Nod for capital recast of HSL likely by March

The plan was submitted a year ago. HSL is desperately in need of the approval for capital restructuring package.

In the absence of any approval, the only alternative is to privatise the yard. The shipyard's privatisation proposal has already been under consideration by the central government.

"We have submitted the fresh capital restructuring package to the ministry of shipping. At present, HSL's accumulated loses have touched Rs 1,100 crores. Once the restructure package is approved by the government, these loses will be wiped out and our balance sheep would be clean, and our present liabilities burden of about Rs 520 crores will be transferred to the government," commodore Y Janardhan, the in-charge chairman and managing director, HSL, told Business Standard.

"The ministry of shipping has already cleared our fresh capital restructuring package. In the month of August the joint controller and accountant general visited the shipyard and had negotiations with us about the restructure package. The company is expecting the ministry of finance clearance in the month December, and by the end of March we may get the final approval," he said.

Currently, the shipyard has liabilities to the tune of Rs 230 crores to State Bank of India, MAT (Modvat tax) liability of Rs 90 crores, VRS liability of Rs 128 crores and other government loans totalling around Rs 520 crores. Once the restructuring package is approved all these liability burdens will be transferred to the Government of India, he informed.

In order to reduce the wage burden further, the company is planning to cut down the manpower size to 2,200 from the existing 3,600, he disclosed.

At present, the shipyard has been paying nearly Rs 66 crores wage bill per annum. Once the manpower strength comes down to 2,200, the wage bill will also get reduced to Rs 43 crores, he added.

"Currently Hindustan Shipyard has Rs 260 crores worth of 14 ship-building orders on hand. At present, we are facing severe financial crises due to lack of funds, and we are not getting any sufficient support from the banks to get the working capital, even though we are trying to complete these orders as early as possible,"Janardhan explained.

Even under severe adverse financial conditions, the company has managed to achieve Rs 2.4 crores net profit during the last fiscal.

If the capital restructuring package comes through, financial institutions will come forward to provide the working capital, and once sufficient working capital is on hand Hindustan Shipyard Limited will be able to complete the new orders on schedule, its CMD added.