Shipyard¡¯s woes continue

Bottlenecks ISAKHAPATNAM: The Hindustan Shipyard Limited (HSL)’s worries continue as the Centre takes its sweet time for according clearance to the revival plan.

Once a premier shipbuilding yard, HSL set up in 1941, is now struggling for existence due to cash crunch. Despite an order book of over Rs. 2,000 crores and favourable market, HSL’s losses are increasing due to inordinate delay.

Presently, a Group of Ministers headed by External Affairs Minister Pranab Mukherjee is examining the proposal to bring the yard under the administrative control of the Ministry of Defence.

HSL has paid dearly due to ill-conceived policies of the powers-that-be. It recorded profit till 1980 and its slide started when it defaulted in payment of loans taken for its expansion during 1981-85.Capital restructuring was cleared on June 30, 1997, by the Centre involving Rs. 591.13 crores along with conversion of Rs. 173 crore credit taken from SBI into term loan. The jubilation over it remained short-lived as it could not be implemented. The reason: Minimum Alternate Tax (MAT) was not considered in the restructuring package.

Bottlenecks

The yard could not get any cash flow and failed to pay to Rs. 77.17 crores towards MAT. In the process, the accumulated losses have crossed Rs. 1,200 crores and net worth is negative at little over Rs. 1,000 crores. “The yard is comfortable as of now going by the order book. It is brimming with activity but the carry forward of the losses, injustice done through MAT, working capital crunch and poor financial parameters emerged as bottlenecks,” a source in the yard said.

On the recommendation of the Bureau of Rehabilitation of Public Sector Enterprises, the Ministry of Shipping is considering a Rs. 800-crore package to improve its health and facilitate its takeover by Ministry of Defence. It envisages writing off of Rs. 103-crore loans and interest from Centre, Rs.49.65 crore loan from SBI, MAT liability of Rs. 132 crores, one-time aid of Rs. 34 crores for machinery, Rs. 128 crores for voluntary retirement scheme and Rs. 255 crores for liquidation of SBI liability.