Indian navy’s requirement
Indian navy has to look after 7000 kilometers of our coastline
including thousands of islands on either side of the country.
Further our coastline is so close to the International shipping lane
which renders them vulnerable. It could be sea piracy or unauthorized presence
of foreign naval vessels operating in the area. There is no doubt that this
task calls for a very strong maritime force.
The Indian Navy and the Coast Guards have to be more equipped and
should have longer legs to cover vast areas. They should be able to mobilize
large forces all along the Coast. It should have good surveillance which is the
beginning of the game on the Strategic front.
Ship building within our defense budget
Now if this has to happen obviously the capital required for ship
building should get due priority. More importantly if you have allocated
capital for ship building, we have to ensure that naval asset is realized in
good time and within the stipulated cost. This has not been happening in the
So there is a need for our planners to think in the manner how can we
get what we want within the available budget. Everyone understands that the
budget is not unlimited and there is always a limit to the budget you can have,
but one should try to get the best out of it.
The government should consider implementing structured contracts for
ship yards whether it is private or public sector, things should happen. But
this has not been the scenario I have seen in the last fifty five years, forty
years in the Navy and three years as the head of the L and T ship yard at
As for L and T ship yard is concerned it meets the time frame
requirement of both the navy and the coastguards. It is one of the very shipyards
in the country which has both design and construction capability.
Brief look-into of the interview of Vice
Admiral B Kannan (retd) Managing
director and CEO of Larsen and Toubro
interview of Vice Admiral B.Kannan (retd) has been quite long taking us through
four weeks; it is very informative and no less instructive in the sense that
the expert comes out with meaningful ideas about the ship building industry. It
will be good that the reader is reminded of what has gone on earlier so that he
will have a whole comprehensive idea of the interview.)
Ship building Industry faced a downward trend following the steep fall in crude
prices in the International market a few years ago. As and the Oil and Gas
Industry felt the pinch of prices going down, they were not interested in
buying new ships. In fact the Industry reversed the orders it had placed with
the ship yards during this period. Consequently the inventory of built and
unsold ships became a huge problem for the ship yards.
the time the Oil and Gas industry turn around came to a point when the demand cannot be reactivated,
a large number of ships built and unsold were lying in ship yards. Instead of
going in for competitive new ships available in the market, the ship owners preferred
to go in for earlier built ships at cheap rates.
benefitted the Operators of ships as well as the Ship yards. The Ship yards
were able to liquidate their stocks but both of them incurred some level of
losses. The Industry was definitely under stress.
the problems affecting the private sector ship yards Vice Admiral Kannan said
most of the equipment required for the industry, are not manufactured in the
country. All these need to be imported. With the result a significant per cent
of the ship’s cost are dependent on imports. This reduces the profit margins
since the costs are dependent on foreign exchange fluctuations.
have not given sufficient emphasis on indigenous development of equipment and
machinery for building commercial ships and the electronic system required for
them. The second problem the ship-yards face is the need to mobilize skilled
manpower. The recruitment system is not institutionalized. We do not have a
method by which skill development requirement for ship building are available
to the ship yards.
ship building seventy per cent of the cost of the ship is accounted for by
equipment and 10 to 12 per cent by man power. Indian labor may be cheaper but
skills are not adequate. Both these issues need to be addressed if the ship
yards have to become competitive.
initial forays into commercial ship building the L and T ship yard management
at Katupalli near Chennai took a policy decision to do only defense ship
building in 2015,
ship building is a structured process but it is badly running on time. Indian
ship building faces the twin challenges of time and cost over runs. Nearly 95
per cent of the war ship building program in the country, are running behind
schedule. I do not know why it should happen at all. The delays are due to
inadequate planning and execution or due to some technical reason or other.
Every case has its own complications. The net result is that there are
and Toubro ship yard secured orders for 54 high speed interceptor crafts for
the Indian Coastguards..We completed the project two years ahead of schedule.
We built it too early for the customer to take possession of the craft. The
Coastguards had then faced Resource Crunch. The agency also had another
problem. They did not have adequate man power to take charge of the craft once
they are manufactured.
the one hand you tell the industry to Make-in-India, the industry completes the
project on time with speed some times ahead of time. Then there is mismatch
between the capability of the industry and the resources required for
operationalizing the assets.
L and T Ship yard secured an order for a floating dry dock, an important
infrastructure for the Indian Navy. The facility was never build in India
before. The ship yard designed and built it. We handed it over to the Nay on
schedule. From keel laying to the delivery to the customer it took 24 and half
month to complete.
this order we demonstrated our capability to design and build a floating dock
on our own. I am sure this will attract attention from neighboring countries
and may result in orders.
ship yard also received order for seven offshore patrol vessels. The first
vessel was delivered in the contractual build time. This has not happened
before in India’s fifty five year old history of war ship building.
admiral Kannan attributed the achievement to the company’s engineering
capability, work ethos, detailed planning and high amount of digitalization of
the industrial process.
our ship yard has the capability to design construct and deliver ships in time
to meet the defense requirements, .which is what Make in India is required for.
That is being met by our ship yard. We have been delivering ships ahead of
schedule and hence there is no time or cost over runs, there is export market
for our products which need to be tapped.
have recently received an order from Vietnamese border guards to build twelve
ships for them at a cost of Rs 660 crores. We will demonstrate our capability
to the foreign vendor as well very soon.
may be genuine reasons for defense orders given to public sector undertakings.
But the orders should not be at the cost of private ship yards which are
performing better and are more economical to the government both in terms of
time and cost. The orders should not be
given to the PSUS on a nomination basis.
Indian Navy’s requirement for assets he said our vast coastline is so close to
the International Shipping Lane which renders them vulnerable. It could be sea
piracy or unauthorized presence of foreign naval vessels operating in the
Indian Ocean region.
navy and coastguards need to be more equipped and should have longer legs to
cover vast areas. They should be able to mobilize large forces all along the
coast. It should have a good surveillance network which is the beginning of the
game on the strategic front.
If this to happen, the capital requirements for
ship building should get due priority. With the allocation of capital, we have
to ensure that Naval Assets are realized in good time and within the stipulated
cost. This has not been happening in the past.