Reliance Naval’s eligibility question holds up warship orders worth Rs 63,000 crore (Rs 630 billion)

[Milspec]

RNEL and L&T are facing the same problems. L&T has a bigger order because they are an older company. But both RNEL and L&T have very similar expertise. And their managements are also equally good. You many not like Anil, but the RNEL management is composed of accomplished people.

https://www.rnaval.co.in/board-of-directors

https://www.rnaval.co.in/board-of-directors

You say that ignoring all the numbers you have posted yourself. 3500cr PAT vs 935cr loss, how are they even in the same league?

let me ask what happened post March 2015 that RNEL has just collapsed?

As for the OPV, the actual construction delay is very limited. The two ships made by RNEL were the first warships made by a private shipyard, which is a pretty big deal. The new designs were unveiled in 2014, and are expected to be delivered early next year. So they have kept to their new schedule, more or less. Compared to that, not one DPSU has ever delivered a warship on time, or without cost overruns. Whereas the RNEL's OPVs do not have cost overruns, and they are paying a penalty for the late delivery.

You should read my previous post.

the order was placed in 2010, the ships were to be delivered by 2014, who asked Pipavav to design a new smaller ship? GSL is one of the worst PSU shipyards and ever it delivered the saryu class OPV for the Srilankan navy within three years, an 1850 ton disp ship, laid in may 2015, delivered in March 3018.
So even with the all the ills of public sector unions and all other crap GSL delivers a ship laid in 2015 in 2018, where is the ADAG OPV again? 2019 now?

 

[randomradio]

You say that ignoring all the numbers you have posted yourself. 3500cr PAT vs 935cr loss, how are they even in the same league?

let me ask what happened post March 2015 that RNEL has just collapsed?
View attachment 3358

All private shipyards are loss making, without exception.

If DPSUs delivered on time, without cost overruns, they will be under loss too.

the order was placed in 2010, the ships were to be delivered by 2014, who asked Pipavav to design a new smaller ship? GSL is one of the worst PSU shipyards and ever it delivered the saryu class OPV for the Srilankan navy within three years, an 1850 ton disp ship, laid in may 2015, delivered in March 3018.
So even with the all the ills of public sector unions and all other crap GSL delivers a ship laid in 2015 in 2018, where is the ADAG OPV again? 2019 now?

GSL has a history of building OPVs since decades.

 

[randomradio]

Will look around, but there is definitely a deafening silence nowadays.

Yeah, the reason for the deafening silence in this case is because they are not getting any orders.

95% of the orders have gone to DPSUs. And 90% was because of direct nomination. I have no idea how private shipyards at least managed to get the remaining 5%.

 

[Milspec]

All private shipyards are loss making, without exception.

If DPSUs delivered on time, without cost overruns, they will be under loss too.

Before I explain numbers again, let me ask you if you understand what break even means in your own referenced link?

GSL has a history of building OPVs since decades.

So?

 

[Milspec]

Yeah, the reason for the deafening silence in this case is because they are not getting any orders.

95% of the orders have gone to DPSUs. And 90% was because of direct nomination. I have no idea how private shipyards at least managed to get the remaining 5%.

Substantiate your 95% figure? where does l&T 110000 cr come from then? Are they too lying now?

 

[randomradio]

Before I expalain number again, let ask you if you understand what break even means in your own referenced link?

You are too hung up on the scale, while not considering that L&T may be headed the same way as RNEL.

RNEL has not released all their numbers anyway.

So?

Previous experience counts. GSL built 4 Saryu class ships before delivering 2 to Sri Lanka. In RNEL's case, if you want a proper comparison, let's see how long it takes them to build the last 3 OPVs.

The first Saryu class took 6 years. Let's see how long RNEL will take with their first ship also.

Overall, I see a future with RNEL, not with our DPSUs, even the more accomplished ones.

 

[randomradio]

Substantiate your 95% figure? where does l&T 110000 cr come from then? Are they too lying now?

That's not from warships alone. They are building civilian ships, and even the SSBNs, and now SSNs.

