HSL upbeat on Rs. 20,000-cr order potential in next 5 yrs

Hindustan Shipyard Ltd (HCL) Chairman and Managing Director Commodore Hemant Khatri's focus is to increase delivery schedule and quality so as to enhance the brand image of the company set up way back in 1941, while admitting the fact that the order book position is adversely hit due to the prolonged spell of Covid-19 pandemic. He is hopeful of doing well in 2021. In an exclusive interview with Bizz Buzz, he says the premier shipbuilding yard at present has orders worth Rs 2850 crore and is expecting orders worth Rs20,000 crore in the next five years. The CMD is hopeful of signing a contract with the Ministry of Defence by the third quarter of the current fiscal on building five Fleet Support Ships

We at HSL are looking to become one of the best shipyards in the country and this can't be possible without full support of our local industries and MSMEs. We cleared 98 per cent of its legacy payments to sub-contractors & MSMEs even during the pandemic. The company is looking forward for various business partners towards undertaking steel fabrication, outfitting, engineering and electrical works in construction of high tonnage ships and other platforms

With regard to DSVs, fabrication of the majority of the blocks is in the advanced stage of completion. However, delays in order placement, has led to slippages in availability of equipment for installation. The yard is gearing up for construction of five Fleet Support Ships for which the preliminary design and built specifications have been approved by Indian Navy

How was the year 2020 for Hindustan Shipyard Limited mainly due to the dislocation caused by the pandemic?

The year 2020 has been a challenging year for all the sectors due to covid-19 pandemic. Like most others, we have also emerged stronger & learnt new ways of working. post- lockdown, HSL ensured resumption of all services and functions in a phased manner/two shift system. I am happy to share how responsibly our employees responded and worked despite personal risks during that time. They also voluntarily contributed Rs30 lakh monetary contribution during the pandemic period to PM CARES fund. With respect to the financials, there is a drop in the turnover primarily due to insufficient order book, as our submarine business unit is lying idle.

Can you elaborate on your mission after taking over as the CMD in September 2020 for the next financial year?

HSL is the premier shipbuilding industry established in 1941. The yard has the best infrastructure for ship building, repairs and refitting submarines. However, projects in the past have taken much longer and suffered losses. My aim now is to drive change towards improving our performance for timely construction and repair of ships and submarines within the budgeted cost and meeting desired quality standards. To achieve this, Prime Minister Modi ji's mantra has been adopted which says, "Reform with Intent, Perform with Integrity and Transform with Intensity." Towards achieving better productivity, a '5T' approach consisting of Trust building, Teamwork, Time management, Technology adoption and Transformation of process/ policies is being followed. I am happy to state that team HSL has whole-heartedly joined me to revamp the procedures and process towards overcoming the inefficiencies & professional challenges.

It seems you have done extremely well in encouraging local MSMEs and ensuring prompt payments to them, notwithstanding the challenges posed by the economic slowdown and lockdown imposed due to the pandemic. Please elaborate MSMEs have been playing a critical role in supply of material and services over the past many years?

They play a very vital role in meeting our production timelines. They are our business partners. HSL had procured 54 per cent of its goods and services from MSMEs in the FY 2019-2020.

We at HSL are looking to become one of the best shipyards in the country and this cannot be possible without full support of our local Industries and MSMEs. HSL had cleared 98 per cent of its legacy payments to sub-contractors & MSMEs even during the pandemic period. HSL is presently looking forward for various business partners towards undertaking steel fabrication, outfitting, engineering and electrical works in construction of high tonnage ships and other platforms.

How are expectations for the yard during the new fiscal going by an impressive record in the past few years?

The company has orders worth Rs2,850 crore and is expecting orders worth Rs20,000 crore in the next five years. Through the sustained efforts, the company has been improving and posting operating and net profits continuously except current financial year. We intend to continue to capitalise on future growth opportunities and export opportunities, under the guidance of the Ministry of Defence/Department of Defence Production and Department of Public Enterprises.

Being a premier shipbuilding yard, how do you see the future of HSL? What are orders on hand and progress with regard to building Fleet Support Ships?

The main goal of HSL is to substantially improve delivery performance and a lot of changes in working methodologies & business processes are being done at all levels to deliver all new projects on schedule. The current meagre order book is about Rs2,850 crore, which includes construction of two Diving Support Vessels and four 50 tonne bollard pull tugs for Indian Navy. All the four tugs are in the final phase of outfitting and will be delivered soon. With regard to DSVs, fabrication of the majority of the blocks is in the advanced stage of completion. However, delays in order placement, has led to slippages in availability of equipment for installation.

The yard is gearing up for construction of five Fleet Support Ships for which the preliminary design and built specifications have been approved by Indian Navy. We are hopeful of signing a contract with MoD by the third quarter of 2021.

What's your comment on public–private partnership model, whilst comparing the working/operations modalities of PSUs and private firms?

The PPP model has the advantage of having better infrastructure solutions than an initiative that is wholly public or wholly private. It results in faster project completion and reduced delays on infrastructure projects by including time-to-completion as a measure of performance and therefore of profit. Also return on investment (RoI) might be greater than projects with traditional, all-private or all-government fulfilment. Innovative design and financing approaches become available when the two entities work together. The operational and project execution risks are transferred from the government to the private participant, which usually has more experience in cost containment. high-quality standards are better obtained and maintained throughout the life cycle of the project. In comparison to the private firms, Central PSUs are governed by policies such as preference to MSMEs, global tender enquiry restrictions, procurement through GeM (Government e-Marketplace portal), CAG & CVC guidelines regarding financial procedures and HR rules. In contrast private shipyards have greater autonomy, flexibility of operations, HR management, business solutions enabling quick decision making.