025           5214



General, Administrative salary/ expenses:
Name of the Post                                      No. of        Monthly      Total TK.
                                                       Post          Salary       in '000'

01. Manager (Admin & Personnel)                                 1      40000           480
02. Manager (Marketing)                                         1      30000           360
03. Accounts Officer                                            1      25000           300
04. Accounts Clerk                                              1      12000           144
05. Driver                                                      7       6000           504
06. Security Guard                                              3       4500           162
07. Computer operator                                           1       7500            90
08. Peon                                                        1       3000            36
09. Sweeper                                                     4       2500           120
Total                                                          20                     2196


                              Depreciation

Item                           Amount             Depreciation                Depreciated
                              TK in "000"             Rate                        Amount

Building (Annexure)              183985               4%-20%                          10795
Machinery (Annexure)             212197               6%-25%                          30704
Other Assets                       1134                20.00%                           227
Pre-operating Expenses              250                20.00%                            50
Vehicles                          10000                20.00%                          2000
IDCP                              30195                20.00%                          6039

Total                                                                                49815
                               Loan Information

                    Period of Repayment      Debt         Equity       Grace        Interest
Type of Loan        Loan (yr) Period (yr)                            Period (m)       Rate

01. Term Loan              1         1.00    60.00%      40.00%                 0     14.50%

02. Commercial Loan                                                                   12.00%


                               Other Information



01. Work in Process                                                     90 days

02. Finished Goods Stock                                                 3 days

03. Opening Stock of WIP                                                 3 days

04. Closing Stock of WIP                                                 3 days

05. Opening Stock of FG                                                 10 days

06. Closing Stock of FG                                                 10 days

07. Receivables at Cost                                                 30 days

08. Raw Material Inventory (Imported)                                  120 days

09. Raw Material Inventory (Local)                                      30 days

08. Depreciation included in the cost of raw material                   15 days

09. Stores & Spares                                                     90 days

09. Working Capital Borrowings                                             70%

                                 1st Year 2nd Year      3rd Year     4th Year

10. Other for W/C                  16964       18094         19225        19225

11. Other for Cost of Goods Sold     175         200           225          250
   Item                                         Cost in   Eqvt. Tk.   L/C          Total Cost
                                               F/C USD
01. Land :                                                                        Tk '000'
   40 acres land @TK100,00,000/acre                   0               400000              400000
   land development cost                                               19602               19602
Sub-Total :                                           0           0   419602            419602

02. Building & other civil works :
    Building 16000 sft + Other civil works            0               183985            183985
Sub-Total :                                           0           0   183985           183985

03. Imported Machinery & Equipment :
    Cost of machinery                           2846369      199246           0          199246
    PSI, Insurance, Import Duty, AIT, Clearing Charge
    L/C Comm, Import License (6.5%)                           12951                      12951
Sub-Total :                                                  212197           0        212197

04. Local Machinery & Equipment :
   (Including attached local machines list)           0                                       0
Sub-Total :                                                       0           0               0

05.Installation Cost                                                    1000               1000
Sub-Total :                                                                               1000

06. Security Deposit for Power                                               25              25
Sub-Total :                                                                                  25
07. Gas Line Connection                                                     500            500
Sub-Total:                                                                                 500
08. Security Deposit for gas line Connection                                349            349
Sub-Total:                                                                                 349
09. Miscellaneous Exp. :                                                                   400
Sub-Total :                                                                                400
10. Furniture & Fixture :
Office Equipment/Other Assets :
    (Incl. Fax, Telephone, Photocopier, Intercom,                       1134               1134
Sub-Total :                                                                               1134
11. Pre-operating Expenses                                                  250             250
Sub-Total :                                                                                250
12. Consultant's Fees :                               0
     Drawing, plan etc.                                                     800            800
Sub-Total :                                           0                     800            800

13. Trial Run Expenses                                          500                         500
Sub - Total                                                                                500
14. Vehicles                                                  10000                       10000
Sub-Total :                                                                              10000
15. IDCP                                                               30195              30195
Total Fixed cost                                                                       860937
                  Cost of the Project & Means of Finance

Item                                               L/C         F/C           Total

Land                                               419602                      419602
Building                                           183985                      183985
Plant & Machinery                                       0      199246          199246
 Landed cost 6.5%                                   12951                       12951
Local Machinery                                         0                           0
Installation Cost                                    1000                        1000
 Trial run Exp                                        500              0          500
Furniture & Fixture Cost                                0                           0
Vehicles                                            10000                       10000
Gas Line Connection                                   500                         500
Security Deposit for Gas                              349                         349
Security Deposit for Power                             25                          25
Office Equipment &Other Assets                       1134                        1134
Consultant's Fee                                      800                         800
Pre operating Expenses                                250                         250
Misc. Expenses                                        400                         400
IDCP                                                30195                       30195

Total Fixed Cost of the Project                   661691       199246         860937


Net Working Capital                                 27076             0        27076

Total Cost of the Project                         688767       199246         888013



Means of Finance :

Term Investment :                                        L/C         F/C Total TK'000'