 

[Milspec]

You are too hung up on the scale, while not considering that L&T may be headed the same way as RNEL.

RNEL has not released all their numbers anyway.

Again, read, comprehend your own link. A company that claims 5000 cr investment, and loss of 2500 cr, and claims to break even in 2 to three years , is contemplating Significant profit. The usual Capital invest payback standard in the west is of 24 months, here an entire shipyard is contemplating break even in 2 to 3 years signals profits. A book order or 110000 cr is not insignificant, to put it on context L&T's book order is 130 times the total Market Cap of RNEL. And that is why scale matters. You cannot claim that Boeing and beechcraft have similar market outlook.

Previous experience counts. GSL built 4 Saryu class ships before delivering 2 to Sri Lanka. In RNEL's case, if you want a proper comparison, let's see how long it takes them to build the last 3 OPVs.

The first Saryu class took 6 years. Let's see how long RNEL will take with their first ship also.

Overall, I see a future with RNEL, not with our DPSUs, even the more accomplished ones.

Order released in 2010, today is 2018. Do we need to learn how to count now?

 

[Milspec]

That's not from warships alone. They are building civilian ships, and even the SSBNs, and now SSNs.

That is not the question, substantiate your 95% figure.

 

[randomradio]

Again, read, comprehend your own link. A company that claims 5000 cr investment, and loss of 2500 cr, and claims to break even in 2 to three years , is contemplating Significant profit. The usual Capital invest payback standard in the west is of 24 months, here an entire shipyard is contemplating break even in 2 to 3 years signals profits. A book order or 110000 cr is not insignificant, to put it on context L&T's book order is 130 times the total Market Cap of RNEL. And that is why scale matters. You cannot claim that Boeing and beechcraft have similar market outlook.

Scale matters when you are making a comparison between two companies. I'm not. L&T has been in shipbuilding for a long time now, and are still yet to make money.

Order released in 2010, today is 2018. Do we need to learn how to count now?

Consider the build time instead. That's what ultimately matters.

That is not the question, substantiate your 95% figure.

Let me check, I remember reading it a few months ago.

 

[randomradio]

That is not the question, substantiate your 95% figure.

There you go.

Broadsword: Private warship builders live off scraps, while the figures tell the real tale

Anyway, L&T's 5000-10000Cr investment is only for Katupalli shipyard. Their actual investments are a lot more than that. Their main shipyard is in Hazira.

What's more interesting is both Russians and Americans chose RNEL over L&T for their projects.
Biggest warship project: Russia selects Anil Ambani's Pipavav to make frigates for Indian Navy

Reliance Defence, US Navy announce master ship repair agreement

 

[Milspec]

What's more interesting is both Russians and Americans chose RNEL over L&T for their projects.
Biggest warship project: Russia selects Anil Ambani's Pipavav to make frigates for Indian Navy

Reliance Defence, US Navy announce master ship repair agreement

Given it's state of affairs, maybe that needs to investigated too. could be another Modi -ADAG aarti type deal.

 

[Milspec]

There you go.

Broadsword: Private warship builders live off scraps, while the figures tell the real tale

Anyway, L&T's 5000-10000Cr investment is only for Katupalli shipyard. Their actual investments are a lot more than that. Their main shipyard is in Hazira.

Which according to your own link will breakeven in two years.
Again what does break even mean?

 

[randomradio]

Given it's state of affairs, maybe that needs to investigated too. could be another Modi -ADAG aarti type deal.

As the DM said, it's a wild goose chase.

If RNEL had political support, then this thread wouldn't exist. Please check OP again.

Which according to your own link will breakeven in two years.
Again what does break even mean?

Let's get real. L&T claims to break even in 2 years, that doesn't mean anything.
This is the reality:
L&T Shipbuilding's auditors raise 'going concern' doubts

They are pinning their hopes on defence orders for it.

Anyway:
Level playing field missing in India, says L&T Shipbuilding MD & CEO

Regardless of RNEL's problems, they are capable of matching L&T. Whereas even our best DPSUs have zero chance.

 

[Milspec]

Let's get real. L&T claims to break even in 2 years, that doesn't mean anything.

