The debt resolution
was delayed mainly due to lukewarm response from the bidders due to the Covid-19 pandemic.
Both Jindal and Russian government have completed the inspection of the shipyard during the last week of February and a five-member team of the Russian Government concluded its inspection of the yard this week.
Pipavav shipyard had earlier received interests from amongst others, Chowgule Industries of Goa, and APM Terminals Company as well as Invent ARC but all three of these potential bidders have set terms unacceptable to the banks.
Besides there are several legal hurdles to the resolution plan as the shipyard is located on the leased land in Pipavav, Gujarat wherein the sea facing port site is taken on lease from Gujarat Maritime Board, and the SEZ site is taken on lease from E-Complex Pvt. Ltd, a wholly owned subsidiary of Reliance Naval.
R-Naval has already received lease termination notices for the land taken on lease from Gujarat Maritime Board, whereas E-Complex Pvt. Ltd is also undergoing a resolution process through NCLT. With this, both the site at the shipyard is under legal dispute and whether the potential buyers will be able to use the shipyard post takeover is not clear.
Taking this into account, the potential bidders have sought assurances from the Ministry of Defence and Indian Navy and Coastguard that fresh orders should be given to the new buyer in order to pay for their risk and investment. But the Indian government is not ready to offer assurance to any bidder including to the Russian Government, saying the yard would have to follow established rules to competitively bid for the potential shipbuilding orders. L&T is another big player in the Indian ship building sector.
Two other private shipyards, ABG Shipyard and Bharati Shipyard Limited (BSL) have also failed to find buyers for the last four years as the Ministry of Defence is unwilling to take the risk of giving ship orders to private yards as these yards went bankrupt and were unable to service orders. The government owned shipyards are performing well in the same segment.
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