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Indian shipyard built ships became competitive following the reintroduction of the subsidy in 2016: Vice Admiral B. Kannan (Retd.)

Vice Admiral B. Kannan (Retd.) holds a Bachelor’s Degree in Electronics & Communications Engineering from Govt. College of Engineering, Trivandrum, M.Tech from IIT Powai and a Post-graduation in Management from Jamnalal Bajaj Institute.

 

He has over 40 years of varied experience, out of which, for a period of 20 years, he was associated with different disciplines of Indigenous development of Naval Equipment, Integration of Equipment for War Ships and Submarine Construction. His areas of expertise also encompass Technical Infrastructure creation, Project Management, Quality Assurance and General Administration. For nearly 4 years, he served as Programme Director of a Strategic Program of Indian Navy, during which INS Arihant was launched. He retired as the Chief of Materiel - Indian Navy. He has been conferred with 3 Presidential awards viz. VSM in 1986, AVSM in 2009 and PVSM in 2013.

 

He is the Managing Director & Chief Executive Officer – L&T Shipbuilding Limited with effect from 19th October 2015. He is a Member of the Executive Management Committee of Larsen & Toubro and Member of Board of Shipbuilding IC of L&T.

 

Vice Admiral B Kannan (retd) Managing Director and CEO of L and T Ship Building, one of the successful private sector ship yards in the country  gives an over view of the ship building industry and in particular the problems faced by the private ship yards  in securing orders from the government and the difficulties in execution of contracts..

He also reveals how the L T ship yard at Katupalli near Chennai has over-come these difficulties and how it has cut both time and cost over runs a perennial problem in the Indian defense industry and successfully bagged overseas contracts.

(In the Interview with Sagar Sandesh, without waiting for questions, he began pouring out vital information covering the shipping industry comprehensively and his highly informative talk delivered with vigour and warmth is given below under subheadings which in a way can be considered as Questions though not in  interrogative forms.

 

(1) The state of the shipping industry














 Ship building industry faced downward trend following the steep fall in crude prices in the international market a few years ago. As the Oil and Gas industry was feeling the pinch of prices going down, they were not interested in buying new ships. In fact the industry reversed the orders they had placed with the ship yards. Consequently the inventory of built and unsold ships became a huge problem for the shipyards.

The trend affected the Indian shipyard industry as well. The public sector ship yards in the country are not engaged in building commercial ships and were largely catering to orders from the defense ministry.

The recession in the industry led to re- activation of the subsidy in 2016 for the ships built by the domestic shipyards. The subsidy which was introduced in 2004 by the Vajpayee government had lapsed in 2014. Indian shipyard built ships became competitive following the reintroduction of the subsidy.

By this time Oil and Gas industry’s turnaround came to a point when demand cannot be reactivated. A large number of ships built and unsold were still lying in ship yards. Instead of going in for competitive new ships available in the market, the owners preferred to go in for earlier built ships at cheaper rates.

This benefitted both the Operators of ships as well as the shipyards. Ship yards were able to liquidate ships and of course both of them incurring some level of losses. .Hence the industry was definitely under stress.

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