Deferred Term Investment                           304000      199246          503246
IDCP                                                30195           0           30195
Total Loans                                        334195      199246         533441

Sponsor's Equity :

Sponsor's Investment                               354572              0      354572


Total Loans & Equity                               688767      199246         888013
                       Assessment of Working Capital


A : Current Assets :           Tied up      1st yr     2nd yr    3rd yr    4th yr
                               Period
Capacity Utilisation                         75%         80%      85%       85%
Raw materials (Imported)      120 days     323033      344568   366104    366104

Raw Materials Local            30 days       3101       3308      3515      3515

Finished Goods Stock           10 days      43750      46667     49583     49583

Stores & Spares                90 days        299        598       897      1195

Other Expenses                 30 days      16964      18094     19225     19225

Total                                      387146    413235     439323    439622




B : Current Liabilities :

Commercial Bank Borrowing                  323033      344568   366104    366104

Working Capital (80% of WIP, FG,            35239      37812     40384     40623
stores & Spares and Others)
Total estimated Working capital             28875      30855     32836     32896
Less : Depreciation & write-off included
 in the cost of raw materials (13 days)      1798       1798      1798      1798

Net working capital                        27076       29057    31038     31098
                               Wages & Salaries

Name of the Post                                     No. of    Monthly     Total Tk.
                                                                Salary      Yearly
Co-ordination Officer to the Managing Director         1          35000           420
Yard Manager                                           1         100000          1200
Co-ordination Officer to the Yard Manager              1          25000           300
Manager Finance and Accounts                           1          50000           600
Chief Accountant                                       1          40000           480
Accounts Officers                                      2          30000           720
Accounts Assistants                                    4          18000           864
Financial Planning Officer                             1          50000           600
Cost Accountant                                        1          50000           600
Stores Officer                                         1          20000           240
Store keeper                                           4          15000           720
Manager Commercial and Planning                        1          50000           600
Senior Commercial Officer                              2          40000           960
Commercial Officer                                     2          30000           720
Planning Engineer                                      3          25000           900
Security Officer                                       1          12000           144
Senior Security Guard                                  4            8000          384
Security Guards                                        12           5000          720
Department Manager                                     2          75000          1800
Deputy Manager                                         15         40000          7200
Engineer                                               45         35000         18900
Plant Operators                                        30         20000          7200
Plant Attendants                                       90         16000         17280
Workshop Foreman                                       30         16000          5760
Workshop Technicians                                   90         10000         10800
Workshop helpers/attendants                            90         10000         10800
Senior Officer Executives                              3          35000          1260
Junior Executives                                      6          20000          1440
Office Attendants                                      12         12000          1728
Other staffs                                           12         12000          1728
Foreman                                                10         25000          3000
Mechanic                                               10         25000          3000
Technician                                             10         25000          3000
Fitters                                                30         25000          9000
Welder                                                 60         16000         11520
Helper                                                 60           8000         5760
Ancillary workers                                      48           4500         2592
                                                      696                    134940

Salaries                        134940      134940    134940     134940       134940
Increment 5%                         0        6747     13831      21270        29080

Total                           134940      141687    148771     156210       164020

Bonus 2 months basic             22490       23615     24795      26035        27337

Total Salary                   157430      165302    173566     182245       191357
                        Other Manufacturing Overhead
                    Water, Power & Fuel Requirements

Water :
     0.00
Sources of Water                                     0.00    Own Deep Tube Well

Power :
Sources of Power                                      0.00                PDB/REB
Connected load in Kw                                  0.00                            50
Maximum Demand in Kw                                  0.00                            35
Peak Hour                                             0.00                             4
Off-Peak Hour                                         0.00                            16
Cost per Kwh in peak hour                             0.00                          5.04
Cost per kwh in off peak hour                         0.00                          3.25
Demand charge per month in Tk.                        0.00                            50
Service Charge per month in Tk.                         :                             60
Cost of Power in Peak Hour                              :                            300
Cost of Power in Off-peak Hour                          :                            600
VAT                                                     :                            135
Demand Charge                                           :                             30
Service Charge                                          :                              1

Total cost:                                                                     1066


Fuel Lubricants :
Item                                   Unit      Quantity    Unit Price    Total Tk.
                                                              in Tk.        in '000'
CNG for Vehicle                                       L.S                          720
Grease                                    Kg.         100       160.00               16
Lubricating Oil                          Liter        500       150.00               75
Diesel for Generator (4 hrs/day)         Cum       800000         5.00            4000
Total                                                                            4811
Requirements of Fuel & Lubricants

Capacity Utilisation                 75%    80%        85%     85%         85%
Power                                 675    720        765     765         765
VAT                                   101    108        115     115         115
Fuel & Lubricant                     3608   3849       4089    4089        4089
Water                                   0      0          0       0           0
Requirement at attainable capacity   4385   4677       4969    4969        4969
Demand Charge                          30     30         30      30          30
Service Charge                          1      1          1       1           1

Total of Fuel & Lubricants           4416   4708      5000     5000       5000

Stores & Spares :

On Machinery cost                    1061   2122      3183     4244       5305




Repairs & Maintenance :

