Visakhapatnam: The strategic partnership between Hindustan Shipyard Limited HSL and Hyundai Heavy Industries Co Ltd of South Korea for construction of five fleet support ships (FSS) with a cost of Rs 9,500 crore for the Navy in both the countries will be grounded soon. The agreement may be signed sometime next year and the talks are in progress between the MoD and South Korea.
Talking to newsmen here in Vizag city on Wednesday, chairman and managing director of HSL Rear-Admiral (retd) L.V. Sarat Babu said if all goes as per plans the first ship was expected to roll out in October 2022 from the Hyundai facility in South Korea.
The construction of remaining four FSS would start at HSL in Vizag with the technical support of Hyundai. “We are planning to roll out one FSS every 10 months after the delivery of the first vessel from Hyundai,” he added.
The HSL, which has posted a net profit of Rs 53.77 crore and the negative net worth has been reduced from Rs 1,252.5 crore to Rs 750.51 crore in 2016-17 fiscal year, is all set to wipe out losses with its pleas for financial restructuring under consideration of the Union government.
Mr Sarat Babu said that through sustained efforts to improve its performance the negative net worth has reduced.
Once the restructuring package, which is a book adjustment without any cash flow, is sanctioned, the negative net worth would become zero, he added.
HSL has achieved an income of '650.08 crore and a value of production of '629.04 crore in 2016-17. The value of production had been the highest since the inception of the company. The profit after tax was Rs 53.77 crore which was a significant achievement. Mr Sarat Babu said that the process of refilling the request for proposal (RFP) on two Special Operational Vessels (SOVs) is now in the process. “We are hoping that HSL would get order for two SOVs on nomination basis and the value of the order for both the vessels will be around Rs 2,500 crore, he added.
Expressing displeasure over the poor orders, the CMD said that the order book position is not satisfactory. Presently the capacity utilisation of the HSL is around 48 per cent only while the breakeven order value for yard capacity should be around Rs 5,000 crore, he added.
HSL to patch up with Essar oils and ONGC
The Hindustan Shipyard Limited (HSL) is trying to settle the financial dispute with the Essar Oils and ONGC through arbitration following the latest orders by the Principal District Judge, that the movable and immovable properties of HSL have been attached.
HSL has signed a contract with four contractors including ONGC for fabrication, transportation and erection of oil platform at Ravva in East Godavari in 1995.
The shipyard, in turn, offloaded the order to Essar Oil Limited. Essar completed the works in 1998 and asked ONGC to pay Rs 40 crore as HSL was financially not in a position to pay the amount.
Due to ‘default in payment the amount had increased to Rs 220 crore, which includes interest and current rate of dollar conversion into rupees.
As the amount was not paid by the HSC, EOL has invoked arbitration and passed three awards asking HSL to pay the amount. HSL refused to comply the arbitration order and filed a petition in the district court in 2001.
