Cash buyer NKD Maritime has bought what will be the first cruiseship sold for recycling in India after lines began culling their fleets following the onset of the Covid-19 pandemic.
The deal provides clarity on the scrap value of cruiseships sold outside the Turkish recycling market, where pricing details have largely been kept under close wraps.
NKD bid $11.65m for Jalesh Cruises’ 70,300-gt cruiseship Karnika (built 1990) through an auction held by the Bombay High Court on Wednesday. This equates to $385 per ldt.
The cash buyer is closely associated with Alang-based Shree Ram Group, which classification society Lloyd’s Register has certified as compliant with European Union regulations on ship recycling.
Indian yards have been completely excluded from the recent cruiseship scrapping boom that has seen a flood of vessels sold to EU-approved yards in Turkey.
Cruise majors such as Carnival Corp and Royal Caribbean Group have been willing to accept hefty discounts of more than 40% from EU-approved yards in Turkey to avoid any negative publicity associated with sending vessels for recycling in non-approved yards.
Shree Ram Vessel Scrap is regarded as one of India's better shipbreakers in terms of its safety and environmental standards, and has been selected by shipowners such as Eastern Pacific Shipping and Maersk Line to demolish their end-of-life ships.
However, while classification societies such as Lloyd's Register have certified several Indian yards as being EU-compliant, the EU itself has not given any yards its formal approval due to concerns over downstream waste management at Alang.
Auctions open the door
Indian ship recyclers have complained in private about being cut off by the cruise industry and, judging by their turnout at the Karnika’s auction, they are keen to recycle cruise tonnage.
Court documents indicate that all 13 parties that submitted bids on the ship were connected to the Indian ship recycling industry.
One leading Indian cash buyer told TradeWinds that auctions provide an inroad for Indian recyclers into the cruise sector as courts outside of the EU are willing to sell ships to the highest bidder including non-EU-certified recycling yards.
The Bombay High Court stipulated as part of the sales contract with NKD that the Karnika was deemed to be scrap and could not be sold for further trading.
Jalesh Cruises was launched in 2018 with a stated aim to become India’s first international standard cruise operator. It bought the Karnika as Pacific Jewel from Carnival Corp and put it through an extensive refit in Singapore, bringing its total investment to $123m.
It suspended cruise operations in March and, shortly thereafter, the ship was arrested in Mumbai over a $4m claim filed by bunker suppliers.
Senior company executives later blamed the ongoing arrest on disruptions to the court process caused by India’s lockdown. They launched an extensive marketing campaign for a domestic cruise programme beginning in November.
The ship’s 60-strong crew sent out a cry for help in early October, claiming that they were stranded on a floating oven and were living off dwindling stocks of cornflakes and burgers.