On Machinery Cost                       0   6556       6556    6556        6556
On Building Cost                        0   2958       1293    1293        1293

Total                                  0    9514      7849     7849       7849

Rent, Tax & Insurance :

1% of the Fixed Cost of Project      8609   8609      8609     8609       8609


Item                          Amount           Depreciation       Depreciated
                                                   Rate               Amount
      0.00                          0.00                   0                  0
Building (Annexure)               183985        4%-20%                    10795
Machinery (Annexure)              212197        6%-25%                    30704

Total                                                                    41499
                    General, Administrative & Selling Expenses


                                  1st yr   2nd yr      3rd yr        4th yr        5th yr
Director's Remuneration             240      240         240           240           240
Salary (Administration)            2772     2911        3050          3187          3326
Post, telephone & telegraph         120      150         170           200           200
Stationery & Printing               100      120         130           140           150
Traveling & Conveyance              120      132         145           159           174
Depreciation & Write off               0     694         694           694           694
Advertisement                       200      150         150           150           150
Audit Fee                            30       30          30            30            30
Miscellaneous Expenses              120      180         200           225           250

Total                             3702     4607        4809          5025          5214


Name of the Post                                    No. of        Monthly     Total TK.
                                                     Post          Salary      in '000'
01. Manager (Admin & Personnel)                               1      40000            480
02. Manager (Marketing)                                       1      30000            360
03. Accounts Officer                                          1      25000            300
04. Accounts Clerk                                            1      12000            144
05. Driver                                                    7        6000           504
06. Security Guard                                            3        4500           162
07. Computer operator                                         4        7500           360
08. Peon                                                      1        3000             36
09. Sweeper                                                   1        2500             30
Total                                                        20                      2376


Item                              1st Yr   2nd Yr     3rd Yr        4Th Yr         5th Yr

Salaries                           2376     2376        2376          2376          2376
Increment 5%                          0      119         238           356           475
Total                              2376     2495        2614          2732          2851
Bonus 2 months basic                396      416         436           455           475
Total Salary                      2772     2911        3050          3187          3326


Depreciation & Write Off      Amount            Depreciation             Depreciated
                                                    Rate                     Amount
Other Assets                      1134               20.00%                          227
Pre-operating Expenses            1134               20.00%                          227
Consultant Fee & Misc. Expenses   1200               20.00%                          240

Total                                                                                694
                          Estimates of Financial Expenses


Interest on Term loan            72972     63849        39526         15202                 0

Commission on L/C Limit              0         0             0              0               0

Interest of Cash credit          42993     45886        48778         48807           48807

Total                         115965     109735        88304         64009           48807

Interest on Term Loan :


Principal                      503246     503246       335498        167750           78770

Installment                          0    167748       167748         88980                 0

Balance                        503246     335498       167750         78770           78770


Interest @14.5% p.a.           72972      63849        39526         15202                  0

Interest during construction :

Amount                           30195     24156        18117         12078            6039
Installment                       6039      6039         6039          6039            6039
Balance                          24156     18117        12078          6039               0

Commission on Back to back L/C Limit :

Amount of L/C Limit                  0         0             0              0               0

Commission @0.50% per annum          0         0             0              0               0


Interest on Cash Credit

Principal                      358272     382380       406487        406727          406727

Interest @Tk. 12%                42993     45886        48778         48807           48807

Assumptions :

01. Amount of term loan       503246               04. Installment              Quarterly

02. Period of loan            4 years              05. Rate of Interest         14.50%

03. Grace Period           12 months               06. No. of Installment       1
              Amortization of Term Loan
              Intt. @14.5% per annum

  No. of.     Principal           Principal      Interest
Installment    Amount            Installment   Installment


   01          503,246                    0          18243

   02           503246                    0          18243

   03           503246                    0          18243

   04           503246                    0          18243

   05           503246                41937          18243

   06           461309                41937          16722

   07           419372                41937          15202

   08           377435                41937          13682

   09           335498                41937          12162

   10           293561                41937          10642

   11           251624                41937           9121

   12           209687                41937           7601

   13           167750                41937           6081

   14           125813                41937           4561

   15             83876               41937           3040

   16             41939               41937           1520

                                    503244        191549
                            Cost of Goods Sold


                                                                       (Tk in '000')

Item                                      YR-1      YR-2      YR-3         YR-4
Capacity Utilisation                         75%       80%       85%           85%

Raw Materials                             838594    894500    950406         950406

Wages & Salaries                          157430    165302    173566         182245

Stores & Spares                                0      1992      2989            3985

Repair & Maintenance                           0      9514      7849            7849

Depreciation                               41499     41499     41499           41499

Fuel & Lubricant                            4416      4708      5000            5000

Rent, Tax & Insurance                       8609      8609      8609            8609

Other Expenses                               200       250       300             350

Cost of Production                       1050748   1126374   1190219        1199944

Add : Opening Stock of WIP for 3 days          0     10507     11369           12016

Total Work in Process                    1050748   1136882   1201587        1211960

Less : Closing Stock of WIP for 3 days     10507     11369     12016           12120

