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HSL bags its biggest order since inception

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Signs over USD 2 Billion order with Indian Navy

Commodore Hemant Khatri (Retd) is in a happy frame of mind these days. Understandable, given that Hindustan Shipyard Ltd (HSL), the company of which he has been Chairman and Managing Director since September, 2020, has just signed its biggest contract, after being looked at as a marginal player for long in the defence contracting segment. The contract has been signed with the Indian Navy.

“The contract is worth Rs 19,048 crore, and this signals that HSL is on its way to becoming a partner of the Indian Navy in the years ahead,” Cmde Khatri told Vizag Industrial Scan, a day after HSL signed the contract with the Indian Navy.

“The contract will be implemented under the supervision of the Indian Navy. Naval officers will be part of each part of the implementation, including the procurement of vital components, to ensure that HSL meets the expectations of the navy,” Cmde Khatri said.

HSL has contracted to deliver five fleet support ships in the new order from the Navy.

“The first FSS is to be delivered within 48 months from the date of the signing of the contract, and one FSS after every 10 months from the first delivery. HSL will be doing the engineering and design of the FSS vessels, and we will be engaging experts as needed,” he said.

The most important thing in this contract is that HSL will be doing the design work itself, instead of depending on a more technological advanced shipbuilding company, either in India or overseas.

“HSL has three clear areas of business, and all three segments have been doing well in the past few years. The ship repair segment has contributed Rs 300 crore in the past few years, while the retrofitting of the navy’s submarines has contributed Rs 900 crore. 

With the new contract in the kitty, we hope to be able to contribute to the indigenisation of the Indian Navy’s capabilities, in line with the Atmanirbhar policy of the central government,” Cmde Khatri said.

Asked how HSL had swung the FSS contract in its favour, he said that it had taken several years of negotiations with the top brass of the Indian Navy to convince it that the shipyard the oldest shipyard in India that opened its doors for business in 1941 as a private company founded by the late Seth Walchand Hirachand—had the technical wherewithal to design and build the ships.

“The past 25 years have seen the outsourcing of work to experts, and the shipbuilding industry has been no exception. We hire experts on three-year contracts, and those contracts are renewed depending on what the consultant contributes to HSL. The shipyard currently employs about 1,100 people, including 350 officers, fulltime. “The rest of the tasks at the yard are outsourced.”

Cmde Khatri, who joined HSL in 2017 after a long and illustrious career in the Indian Navy, said that HSL had been hobbled with the reputation of being a builder of commercial oceangoing vessels for long. “Many people do not know that HSL built a mooring vessel for the Indian Navy called the INS Dhrumak in 1959 and the second vessel, the INS Darshak, in 1964, but somehow HSL was never considered as a serious player in the naval vessel segment. 

The shipyard also lost out on naval contracts because it was under the administrative control of the Ministry of Shipping. 

HSL was brought under the administrative control of the Ministry of Defence in February, 2010,” he said.

According to Cmde Khatri, HSL is well on its way to becoming a lean and agile shipbuilding company, with a focus on the defense sector. “The yard has so far delivered 300 vessels, including 200 passenger vessels. HSL has also delivered several bulk carriers, and it got into the specialty vessel business when it built offshore platform vessels in partnership with a South Korean shipbuilder. 

The Navy appeared to be hesitant in awarding us contracts for building its vessels, but our relationship with the Navy has changed since HSL came under the control of the Ministry of Defence, and we hope this relationship will lead to more contracts from the navy,” he said. 

He further added that his focus was to complete the new contracts on time, the augmentation of the shipyard’s infrastructure and its modernization, and finally, its digitization. 

Cmde Khatri said the way of costing of naval vessels has also transitioned from being cost-plus to fixed cost. “The new contract includes everything that will need to go into the building of the five, 44,000-tonne fleet support ships,” he concluded.

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