Shipyards race for Rs 60,000 crore deal

[CONNAN]

Hindustan Shipyard Ltd chairman and managing director, had fired the salvo saying private shipyards work for profits. (Photo: hsl.gov.in)
Visakhapatnam: The race between shipyards controlled by the defence ministry and private ship builders to bag Rs 60,000-crore contract to build six submarines for the Indian Navy has turned interesting.

Rear Admiral N.K Mishra, Hindustan Shipyard Ltd chairman and managing director, had fired the salvo saying private shipyards work for profits. Adm. Mishra said he feared that private shipyards may compromise on quality after bidding at lower prices to bag the projects. “They never work for losses,” he said.

The defence ministry had appointed a high-powered committee to assess the strengths of various shipyards in both the public and private sectors for Project-75 (India). Along with the defence controlled yards, private sector Pipavav Yard, L&T, and ABG are also in the race. Last December, BHEL, Midhani and HSL formed a consortium to build submarines. The consortium will jointly stake claim with the MoD.

“There is a systematic smear campaign by the private yards against the defence controlled shipyards. There were instances where certain private shipyards had bagged work at a lower price and then stopped them midway without completing them,” Adm. Mishra said. “Private shipyards will never build ships for a loss, they will do it for profits. I fear they may compromise on quality,” he said.

“Warships should be built at defence controlled yards where technology, manpower and expertise are available. Proper care should be taken while building warships that are used to face the enemy,” he told reporters.

A core team headed by a three-star admiral has been formed with members from the MoD to assess the right shipyard. Earlier, five of the six submarines were to be built at the Mazagon Dock Ltd and HSL was to build one. According to the latest decision, all six are to be constructed by a single shipyard in India.

Shipyards race for Rs 60,000 crore deal

 

[anant_s]

Hindustan Shipyard Ltd chairman and managing director, had fired the salvo saying private shipyards work for profits.

And isn't that a standard business model.
While govt. owned builders do foray into financially unattractive projects, Private players do not enjoy government support in case of financial loss. Also given the fact that most shipyards are booked heavily, any participation of private players must be looked at positively as they will add to the already strained capacity and in the longer run will prove far cheaper than importing.

Last December, BHEL, Midhani and HSL formed a consortium to build submarines. The consortium will jointly stake claim with the MoD.

These too are all Public sector Units.

 

[CONNAN]

And isn't that a standard business model.
While govt. owned builders do foray into financially unattractive projects, Private players do not enjoy government support in case of financial loss. Also given the fact that most shipyards are booked heavily, any participation of private players must be looked at positively as they will add to the already strained capacity and in the longer run will prove far cheaper than importing.

These too are all Public sector Units.

good point

The main problem is the process of indigenisation as yet was focussed on strengthening PSUs in their efforts to develop and manufacture defence equipment not on private firms

 

[anant_s]

The main problem is the process of indigenisation as yet was focussed on strengthening PSUs in their efforts to develop and manufacture defence equipment not on private firms

True!
There is an urgent need to not only to add to building capacities but also absorb new technology that will be coming in future. The orders anticipated in future are huge and i donot think it will be possible for existing contractors to complete projects in time, unless new players are allowed. Also new players will also bring with them a fresh set of sub-assembly suppliers (Machinery manufacturers, electronic item suppliers, foundries etc) and this will not only be passing the benefits of defence spending to general economy, but also provide principle integrators, more choices for large projects as the need arises.

 

[PARIKRAMA]

HSL position has not been good and that has come out in last one week in various reports. This report is a way to provide confidence that HSL still can do much more.

If MOD wants to reap benefits then
A) It needs to award P75I program to MDL and choose scorpene so that investments made till now to get modular construction going benefits IN the most in terms of time to execute the project and Cost efficiency. In case P75I is not given still, the assembly line benefits should be used to order additional scorpenes for the benefits as mentioned above.

B) If creation of second assembly line that too in a private sector is the aim, then we can be rest assured that HSL and its team of HSL-MIDHANI-BHEL wont win.. All are DPSUs with no private party. They missed a trick here surely. Expect L&T or Pipavav to be the front runners among the pvt companies especially L&T who had done work for Arihant black project.

An important question is, part A) makes sense to arrive at economies of scale model with P75I or follow on orders (envisioned logically). Part B) needs a more assurance to players inclusive of L&T etc as setting up an assembly line is cost intensive and with just 6 Subs order may not look that attractive. Unless, MOD would politely indicate and say perform well, do timely deliveries and take more orders as then they can quote existing shipyards running full orders. In case thats the aim then, its whole heartedly welcomed by all the folks. The private sector participation would definitely spur the industry towards a more matured defence ecosystem and increased competition would make DPSU's also pull up their pants. Its simple Perform or Perish.

Going by this, i dont see HSL in any of the points stated above.

 

[SwAggeR]

Useless crying.This is same as recently workers and management of coal unions and railway unions were crying. These sarkari mofos just don't like competition from their more efficient private peers. Compare the nowadays condition of BSNL with private telecom companies.

Now it's time to stop free loading. Principle of Perform or Perish should be touchstone of modernization and they shouldn't worry about quality,quality control would be of stringent order as there would be lives of our men at stake.

This should be understood as a measure to bypass undeserving reservation wale babus. No reservation in Pvt. Companies.

 

[kaykay]

Including private shipyards will make the competition healthier and a welcome step. Want this to happen in Aviation sector too.

 

[third eye]

Far too long have PSUs lived off the tax payer.

The fact that they are still around without making profits indicates bad business ethics.

The PSU's must compete with the industry on level terms.

As regards quality, the buyer will decide supported by water tight terms & conditions & warranty clauses that extend across the life of a vessel.