Cost of Goods manufactured               1040240   1125513   1189571        1199840

Add : Opening Stock of FG for 10 days          0     34675     38673           40941

Goods available for sale                 1040240   1160188   1228244        1240781

Less : Closing Stock of FG for 10 days     34675     38673     40941           41359

Cost of goods sold                       1005565   1121515   1187303       1199422
                             Sales Estimate
                                                                          (Tk in '000')
Item                                      YR-1         YR-2      YR-3          YR-4


Revenue at rated capacity                1750000      1750000   1750000        1750000

Capacity Utilization                           75%       80%       85%             85%

Revenue at Capacity Utilization          1312500      1400000   1487500        1487500

Add : Opening stock of WIP for 3 days            0      10507     11369           12016

Total Revenue                            1312500      1410507   1498869        1499516

Less : Closing Stock of WIP for 3 days        10507     11369     12016           12120

Sales revenue                            1301993      1399139   1486853        1487396

Add : Opening stock of FG for 10 days            0      34675     38673           40941

Sales revenue                            1301993      1433813   1525526        1528338

Less : Closing Stock of FG for 10 days        34675     38673     40941           41359

Total Sales revenue                      1267318      1395140   1484584        1486978

Net Sales                                1267318      1395140   1484584       1486978
                                   Forecast of Earnings

Item                                         1st yr       2nd yr      3rd yr       4th yr

Sales Revenue                              1267318    1395140        1484584   1486978

Cost of Goods Sold                         1005565    1121515        1187303   1199422

Gross Profit                                261752        273626     297281        287556

Administrative & Marketing Expenses           3702         4607        4809         5025

Operating Profit                            258050        269019     292472        282531

Financial Expenses                          115965        109735      88304        64009

Net operating profit                        142086        159284     204168        218522

Income Tax                                   T a x                 H o l i d a y

Investment (15%)                             21313        23893       30625        32778

Net Profit after investment                 120773        135392     173543        185744

Return on investment (6.00%)                     0         1279        2712         4550

Net profit after return on investment       120773        136671     176255        190294

Dividend @10% on paid up capital             35457        35457       35457        35457

Retained earnings                            85316        101213     140798        154837

Cumulative retained earnings                 85316        186529     327327        482163

Ratios :

Gross Profit to sales                         21%           20%         20%          19%

Operating profit to sales                     20%           19%         20%          19%

Net Profit to sales                           11%           11%         14%          15%

Return on Equity                              26%           23%         23%          20%

Return on Investment                           9%           10%         13%          13%

Debt-Service Coverage Ratio (times)           0.00          1.05        1.24         2.38
                                   Sensitivity Analysis
                         ( Based on 10% increase in Production Cost)

Item

Sales revenue                              1267318   1395140    1484584      1486978
Cost of Goods Sold                         1106122   1233666    1306033      1319364
Gross Profit                                161196     161474       178551   167614
Administrative & Marketing Expenses           3702       4607        4809      5025
Profit before Tax & Interest                157494     156867       173742   162589
Financial Expenses                          115965     109735       88304     64009
Net operating profit                         41529     47133     85438        98580
                                             T a x    H o l i d a y
Investment (15%)                              6229       7070       12816     14787
Net Profit after investment                  35300      40063       72622     83793
Return on investment (6.00%)                     0        374         798      1567
Net profit after return on investment        35300      40437       73420     85360
Debt-Service Coverage Ratio (times)           0.00       0.00         0.00      0.00


                                    Sensitivity Analysis
                               ( Based on 10% decrease in Sales )

Item
Sales revenue                              1140586   1255626    1336126      1338281
Cost of Goods Sold                         1005565   1121515    1187303      1199422
Gross Profit                                135021     134111       148823   138859

Administrative & Marketing Expenses           3702       4607        4809      5025
Profit before Tax & Interest                131319     129504       144014   133834
Financial Expenses                          115965     109735       88304     64009
Net operating profit                         15354      19770     55710       69825
                                             T a x     H o l i d a y
Investment (15%)                              2303       2965        8356     10474
Net Profit after investment                  13051      16805       47354     59351
Return on investment (6.00%)                     0        138         316       817
Net profit after return on investment        13051      16943       47670     60168

Debt-Service Coverage Ratio (times)           0.00       0.00         0.00      0.00
                               Break Even Analysis

                                 At the 4th year

01. Sales and Service revenue at 85% capacity                                           1486978
02. Total Cost : Operational, Administrative and Financial                              1267894

                                                                                       TK in'000'
Items                                                  Fixed cost       variable       Total cost
                                                                          cost
Raw Materials                                                       0     950406         950406
Wages & Salaries                                             36449        145796         182245
Stores & Spares                                                797          3188           3985
Repairs & Maintenance                                         3925          3925           7849

Depreciation & Write Off                                     41499                 0      41499
Water, Power & Fuel                                           1000          4000           5000
Rent, Tax & Insurance                                         8609                 0       8609

