After Mazagon, more state-run defence shipyards eye tie-ups

  (LiveMint) : After Mazagon Dock Ltd, two more defence ministry-controlled shipyards are looking for private partners to build warships to meet rising demand from the Indian Navy and the Coast Guard.

Hindustan Shipyard Ltd and Garden Reach Shipbuilders and Engineers Ltd have received expressions of interest from 8-10 private shipyards in response to tenders floated last month, their spokespersons said, without naming the applicants.
While separately inviting expressions of interest for joint venture partnerships last month, the two shipbuilders said in similarly worded advertisements on their websites that they were “looking at a joint collaborative strategy to meet the challenging timelines in order to liquidate the existing order book as well as expected orders from the Indian Navy and Coast Guard.”
State-run defence shipyards are looking for private partners to expedite production as the government tries to boost maritime defence capabilities to deal with piracy and terrorism. Mumbai-based Mazagon Dock, with an order book of RS.1 trillion accounting for about 85% of India’s defence shipbuilding orders, recently selected Pipavav Defence and Offshore Engineering Co. Ltd as a joint venture partner to build warships.
Vizag-based Hindustan Shipyard, which was brought under the control of the defence ministry from the shipping ministry last year, is executing orders worth Rs.2000/- cr . Kolkata-based Garden Reach Shipbuilders has an order book of about Rs. 9,000 crore.
“The demand from the navy and the coast guard is very high,” said R. Ghosh, director of shipbuilding at Garden Reach Shipbuilders. “So we are looking for a JV with a private yard to utilize its capacity to meet the requirements of the defence agencies,” he said by phone from Kolkata.
Defence shipyards that have developed expertise in building warships are looking at holding hands with private yards to share the rising workload, he said. “We want to augment our resources by choosing a JV partner,” said D. Srinavasa Rao, chief manager of planning at Hindustan Shipyard.
Several Indian ships have faced pirate attacks since 2008. Terrorists who attacked Mumbai in November 2008 and killed more than 160 people entered the country via the sea, forcing the government to revamp its maritime defence policy.
There are commercial reasons for such partnerships as well, said a naval expert.
“Indian yards that have made huge investments to add capacity over the past two-three years have been hit by a slump in commercial shipbuilding globally,” said B.S. Randhawa, a former chief of material as well as controller of warship production and acquisition at the Indian Navy. “If our national yards are not supported by the government, they will suffer.”
Apart from taking orders from the navy and the coast guard on their own, private yards are eyeing partnerships with state-owned defence shipyards to get work through sub-contracting.
But the joint venture plans floated by defence yards have sparked intense rivalry among private yards.
On Wednesday, Larsen and Toubro Ltd, India’s biggest engineering and construction firm, wrote to defence minister A.K. Antony questioning Mazagon Dock’s decision to pick Pipavav as a JV partner to build warships, Mint reported on Thursday.