The Hindu Business Line : Hindustan Shipyard may go to Defence Ministry

Snapshot
HSL’s Rs 799.61-crore restructuring-cum-revival proposal was referred to the GoM by the Union Cabinet, given Indian Navy’s strategic interests.
The company has Rs 2,000 cr worth orders catering to merchant shipbuilding and repairs, oil sector, ports, defence and coast-guards.

Mamuni Das

New Delhi, Oct 9 The ownership of Visakhapatnam-based Hindustan Shipyard Ltd (HSL), the largest public sector shipyard, is likely to be transferred from the Ministry of Shipping to the Defence Ministry. A Group of Ministers (GoM), which is evaluating HSL’s restructuring proposal, is likely to take this view, it appears.

The HSL restructuring-cum-revival proposal, at a cost of about Rs 799.61 crore, was referred to the GoM by the Union Cabinet, given Indian Navy’s strategic interests in the region around Visakhapatnam.

“While no final decision has been taken yet, indications are that the GoM would favour the use of HSL for meeting the strategic requirements of the Indian Navy,” said sources.

However, the complete transfer is likely to happen by about 2010 so that HSL is able to deliver its current orders. HSL has about Rs 2,000 crore of orders on its books. At present it caters to the needs of merchant shipbuilding and repairs, oil sector, ports, defence and coast-guards.

The GoM 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 GoM is likely to meet on Wednesday for taking a decision on the issue.

At present, the Defence Ministry has three shipyards in the country – Mazagaon Dock Ltd, Mumbai; Garden Reach Shipbuilders and Engineers Ltd, Kolkata; and Goa Shipyard Ltd, Goa. Meanwhile, the Shipping Ministry has three shipyards under it which include HSL, Visakhapatnam; Cochin Shipyard Ltd, Cochin and Hooghly Dock and Port Engineers Ltd, Kolkata.

Expectedly, the Shipping Ministry wants to retain HSL with itself (and serve Defence orders also as is the case now), while the Defence Ministry wants HSL exclusively for its own use.

The GoM, formed to take a decision on the issue of restructuring HSL, had sought a report on the shipyard’s business plans. The report, prepared by officials from Defence and Shipping Ministries, had discussed the extent to which HSL would meet the Navy’s demands.

New naval base

Incidentally, the Navy, with its eastern command headquartered in Visakhapatnam, has announced plans to set up a new, futuristic base near the district. The Visakhapatnam-based Eastern Command is the nodal point for naval operations on the eastern sea-front. Last year, the Indian Navy announced that it would 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.

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 negative net worth. But, driven by the recent surge in shipping industry, the order-books of all shipyards in India, including HSL, have swelled.

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