Mazgaon Dock To Bag Rs 135cr Deal Contract

The new external commercial borrowing (ECB) norms announced last week might enable the defence shipyard Mazgaon Docks Limited (MDL) to bag a Rs 135 crore contract to build a 700 passenger vessel. This will be the first major large passenger ship contract given out by the Shipping Corporation of India (SCI) in recent times.

The norms permit foreign currency borrowings for the purchase of ships from Indian shipyards. MDL is in the shortlist of an SCI global tender to supply a large passenger\cargo ship to the Lakshadweep Administration. Leading international shipbuilders in the race include Shanshai-Jaingzhou of China, the Daewoo Corporation of Korea, Frisian Shipyard of the Netherlands and three other Indian shipyards.If Mazgaon Docks Limited goes in for an external borrowing, it will be the first Indian defence establishment to procure funds from abroad.Sources said MDL was rated high on technical competence, reduced outgo of foreign exchange, subsidy given by the foreign governments to their shipbuilders which is not available to Indian shipyards and the Mazgaon Docks Limited commitment of delivering the ship in a period of 24 months.

 

Besides the government would benefit to the extent of 30 per cent of the contract value in terms of taxes, duties and levies.

However, the other shipyards have quoted substantially lower amounts than MDL with Shanshai-Jaingzhou quoting a dumping price of $25.52 million (Rs 90 crore).

The closest rival to MDL was Frisian Shipyard, Netherlands which bid $30.72 million (Rs 112 crore). The SCI has not finalised the tender.

The sources said the foreign borrowings would enable Mazgaon Docks Limited to offer deferred payment terms to the Lakshadweep administration. It would also enable it to build the ship on a modular basis by acquiring components from abroad.

For this purpose it has already signed a memorandum of understanding with Merwede, a Dutch Shipyard to provide structures and components if it bags the contract.

The new ship will supplement two ageing small vessels being used by the Lakshadweep administration for over 15 years now for transportation between the mainland and the picturesque Indian Ocean islands, considered of vital strategic importance to India.