Other Expenses                                                 175           175             350
Salary (Administration)                                       3187                 0       3187
Postage, telephone & telegraph                                 100           100             200
Stationery & Printing                                            70            70            140
Travelling & Conveyance                                          80            80            159
Audit Fee                                                        30                0          30
Miscellaneous Expenses                                         113           113             225
Financial Expenses                                           13935        50074           64009
                                                                              0
Total                                                        109968     1157926         1267894


P/V Ration : Sales-Variable cost/ Sales         0.22

Break Even Point (Sales) = Fixed Cost/       496941              33 % of capacity Utilization
                             P/V Ratio                           28 % of rated capacity

Break Even Point (cash) =                    309408              21 % of capacity utilization
                                                              17.68 % of rated capacity
                               Projected Fund Flow Statement

                                                                               TK in '000

Sources of Fund                Constr.        1st Yr       2nd Yr    3rd Yr       4th Yr
                                Year

Paid-up Capital                    354572         -           -          -           -
Net Profit before Tax & Interest      -        258050       269019    292472        282531
Back to back L/C Limit                -
Working capital loan                  -         35239         2572      2572               239
Depreciation & Write off              -         42193        42193     42193         42193
Bank's term Loan                   503246         -           -          -           -
Interest during construction        30195         -           -          -           -
Return on Investment                  -                0      1279      2712             4550

Total                              888013     335482       315063    339950        329513


Utilization of Fund

Capital Expenditure                860537         -           -          -           -
Preliminary Expenses                  400         -           -          -           -
Increase in current assets            -
Repayment of term loan                -                0    167748    167748         88980
Payment of IDCP                       -          6039         6039      6039             6039
Payment of Interest                   -        115965       109735     88304         64009
Investment                            -         21313        23893     30625         32778
Dividend                              -         35457        35457     35457         35457

Total                              860937     178774       342871    328174        227264



Cash Surplus/deficit                27076      156709       -27808     11776        102250
Opening Balance of Cash                   0     27076       183785    155977        167753
Closing Balance of Cash            27076      183785       155977    167753        270003
                                 Projected Balance Sheet


Properties & Assets            Constr.       1st Yr    2nd Yr    3rd Yr    4th Yr
                                Year

Current Assets :

Cash & Bank Balance              27076        183785    155977    167753     270003
Other Current Assets               -          326134    347876    369618     369618

Sub-Total                       27076        509919    503853    537371     639621

Fixed Assets :

Investment                         -           21313     45206     75831     108609
Preliminary & Pre-operating exp. 1200            960       720       480        240
Fixed Assets (net)              859737        809922    760107    710292     660478

Sub-Total                       860937        832195    806033    786603     769327

Total Assets                   888013 1342114          1309886   1323974   1408948

Liabilities :

Short term liability :
Working Capital loan               -           35239     37812     40384      40623
Bank Borrowing                     -          323033    344568    366104     366104
Total                                    0   358272    382380    406487     406727

Term Loan :

Bank's term Loan                503246        503246    335498    167750      78770
Interest during construction     30195         24156     18117     12078       6039
Sub-Total                      533441        527402    353615    179828      84809

Owner's Equity :

Paid-up capital                 354572        354572    354572    354572     354572
Investment                           0         21313     45206     75831     108609
Retained earnings                  -           85316    186529    327327     482163

Sub-Total                      354572        461201    586307    757730     945345

Total Capital & Liabilities    888013 1346874          1322301   1344045   1436880
                        Financial Rate of Return
                                                                  Tk in 000

  Year           Investment                Benefit                 Net Cash
                                                                    Flow


    0                860937                          0               -860937
    1                 46851                  300243                   253392
    2                  6247                  311212                   304965
    3                        0               334665                   334665

    4                        0               324724                   324724
    5                        0                42193                    42193
    6                        0                42193                    42193
    7                        0                42193                    42193
    8                        0                42193                    42193
    9                        0                42193                    42193
   10                        0                42193                    42193

   11                        0               501061                   501061


Financial Rate of Return =         21.96 %
Assumptions :

01. The economic life of the project has been estimated to be 10 years without
    any major replacement.
02. The fixed cost of the project has been estimated at Tk. 4078.49 lac.
03. Benefit of the project has been estimated as appended :

Operating          Net Profit            Depreciation                Total
  Year             before Tax & Intt.

         1           258050                   42193                  300243
         2           269019                   42193                  311212
         3           292472                   42193                  334665
         4           282531                   42193                  324724
         5                0                   42193                   42193
         6                0                   42193                   42193
         7                0                   42193                   42193
         8                0                   42193                   42193
         9                0                   42193                   42193
        10                0                   42193                   42193
Total                                                              1524003
04. Recovery of capital i.e. salvage value of the project at the 11th year


  Item                  Cost                Recovery                   Total
                                             Percent

Land                 419602                     100%                    419602
Building             183985                      10%                     18399
Machinery            199246                       5%                      9962
Inventories           53098                     100%                     53098

Total                                                                  501061
Inventories :


  Year                                                                Amount

    0                                                                        0
    1                                                                    46851
    2                                                                     6247
    3                                                                        0
    4                                                                        0
    5                                                                        0

