Hindustan Shipyard expects to close Hyundai JV next year

Hindustan Shipyard expects to conclude its strategic partnership with Hyundai Heavy Industries of South Korea to construct five-fleet support ships (FSS) at an investment of Rs 9,500 crore for the Navy early next year.

The agreement may be signed sometime next year and the talks are in progress between the defence ministry and the Korean company.

Hindustan Shipyard chairman and managing director Rear Admiral (retd) L V Sarat Babu said if all goes as per the plans, the first ship will be rolled out in October 2022 from the Hyundai facility in South Korea. The construction of remaining four FSS would start at the Vizag facility 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 told reporters here last evening.

Hindustan Shipyard, which reported a net profit of Rs 53.77 crore in FY17 and could also improve its negative networth to Rs 750.51 crore from Rs 1,252.5 crore in FY16, will be able to wipe out losses if government accepts its financial restructuring proposal.

Babu said through sustained efforts to improve performance, the negative networth has come down. Once the restructuring package, which will be a book adjustment without any fresh cash flow, is sanctioned, negative networth will become zero, he added.

The public sector shipyard had income of Rs 650.08 crore and a value of production of Rs 629.04 crore in FY17, which was the highest since its inception.

Babu said the process of refilling request for proposal on two special operational vessels (SOVs) is being worked out now. "We hope we would get the order for two SOVs on nomination basis and the value of the order for both the vessels will be around Rs 2,500 crore."

Expressing displeasure over the poor order book, he said the present capacity utilisation is only around 48 per cent while the breakeven order value for the yard capacity should be around Rs 5,000 crore.