The Hindu Business Line : GoM meet on Hind Shipyard inconclusive

New Delhi, Oct 10 The Group of Ministers (GoM) meeting on Wednesday to decide the fate of Hindustan Shipyard Ltd (HSL) remained inconclusive. However, indications are that that the GoM is more tilted towards the Defence Ministry’s interests, which is eyeing HSL to meet the Indian Navy’s requirements.

This is evident from the fact that HSL has been told not to bid for any more projects till a final decision is taken. Higher the size of order book of HSL, more delayed would be the proposed transfer of HSL’s ownership from the Shipping Ministry to the Defence Ministry. As it is, HSL would take about 3-4 years to serve its current order book of about Rs 2,000 crore.

HSL, a public sector enterprise currently under the Shipping Ministry, caters to the needs of merchant shipbuilding and repairs, oil sector, ports, defence and coast-guards at present. Indian Navy, which has its Eastern Command (the nodal point for naval operations on the eastern sea-front) in Visakhapatnam, had shown interest in HSL to carry further work on its futuristic projects.

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 for its own use.

The Union Cabinet had referred the Rs 799.61 crore restructuring-cum-revival proposal of HSL to the GoM. 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.

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.

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.

At present, the Defence Ministry has three shipyards in the country -- Mazagaon Dock Ltd, Mumbai; Garden Reach Shipbuilders and Engineers Limited, 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.

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