Total                                                                   53098



                Debt-Service Coverage Ratio

Income

Net profit                        120773      136671       176255       190294

Depreciation & write-off           42193        42193        42193       42193

Interest on term loan              72972        63849        39526       15202

Total                            235938      242713       257974       247689


Obligation

Interest on term loan              72972        63849        39526       15202

Installment of term loan                0     167748       167748        88980

Total                             72972      231597       207274       104182

Ratio:                                           1.05         1.24           2.38
              Building & Other Civil Construction

Item of Construction                                Q
                                        Specification uantity    Unit      Total cost
                                                                 Cost      TK '000'

01.Shore/slipway protection works       Brick wall(m)    1200      8000           9600

02.Internal Road with RCC Topping       HBB                                       4000

03. Slipways construction               400m                2   16000000         32000

04. Shipbuilding Hall 16m height        sqm              3000     12000          36000

05. Fabrication Shed 12m height         sqm              3000      8000          24000

06. Machine shop 8m height              sqm              1500      9600          14400

07. Sand Blasting Plant 8m height       sqm              1500      9600          14400

08. Power Station 8m height             sqm               800     13200          10560

09. Carpentry Shop 8m height            sqm               500      9600           4800

10. Office Building 5m height           sqm               600     20000          12000

11. Labour Shed 4m height               sqm               500     12000           6000

12. Covered Warehouse                   sqm               700     12000           8400

13.R.C.C Flooring of 30% Open Space sqm                  4500       850           3825
  Open ship building area 15000sqm
14. Deep tube well, water supply, sewerage                                        1000

15. B/wall, gates, security posts etc   L.S                                       1000

16. Miscellaneous                                                                 2000

Grand Total                                                                     183985
                      List of Machinery to be Imported

'Name of the Machinery           Unit    Quantity        Unit price Unit Price Total price
Description                                             in USD      in TK       in TK '000'
01.Acetylene Gas regulators
    No.
                                
              100              180       12600          1260
02. Air Compressor              No.              1             2000     140000            140
03. Bench Grinder               No.              3              400       28000             84
04. Cast Steel Wheels           No.            150              280       19600          2940
05. Chain pulley block          Set             30              400       28000           840
06. CNC plate cutting m/c       No.              1           85000     5950000           5950
07. Crane: Electric overhead     No              2           22000     1540000           3080
     traveling (10 tons)
08. Crane: Electric overhead     No.                1        30000     2100000           2100
     traveling (20 tons)
09. Crane: Electric overhead     No.                2        12500      875000           1750
     traveling (5 tons)
10. Crane: Electric overhead     No.                1        80000     5600000           5600
     traveling (50 tons)
11. Crane: Slipway gantry        No.                1       150000   10500000          10500
   (120 tons)
12. Cutting machine with         No.            20             220       15400            308
    abrasive disc
13.Diving equipment              No.                1         3800      266000            266
14. Drill bit sharpener          No.                2          250       17500             35
15. Dye penetration NDT            No.              1         2200      154000            154
   testing machine
16. Electric cables                 m          2000             12        840           1680
17. Electric lights                Sets         800             12        840            672
18. Electric motors                Nos.          15            125       8750            131
19. Electric panels and switchboards              4           6800     476000           1904
20. Electrical switches, fuses,ckt breakers      60            320      22400           1344
21. Electronic thickness measuring apparatus      2           7200     504000           1008
22. Fan and blowers                Sets          50             70       4900            245
23. Fire extinguishers             Nos.          50             80       5600            280
24. FS Wire                        Coil           2           8000     560000           1120
25. Gas generator(400 kW)          Nos.           2         280000   19600000          39200
26. Grit blasting nozzles          Nos.         100            220      15400           1540
27. Hand tools                     Sets         150             35       2450            368
28. High pressure rubber hose       m           100             35       2450            245
29. High pressure water gun        Sets           1           1600     112000            112
30.Horizontal bend saw             Sets           1           2750     192500            193
31. Hydraulic jack                 Nos.          20            850      59500           1190
32.Hydraulic press                 Sets           1          45000    3150000           3150
33. Hydraulic shear             Nos.                1        22000     1540000           1540
Sub-Total Imported Machinery cost                        1298975                      90928
                      List of Machinery to be Imported (contd)
'Name of the Machinery           Unit      Quantity Unit price Unit Price Total price
Description                                          in USD     in TK       in TK '000'
34. Lathe machine (10 feet bed)
 
