Crisil Ratings Forecasts 15% Revenue Growth For Indian Ship Recyclers

The Indian ship recycling industry will see revenue growth of 15% this fiscal after two years of decline, Crisil ratings said on Thursday. The rating agency said the growth will be supported by the increased availability of ageing vessels for recycling due to addition of new vessel capacity globally and higher competitiveness of Indian ship recyclers compared to key rival nations -- Bangladesh and Pakistan.

"The Indian ship recycling industry will see revenue growth of 15% this fiscal after two years of decline -- 22% in fiscal 2024 and 8.5% in fiscal 2023," it said.

According to the rating agency, the increased availability of ageing vessels will bring down input cost for ship recyclers.

"This, along with higher capacity utilization leading to better efficiency, will improve operating profitability by 75 basis points (bps) to 6.5% this fiscal," it said.

Crisil ratings said higher cash generation and absence of capital expenditure (capex), along with healthy balance sheets, will keep credit profiles stable for Indian ship recyclers.

Indian ship recyclers are expected to grab a lion's share of the increased volume of condemned vessels, given their higher competitiveness leading to likely volume growth of around 20-23%, it said.

Key competitors -- Bangladesh and Pakistan, are facing a severe crisis of foreign currency availability and ship recyclers in these countries are hence taking longer to complete vessel purchases and thus owners of condemned vessels are likely to avoid these markets.