Urgent need to load Hindustan Shipyard with adequate orders: L V Sarat Babu, chairman and managing director, Hindustan Shipyard

There is an urgent need to load Hindustan Shipyard (HSL), located in Visakhapatnam, with adequate orders so that the shipyard’s capacity can be optimally utilised, Rear Admiral L V Sarat Babu (Retd), chairman and managing director of HSL, tells Huma Siddiqui in an interview.

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L V Sarat Babu

There is an urgent need to load Hindustan Shipyard (HSL), located in Visakhapatnam, with adequate orders so that the shipyard’s capacity can be optimally utilised, Rear Admiral L V Sarat Babu (Retd), chairman and managing director of HSL, tells Huma Siddiqui in an interview. Excerpts:

What new orders are you expecting to cater for Indian Navy’s maritime capability prospective plan 2025 (MCPP)?

It is understood that the Indian Navy would aspire to operate around 180 to 200 warships by the year 2025 which could possibly include 3 air craft carriers. Given the present strength of warships of the Navy which is possibly about 125, there is a vast opportunity for partnering in the Navy’s MCPP programme in shipbuilding. The Navy has assigned construction of 2 Special Operations Vessels and 5 Fleet Support Ships to be constructed over the next 5 to 8 years. However, the actual construction of these vessels would commence only by 2019-end due to inherent pre-contractual procedures. Therefore, the existing capacity would remain grossly under-utilised till then if the yard does not receive orders on nomination in areas of our strengths.

What is the status of the tie-up of HSL with Hyundai Heavy Industries (HHI)?

The government has signed an inter-governmental MoU with South Korea in April this year for strategic co-operation in shipbuilding. HSL has been nominated as their preferred shipyard while South Korea has recommended Hyundai Heavy Industries (HHI) for the strategic partnership between the two yards. On June 28, representatives from both sides had preliminary discussions to review the progress on the strategic partnership. The co-operation between the two will enable joint construction of Fleet Support Ships with modern shipbuilding techniques.

What about the ministry’s efforts at assigning orders on nomination to HSL?

HSL came under the administrative control of defence ministry in 2010 for undertaking construction of ships for the Navy as also strategic projects. However, the order book position from the Navy since then till today has been limited toRs 120 crore. There is an urgent need for the Navy/Indian Coast Guard /Shipping Corporation of India to consider assigning construction on nomination for enabling optimum utilisation of the shipyard’s capacity. The shipyard is presently operating at 48% capacity. Secretary (Defence Production) is seized of the issue and he is making all out efforts towards this end.

Indian Navy is your main customer — are they satisfied?

In the past, there have been considerable time overruns in delivery of various products. But, since the last two years, the yard’s operational performance and productivity indices have all improved substantially and are now better or comparable to the best amongst our yards. Last year in 2016 we completed 2.5 out of 5 pending shipbuilding projects and in this financial year we certainly intend to complete the balance 2.5 shipbuilding projects for various customers. We, therefore, would like to maintain the tempo and momentum of growth which would certainly help the economy of the city and state and also provide increased employment to the people around the shipyard. And enable the government’s quest to encourage MSEs and promote indigenisation.

Mazagon Dock (MDL) is occupied with P-75 Submarines project, EoI is going to L&T / Reliance / MDL for P-75 India Project, what does it mean for HSL?

In accordance with strategic partnership model, certain OEMs and Indian partners were to be identified and assigned to various strategic defence segments. HSL has the necessary strategic infrastructure to be capable of being upgraded for submarine construction especially due to its vast experience in major submarine repairs and due to the fact that in due course the yard would undertake construction of Special Operations Vessels which are nothing but smaller submarines. We would certainly like to be considered as one of the competent yards for submarine construction.

What about major submarine repair capability at HSL?

Our yard has been in the business of submarine repairs from 1970s. Over the years we have undertaken minor and major repairs to Egyptian submarines, Foxtrot class submarines and EKM submarines. Although the refit completion of the last EKM submarine took longer than desired, the quality of refit and its subsequent uninterrupted operational cycle stands testimony of HSL’s competency and quality of work. Based on our past experience, we at the yard are of the opinion that the Medium Refit Life Certification (MRLC) of EKM submarines should be undertaken at HSL. Apart from the capability of the yard, a large amount of resources both in terms of men and material have been invested over the years in the submarine retrofit division. Further, it would not be in the best interests of our country to lose the skill set and under-utilise our resources developed through government funding.

What is the status of pending orders and exports and global business?

As I said earlier, presently capacity utilisation of the yard is less than 50% while the breakeven order value for yard capacity should be aroundRs 5,000 crore. We presently have a residual order book position of onlyRs 383 crore. Therefore, there is an urgent need to load the yard with adequate orders so that shipyard’s capacity can be optimally utilised. The shipyard is focussed on the domestic shipbuilding requirements. However, the yard has the capacity to construct and export the following types of vessels: Bulk Carriers; General Cargo cum multi-purpose vessels; Survey and mooring vessels; Training Ships; Inshore & Offshore Patrol vessel; Passenger/Ferry Ships; Tugs for Defence sector and various ports.

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