You posted it as a reference to back up your claim. It's quite funny when you refer to a piece of data to corroborate your narrative, when the same exact data goes against it doesn't mean anything. nice.

This is the reality:
L&T Shipbuilding's auditors raise 'going concern' doubts
.

You should really read your links before posting them .

In its report, the auditor said the management is satisfied that there are "no events or conditions that may cast a significant doubt on the ability of the company to continue as a going concern".

Read more at:
//economictimes.indiatimes.com/articleshow/64399511.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst


Now given that you are singing praises of ADAG consistently and do not want to be compared with the GSL or any other mature DPSU's, lets look at state of RNEL's OPV's Againt Vikram Class OPV's of L&T.

Keel Laid in March 2016, commisioned in 2018? and it is a 2100 Ton OPV actually bigger than the reliance's OPV. How do you justify the delay in comparison to L&T's product then?

Anyway:
Level playing field missing in India, says L&T Shipbuilding MD & CEO

Regardless of RNEL's problems, they are capable of matching L&T. Whereas even our best DPSUs have zero chance.

Finally regarding level playing field, DPSU's are in the business of defence, and yes over the years they have gathered enormous cash reserves, and always will have massive interests and no issues with working capital and thus will have lower cost compared to Private Industries. That is the reality, just to make it level playing ground, DPSU's cannot be expected to quote higher or give away their cash reserves. From your own link again, MDL, CSL, GRSE and GSL quote significantly lower than L&T or RNEL, it's just common sense to buy from L1. Nomination vs open bidding is a MoD decision, that is for the current dispensation to review, for open bidding, Private industries have had a healthy 40% share compared to 60% of the DPSU's.

 

[TARGET]

Private sector should be the future of Defense manufacturing in India but we shouldn’t ignore our public sector.Private sector has a bad reputation of market monopoly and escalating the production costs .

 

[randomradio]

You posted it as a reference to back up your claim. It's quite funny when you refer to a piece of data to corroborate your narrative, when the same exact data goes against it doesn't mean anything. nice.


You should really read your links before posting them .

In its report, the auditor said the management is satisfied that there are "no events or conditions that may cast a significant doubt on the ability of the company to continue as a going concern".

Read more at:
//economictimes.indiatimes.com/articleshow/64399511.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst

No thanks to the navy when it comes to shipbuilding. With the exception of the submarine program, they do not have much navy orders. Regardless, they are still making losses.

Now given that you are singing praises of ADAG consistently and do not want to be compared with the GSL or any other mature DPSU's, lets look at state of RNEL's OPV's Againt Vikram Class OPV's of L&T.

View attachment 3360

Keel Laid in March 2016, commisioned in 2018? and it is a 2100 Ton OPV actually bigger than the reliance's OPV. How do you justify the delay in comparison to L&T's product then?

True. But then, as I pointed out, RNEL's problem isn't a shipbuilding problem. They should have chosen their design partners better. But they can spit out ships at the same speed L&T can, which is much more important.

Finally regarding level playing field, DPSU's are in the business of defence, and yes over the years they have gathered enormous cash reserves, and always will have massive interests and no issues with working capital and thus will have lower cost compared to Private Industries. That is the reality, just to make it level playing ground, DPSU's cannot be expected to quote higher or give away their cash reserves. From your own link again, MDL, CSL, GRSE and GSL quote significantly lower than L&T or RNEL, it's just common sense to buy from L1. Nomination vs open bidding is a MoD decision, that is for the current dispensation to review, for open bidding, Private industries have had a healthy 40% share compared to 60% of the DPSU's.

What I am saying is private companies should also be nominated to certain projects where only the private companies are competing.

No, private companies have only a 5% share. They are allowed to bid on only 10% of the projects, and DPSUs take half.

You aren't reading the links properly. This is from L&T's MD.
Level playing field missing in India, says L&T Shipbuilding MD & CEO
Kannan said over the past 10-12 years, around 90 per cent of the Rs 1,300-billion orders went through 'on nomination'; and PSUs compete for the remaining 10 per cent as well. The infrastructure of these PSUs was built by the government. Hardly 4-5 per cent of the orders come to the private sector.

