Hooghly Dock to form JV with pvt shipbuilder

The move comes after a directive from the shipping ministry to either float a JV or face disinvestment

Hooghly Dock and Port Engineers Ltd (HDPEL) in West Bengal will be restructured into a shell company and will form a joint venture with a private shipbuilder to manufacture, maintain and repair ships.

This move comes after HDPEL was served an ultimatum by the shipping ministry to either float a JV or face disinvestment

HDPEL, in turn, will lease its land and assets to the planned JV for 30 years which can be extended upon necessary approvals. Furthermore, only 24 per cent of the stake in the JV will remain with the Centre, thereby equipping the private partner with managerial control. Besides shipbuilding and repairing, the private partner will have the additional responsibility of promoting tourism in inland and coastal waters. In case the ailing vessel maker fails in this attempt, it will be disinvested.

The ministry in September this year also improved the voluntary retirement scheme (VRS) for the shipbuilder's employees. So far, of its 314 workers, 80 have opted for the scheme.

According to a company executive, the employees have to opt for the improved VRS by January. The fate of those who do not opt for the scheme remains uncertain as the ministry is yet to take a call in this regard.

Manish Jain, chairman of HDPEL, is, however, confident of roping in a private partner. Given its 800 metre waterfront in Nazirguange and Salkia on the banks of the Hooghly river, he said the request for quotation for the JV would attract global and Indian companies. “All we need is a partner that has the technological edge,” he told Business Standard.

He said Indo-Bangladesh maritime traffic (cargo and passenger vessels) was poised to lead growth in shipping in the east which, in turn, would increase demand for shipbuilding.

According to professional services company KPMG, trade between India and Bangladesh was valued at $6.9 billion during 2014-15 and was expected to double to $10 billion by 2018. “The share of the eastern coast ports of the total cargo handling capacity for Indian ports is expected to increase to 40 per cent over the next 4-5 years,” Prahlad Tanwar, director, transport and logistics at KPMG in India, told this newspaper.

The east coast ports in India handled about 370 million tonnes of cargo in 2014-15 out of the total 1,051 million tonnes handled by all ports in India.

“If we need to handle more cargo in inland waters and increase Indo-Bangladesh maritime traffic, we need to have the latest technology,” Jain said.

In June this year, Prime Minister Narendra Modi signed an agreement with Bangladesh on coastal shipping and renewed the 1972 protocol on inland waterways transit that uses the two countries’ waterways for commerce. A memorandum of understanding was also signed for using Chittagong and Mongla ports in Bangladesh for movement of goods to and from India.

Asked about the interest the move would generate among private shipbuilders in India, P R Govil, advisor to the Shipyards’ Association of India said, “The equipment at HPDEL is too old and there needs to be a concrete policy on shipbuilding from the Centre.”

He said private shipbuilding majors in the country would not be interested in participating in the forthcoming tender.

Established in 1819 and nationalised in 1984, HDPEL has been suffering recurring losses for 10 years.
SALVAGING A SINKING SHIP

• Nationalised in 1984, Hooghly Dock and Port Engineers Ltd (HDPEL) has been suffering recurring losses for 10 years
• HDPEL has been asked to either float a joint venture with a private shipbuilder or face disinvestment
• HDPEL will lease its land and assets to the planned JV for 30 years which can be extended
• 24% of the stake in the JV will remain with the Centre
• HDPEL Chairman Manish Jain is confident of roping in a private partner
• Besides shipbuilding and repairing, the private partner will also have the responsibility of promoting tourism in inland and coastal waters