New Delhi: Industrialist Navin Jindal’s Jindal Steel and Power Limited and Russian government-owned United Shipbuilding Corporation have carried out an inspection of the Anil Ambani Group’s Reliance Naval and Engineering Limited’s (R-Naval) Gujarat-based Pipavav Shipyard for a potential buy-out, ThePrint has learnt.
According to sources, the Jindals completed inspection of the naval shipyard during the last week of February, while a five-member team of the Russian government concluded its inspection on 2 March.
R-Naval is undergoing process under the Insolvency and Bankruptcy Code (IBC) and facing claims of over Rs 43,587 crore from several financial creditors, including the State Bank of India (Rs 1,965 crore), the Union Bank of India (Rs 1,556 crore) and the IDBI Bank (Rs 1,375 crore).
According to sources, the National Company Law Tribunal (NCLT), Ahmedabad, in its order dated 24 February, has granted an extension of 153 days (1 September 2020 to 31 January 2021), owing to the Covid-19 pandemic, for the completion of the Resolution Process of R-Naval by August 2021.
In addition, the Resolution Process of R-Naval has extended the bids submission date for the fifth time, to 15 March 2021.
The extension of the insolvency process for Pipavav comes at the same time when a new bidder has entered the fray — Jindal Steel and Power Limited, India’s third-largest producer of the alloy by market value.
ThePrint had in November last year reported that the United Shipbuilding Corporation (USC) and 11 other firms have been given time till 30 November to submit their resolution and revival plans to acquire Pipavav.
Also read: We’re facing an acute cash crunch, Anil Ambani’s Reliance Naval says
Issues with Pipavav Shipyard
The Pipavav Shipyard had earlier received interests from Chowgule Industries of Goa, APM Terminals Company and Invent ARC, among others, but all the three potential bidders have set terms unacceptable to the banks, sources said.
Compounding the issue were legal hurdles to the resolution plan as the shipyard is located on a land taken on lease from Gujarat Maritime Board, and the SEZ site is taken on lease from E-Complex Private Limited, a wholly owned subsidiary of Reliance Naval.
R-Naval has already received lease termination notices from the Gujarat Maritime Board, while the E-Complex is also undergoing a resolution process through NCLT.
This means that both the sites at the shipyard are under legal dispute and whether the potential buyers will be able to use the shipyard post-takeover is not clear.
All potential bidders want assurances from the Defence Ministry and the Indian Navy, besides the Coast Guard, that orders will be given to the new buyer in order to pay for their risk and investment.
It is learnt that the government is unwilling to give any such assurance to any bidder, including the Russian government, saying the yard would have to follow established rules to competitively bid for the potential shipbuilding orders.
Why Russia and Jindal Steel are interested
The reason why the USC is interested in R-Naval is because the Russian firm has been eyeing the Indian Navy’s long-pending Project 75 India, under which six conventional submarines with Air-Independent Propulsion (AIP) System are to be built.
If USC acquires R-Naval, it can build new submarines in India itself, under the Make in India initiative.
Russia is eyeing the contract, worth about Rs 80,000 crore, with Moscow pitching in strongly for a joint design and production under a government-to-government agreement.
Jindals, meanwhile, see Pipavav as a captive client for the company’s shipbuilding plates.
Quoting Vidya Rattan Sharma, managing director at the steelmaker, Bloomberg reported, “We are looking at it in two ways… One is the strategic location as it is port-based and the other is that it can be a good outlet to consume our own plates.”
Also read: Setback for private shipyards as Navy cancels Rs 20,000 cr Landing Platform Docks contract
Tareek pe Tareekh has always been the order of the day. After 153 days, the RP will find some other reason for another extension. And yes, more the adjournment, more the RP gets paid. Anil Ambani is out of the company, so he will not be bothered. Banks are not affected because it is the Public Money that is going down the drain.
The Navy is not getting the OPVs and perhaps they are in no hurry to get the vessels. In any case the contracts have been cancelled. The first two vessels are rotting away slowly without being commissioned. The hulls might rust away in this Tareek pe Tareek policy.
The Coast Guard Training Ship will never get completed. In fact, it may be waste in any case since CG personnel are being trained on other vessels. But why is the GOI not cancelling the order yet?
The order for 14 FPVs was placed by the MoD on RNEL fully knowing that the yard was in deep financial distress. Yet, there is no accountability. Obviously, the decision to give the contract to RNEL must have been taken at the highest levels of the Govt and the Indian Coast Guard!!! Now the ICG can kiss the project good-bye.
Further, as rightly brought out by the author, the yard is plenty of legal problems. There are other hidden technical problems with the Graving Dock which might need plenty of time and money to resolve. With all these hassles, even is somebody is willing to acquire the yard, it will be at a cost which not be acceptable to the CoC.
In all probability, the Tareek pe Tareek will continue till it ends up in liquidation. The same route taken by ABG Shipyard and Bharati Defence.
the banks are not struggling. whoever takes over should be required to first payback any debts plus interest from smaller businesses that had ship contracts that were never paid. as well as other employees and business. Anil Ambani bought the shipyard with debts that he should have paid when he took over. he instead ignored them because he knew the court system would take so long that some of these creditors would give up. THE RESOLUTION PROFESSIONALS SHOULD FIRST PAY BACK THOSE WHO ARE OWED DEBTS FROM THE TIME IT WAS PIPIVAV.
Instead of going to hammer all the properties of ANIL AMBANI JI,all finincial institution should GIVE HIM ANOTHER CHANCE AND SUPPORT TO ANIL AMBANI JI SO THAT HE COULD STAND AGAIN,IT WILL BE GOOD FOR EVERYONE, BECAUSE I CAN ASSURE ONE THING TO EVERYONE THAT,HE BELONGS TO A VERY HARDWORKING AND LABOURIOUS FAMILY. HE MIGHT BE GOING THROUGH BAD PERIOD,BUT,,,,HE IS NOT AT ALL A BAD PERSON.HE CAN RECOVER,LETS PRAY TO THE ALMIGHTY AND SUPPORT HIM.
(SANJEEV BAKSHI SONGSMITH)
Modijee is doing everything in his capacity to protect ambani brothers . As you can see from few years they are extending time so anil ambani can get more time and better money . Our country has became banana republic because of current govt . SC , ED , EC ,CBI ,Police and media are misused on daily basis to silent dissent .
Modijee is doing everything in his capacity to protect ambani brothers . As you can see from few years they are extending time so anil ambani can get more time and better money . Our country has became banana republic because of current govt . SC , ED , EC ,CBI ,Police and media are misused on daily basis to silent dissent .
Whoever is successful budder for anil ambani’s naval shipyard in Gujarat the buyer should be asked to directly deposit the sale proceeds into the bank from which loan was taken for this project. This method should be followed in all takeover bids to protect public money and this will definitely bring down NPAs reoported by all banks especially nationalised banks