No.              1       5000     350000            350
35. Lathe machine (15 feet bed) No.                1      12500     875000            875
36. Lathe machine (25 feet bed) No.                1      30000    2100000           2100
37. Lever shears                  No.              1       7000     490000            490
38. Open steel chain             meter          400          20        1400           560
39. Oxy Acetylene Gas            Sets           125         280       19600          2450
   cutting and brazing torch
40. Oxygen and Acetylene pipes meter            750          12         840           630
41. Paint drying oven             No.              1      11500     805000            805
42. Paint spray unit              No.              3       6000     420000           1260
43. Paint thickness measuring No.                  2       2200     154000            308
44. Pipe cutting machine          Set              1       3500     245000            245
45. Pipes                        meter          800         125        8750          7000
46. Plate bending roller          No.              1      95000    6650000           6650
47. Portable crack tester         No.              1      12500     875000            875
48. Portable ultrasonic device    No.              1      10000     700000            700
49. Power tools                  Sets           100          80        5600           560
50. Pressure testing pump         Set              1       3000     210000            210
51. Radiographic NDT m/c          No.              1      15000    1050000           1050
52. Rail Line                     ton           150         650       45500          6825
53. Roller bearing               nos.           200         400       28000          5600
54. Shaper machine                 no              1       8000     560000            560
55. Sheet pile                    Ton           150        1200       84000         12600
                                  set
56. Shot blasting and priming plant                1     220000 15400000            15400
57. Sintered bearing             nos.           200         200       14000          2800
58. Steel plates, joists          Ton           250        1050       73500         18375
59. Thermic Oil heater (1 MW)                      1       3500     245000            245
60. Thread cutting machine        No               1       2500     175000            175
61. Transport carriage           Nos.              2      11000     770000           1540
62. Truck (10 tons)               No               1      22000    1540000           1540
63. Truck: Flat pickup            No               1      15000    1050000           1050
64. Truck: Fork lift (10 tons)    No               1      18000    1260000           1260
65. Ultrasonic thickness         Nos.              2       3200     224000            448
    measurement machine
66. Universal tool sharpener     Nos.              1        500       35000             35
67. Welding electrode            Nos.              3       2000     140000            420
    drying oven
68. Welding holder               Sets           200          65        4550           910
69. Welding machine (arc)        Sets             75        750       52500          3938
70. Welding: MIG machine         Sets              1       7000     490000            490
                                 Nos.
71. Welding: Submerged arc machine                 1       6000     420000            420
72. Welding: TIG machine         Nos.              1       7000     490000            490
73. Wire rope cutter             Nos.              1       1250       87500             88
74. X-ray devise                 Sets              1       8000     560000            560
                                 Sets
75. X-ray film processing/developing unit          1       6000     420000            420
76. X-ray Pocket apparatus       Sets              2       4500     315000            630
77. Miscellaneous equipment (2.5%) of total        1      62594    4381580           4382
Sub-Total Imported Machinery cost                      1547394                   108318
Grand Total:                                           2846369                   199246
                         List of Furniture & Fixture


Name of the Furniture                     Unit     Quantity       Unit price   Total Tk.
                                                                   in Tk.        in'000


01. Table for Managing Director            No.                1       12000          12
02. Table for others                       No.                8        4500          36
03. Chair for Managing Director            No.                1        5200           5
04. Chair for others                       No.            12           1500          18
05. Visitors Chair                         No.            18           1500          27
06. File Cabinet                           No.                4        5000          20

07. Steel Almirah                          No.                2        7500          15
08. Fan                                    No.            30           1500          45

09. First Aid Box                          No.                4        5000          20
10. Floor Mat                              No.                1       12000          12
11. Tube Light                             No.          100              150         15
12. Furniture & Fixture general            LS                 1      500000         500
13. Telephone                              No.                2       15000          30
14. Photocopy Machine                      No.                1       75000          75
15. Mobile Phone                           No.                5        5000          25
16. Computer, Printer & UPS.               No.                2       32000          64
17. Air Cooler                             No.                5       35000         175
07 Fire Extinguisher                       No.                8        5000         40
Total                                                                             1134
                            DEPRECIATION AND MAINTENANCE COST

