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Hindustan Shipyard deal with Hyundai falls flat

      05/09/2018

With the decision for collaboration between Hyundai Heavy Industries Co. Ltd of South Korea and Hindustan Shipyard Ltd, a Ministry of Defence Enterprise, for construction of five Fleet Support Ships falling through, HSL is now exploring other options for strategic partnership.

Highly-placed sources have told that, HSL has begun the process to scout for a partner to take up construction of five FSS, vessels meant for replenishment of ships in mid-sea with man, material, weapons in the event of emergency, at an estimated cost of 9,500 crore.

After the visit of Prime Minister Narendra Modi to South Korea and his talks with the officials of Hyundai, world’s leading shipbuilder, an inter-governmental agreement was signed to designate HSL and one of the shipyards of South Korea for collaboration last year. As Hyundai is in the private sector, the Ministry of Defence wanted the government there as a counter-guarantee for the collaboration.

According to the sources, differences over incorporation of certain standards and pricing are responsible for failure to strike a deal with Hyundai. Now HSL is issuing an expression of interest to seek prospective shipbuilders for partnership keeping in view the thrust on ‘Make in India’ initiative.

As per the talks held earlier, Hyundai is supposed to roll out the first FSS in 2022 and simultaneously take up construction of other vessels at HSL here under the supervision of its experts. The formal agreement is slated to be signed next month.

HSL, a premier shipbuilding yard set up in 1941, achieved a turnaround in 2015-16 with a net profit of 19 crore and increased it to 30 crore in 2016-17.

A senior official of HSL has said they will issue Request for Quotation (RFQ) after zeroing in on strategic partner for construction of FSS, which has already been mandated to the shipyard by the Ministry of Defence.

HSL is also getting the order for construction of two Strategic Operational Vehicles, also called midgets or mini submarines at a total cost of 2,500 crore. It took up the refit of INS Sindhuvir, an EKM class submarine, in July last at a cost of 500 crore after successful completion of retrofitting of another submarine of Navy INS Sindhukirti.