India seeks JV for ailing shipbuilder

The government in India has decided to look for a joint venture (JV) partner from the private sector to bail out ailing state-owned shipbuilder Hooghly Dock and Port Engineers Ltd (HDPEL) and allow it to participate in the ongoing ship-building boom in the country.

A committee of secretaries, headed by the cabinet secretary, recommended this plan while considering a Rs393.61 crore financial restructuring package for the country?s oldest shipbuilder based in Kolkata. The plan includes writing off the government?s loan to the company, including interest.

“We are in the process of drafting the terms of reference for the induction of a JV partner in HDPEL,” a shipping ministry official said. HDPEL, a small-size shipbuilder capable of constructing ships with maximum cargo carrying capacity of 15,000 tonnes, has two units at Salkia and Nazirgunge on the banks of river Hooghly in Howrah near Kolkata. Both facilities have the infrastructure to build various types of vessels such as tugs, dredgers, floating dry-docks, fishing trawlers, oil pollution control vessels and passenger ships. The company?s ship repair division at Salkia can handle small and medium size vessels and other marine craft, while its facilities at Kidderpore dock and Haldia can attend to emergency repair and refitting jobs.

As both the Salkia and Nazirgunge units were suffering heavy losses due to a lack of fresh investment and modernization, the Union government nationalized the company in 1984. It expected to use the available infrastructure through necessary investment for modernization, and increase the capacity for shipbuilding and ship repairing in the country. Since the company was nationalized through an Act of Parliament, it could be privatized only after legal approval and it has suggested that the government offload its entire stake in the company to a strategic partner after finalizing a financial restructuring package in consultation with the prospective buyers. If the government fails to find buyers, it may shut down HDPEL.