Machinery
Name of                     Cost          Annual    DepreciationAnnual      Annual
item                        (USD)                   life(Years) repair &
                                          maintenance                       Depreciation
                                          cost (%)                           cost
                                                                maintenance USD USD
Acetylene Gas regulators          18000      5.0%         4             900         4500
Air compressor                     2000      2.5%         5              50           400
Bench grinder (double)             1200      5.0%         5              60           240
Cast steel wheel                  42000      5.0%         5            2100         8400
Chain pulley block                12000      2.5%         5             300         2400
CNC plate cutting machine         85000      2.5%         7            2125        12143
Crane: Electric (10 tons)         44000      2.5%         10           1100         4400
Crane: Electric (20 tons)         30000      2.5%         10            750         3000
Crane: Electric (5 tons)          25000      2.5%         10            625         2500
Crane: Electric (50 tons)         80000      2.5%         10           2000         8000
Crane: gantry (120 tons)         150000      2.5%         12           3750        12500
Cutting abrasive disc              4400      5.0%         7             220           629
Diving equipment                   3800      5.0%         10            190           380
Drill bit sharpener                 500      2.5%         7              13            71
Dye penetration testing            2200      2.5%         10             55           220
Electric cables                   24000      2.5%         4             600         6000
Electric lights                    9600      2.5%         10            240           960
Electric motors                    1875      5.0%         12             94           156
panels & switchboards             27200      5.0%         5            1360         5440
 switches, fuses, ckt etc.        19200      5.0%         7             960         2743
 thickness measuring              14400      2.5%         5             360         2880
Fan and blowers                    3500      5.0%         5             175           700
Fire extinguishers                 4000      2.5%         10            100           400
FS Wire                           16000      5.0%         12            800         1333
Gas generator (400 kW)           560000      5.0%         4          28000        140000
Grit blasting nozzles             22000      2.5%         10            550         2200
Hand tools                         5250      5.0%         3             263         1750
High pressure rubber hose          3500      2.5%         7              88           500
High pressure water gun            1600      2.5%         12             40           133
Horizontal bend saw                2750      2.5%         12             69           229
Hydraulic jack                    17000      2.5%         15            425         1133
Hydraulic press                   45000      2.5%         15           1125         3000
Hydraulic shear                   22000      2.5%         7             550         3143
Lathe machine (10 feet bed)        5000      2.5%         15            125           333
Lathe machine (15 feet bed)       12500      2.5%         15            313           833
Lathe machine (25 feet bed)       30000      2.5%         15            750         2000
Lever shears                       7000      2.5%         7             175         1000
Open steel chain                   8000      2.5%         4             200         2000
 Gas cutting and brazing torch    35000      2.5%         4             875         8750
Oxygen and Acetylene pipes         9000      2.5%         10            225           900
Paint drying oven                 11500      5.0%         7             575         1643
Paint spray unit                  18000      2.5%         7             450         2571
Machinery (CONTD)
Name of                      Cost          Annual    DepreciationAnnual      Annual
item                         (USD)                   life(Years) repair &
                                           maintenance                       Depreciation
                                           cost (%)                           cost
                                                                 maintenance USD USD
Paint thickness measuring m/c       4400      2.5%         12            110           367
Pipe cutting machine                3500      2.5%         7              88           500
Pipes                             100000      2.5%         12           2500         8333
Plate bending roller               95000      5.0%         5            4750        19000
Portable crack tester              12500      5.0%         5             625         2500
Portable ultrasonic device         10000      5.0%         4             500         2500
Power tools                         8000      2.5%         5             200         1600
Pressure testing pump               3000      2.5%         12             75           250
Radio NDT testing m/c              15000      1.0%         15            150         1000
Rail Line                          97500      2.5%         5            2438        19500
Roller bearing                     80000      2.5%         7            2000        11429
Shaper machine                      8000      2.5%         7             200         1143
Sheet pile                        180000      2.5%         12           4500        15000
Shot blasting & priming plant     220000      2.5%         7            5500        31429
Sintered bearing                   40000      2.5%         5            1000         8000
Steel plates, joists & sections   262500      2.5%         12           6563        21875
Thermic Oil heater (1 MW)           3500      5.0%         7             175           500
Thread cutting machine              2500      2.5%         12             63           208
Transport carriage                 22000      5.0%         7            1100         3143
Truck (10 tons)                    22000      2.0%         5             440         4400
Truck: Flat pickup                 15000      2.5%         7             375         2143
Truck: Fork lift (10 tons)         18000      2.5%         7             450         2571
Ultrasonic thickness m/c            6400      2.5%         5             160         1280
Universal tool sharpener             500      2.5%         12             13            42
Welding electrode drying oven       6000      2.5%         7             150           857
Welding holder                     13000      2.5%         4             325         3250
Welding machine (arc)              56250      5.0%         7            2813         8036
Welding: MIG machine                7000      2.5%         7             175         1000
Submerged arc machine               6000      2.5%         7             150           857
Welding: TIG machine                7000      2.5%         7             175         1000
Wire rope cutter                    1250      2.5%         7              31           179
X-ray devise                        8000      2.5%         7             200         1143
X-ray film developing unit          6000      2.5%         7             150           857
X-ray Pocket apparatus              9000      2.5%         7             225         1286
Miscellaneous                      62594      2.5%         7            1565         8942
                                                     US$              93659        438633
                                                     BDT           6556130      30704310
                           DEPRECIATION AND MAINTENANCE COST

Civil Works
Name of                    Cost          Annual    DepreciationAnnual     Annual
item                       Taka                    life(Years) repair &
                                         maintenance                      Depreciation
                                         cost (%)                          cost
                                                               maintenanceTaka USD
Shore/slipway protection works 9600000      1.0%         25         96000       384000
Internal Road                  2500000      2.5%         15         62500       166667
Slipways construction        32000000       1.0%         15        320000      2133333
Shipbuilding hall            36000000       1.5%         20        540000      1800000
Fabrication shed             24000000       1.5%         20        360000      1200000
Machine shop                 14400000       1.0%         20        144000       720000
Sand blasting plant          14400000       2.5%         15        360000       960000
Power station                10560000       2.5%         15        264000       704000
Carpentry shop                 4800000      1.0%         12         48000       400000
Office building              12000000       2.0%         15        240000       800000
Labor shed                     6000000      3.0%         12        180000       500000
Covered Warehouse              8400000      2.0%         15        168000       560000
Deep tube well, water supply, 1000000       2.5%         15         25000        66667
Office building decorations,   1000000      5.0%         5          50000       200000
Other constructions            4000000      2.5%         20        100000       200000
                                                        BDT       2957500    10794667

								
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