The Hindu Business Line : GoM seeks report on HSL plans

The Group of Ministers (GoM) formed to take a decision on the issue of restructuring Hindustan Shipyard Limited (HSL) has sought a report on the shipyard’s business plans. The report, which will also discuss the extent to which HSL will meet the Navy’s demands, would be submitted in about a week, said sources.

The HSL restructuring proposal was referred to a GoM by the Union Cabinet, given Indian Navy’s strategic interests in the region around Visakhapatnam. The Navy, with its eastern command headquartered in Visakhapatnam, plans to set up a new, futuristic base near the district.

The GoM, which had its first meeting recently, comprises the Defence Minister, Mr A.K. Antony; the Minister for External Affairs, Mr Pranab Mukherjee; the Finance Minister, Mr P. Chidambaram; and the Minister for Shipping, Road Transport and Highways, Mr T.R. Baalu.

The Department of Shipping had sent a Rs 799.61-crore proposal to the Cabinet Secretariat to rehabilitate and revive the shipyard, which now has an order-book of Rs 2,000 crore. A department-related Parliamentary standing committee had also recommended expeditious clearance of the proposal.

HSL had been in a financial crisis for many years due to several factors that include poor order-book position, lack of working capital, managerial inadequacies and inability to raise funds from financial institutions due to a negative net worth. But, driven by the recent surge in shipping industry, the order-books of all shipyards in India, including HSL, have swelled.

NAVAL INTERESTS

The Visakhapatnam-based Eastern Command is the nodal point for naval operations on the eastern sea-front. Last year, the Indian Navy had announced plans to set up a new base on 5,000 acres, located about 50 km south of Visakhapatnam. The land acquisition process for the base is yet to be completed.

The new base is of strategic importance for the ENC to expand its facilities in an exclusive enclave by deepening a natural channel to have easy access to sea. The need to set up a new base arose as the existing channel of Visakhapatnam port is shared by the Navy and the port has become crowded.

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