In this case, the MoD should keep RNEL in the LHD tender. I don't care who wins, whether it's L&T or RNEL, but both have the experience and the infrastructure to perform this task. I lean towards the Juan Carlos, which is conveniently with L&T, but that's a different topic. Any delay will push the contract into 2025.

RNEL's debts are peanuts compared to the size of contracts that are coming up. 12 RFPs are yet to be released. And if both RNEL and L&T get 2 contracts each, they will break even and move into the black. It's stupid to remove RNEL at this time.

 

[Ashutosh]

I think we ought to rid ourselves of the fallacy that just because DPSU's functioned in a totally arbitrary & unprofessional manner, we ought to excuse the Pvt Sector too. I thought thanks to the prevailing attitude of the DPSU's , that's one of the reasons the incumbent GoI is promoting pvt defence contractors to begin with.

It is a comparative scale, DPSUs literally hold the forces to ransom to their whims and fancies, In return the forces get imaginative with their demands . Pvt Sector is way more agile and responsive to changes.

 

[_Anonymous_]

It is a comparative scale, DPSUs literally hold the forces to ransom to their whims and fancies, In return the forces get imaginative with their demands . Pvt Sector is way more agile and responsive to changes.

Please check the progress made by RNaval. That's what this thread is all about. Professionalism then is a subset of the values that the management of the said firm espouses and enforces. Be it the pvt sector or the public sector, where in the public sector can only be as professional as its management ( read the government of the day) . Years of neglect, treating unions with kid gloves, treating the defence entities as holy cows, lack of vision, Inadequate timely financial inputs & state of the art modernization, etc are manifesting itself in the problems that we are facing today.

While one doesn't dispute your submission about the DPSU's, the solution lies in more autonomy to the management followed by privatisation.

This a transition phase. It's bound to be Rocky. Having said that, the present government has disappointed on multiple grounds with respect to defence beginning from the lack of a responsible person to head defence for the first three years. Parrikar's was too brief a stint to have made a desirable impact. The DPP flowing from MII should have seen parallel moves towards more autonomy for the DPSU's accompanied by a road map for privatization. This could easily have been accomplished in the first couple of years of the reign of this incumbent GoI.

I state this with retrospective view just as I state that this government was totally out of its depth w.r.t many matters concerning defence. I would put it down to a lack of experience and a steep learning curve The recent moves towards appointing a China centric TT & the SPG, though belated but welcome, ought to be seen in this light. Unfortunately, we are but 6 months away from the general elections with no guarantee of this administration returning to constructively build on their learnings.

 

[Ashutosh]

Please check the progress made by RNaval. That's what this thread is all about. Professionalism then is a subset of the values that the management of the said firm espouses and enforces. Be it the pvt sector or the public sector, where in the public sector can only be as professional as its management ( read the government of the day) . Years of neglect, treating unions with kid gloves, treating the defence entities as holy cows, lack of vision, Inadequate timely financial inputs & state of the art modernization, etc are manifesting itself in the problems that we are facing today

Reliance Naval and Engineering Ltd or Pipavav worked well before, mismanagement of finances, was late because of multiple factors, it was not just miss management. Till March 2015 it was Pipavav was working independent of Reliance. The debt that ti piled on was primarily because not its own ability to deliver projects but because customers and vendors didn't supply critical equipment and electronics in time, the interest burden screwed em up.

As for state run DPSUs. They are a classic case of failure at an every parameter of business. solution lies in selling them, firing everyone below SMC. Then gradual rehiring post restructuring.

This a transition phase. It's bound to be Rocky. Having said that, the present government has disappointed on multiple grounds with respect to defence beginning from the lack of a responsible person to head defence for the first three years. Parrikar's was too brief a stint to have made a desirable impact. The DPP flowing from MII should have seen parallel moves towards more autonomy for the DPSU's accompanied by a road map for privatization. This could easily have been accomplished in the first couple of years of the reign of this incumbent GoI

Present Government has been horrible in defense, lesser than AKA, but still being horrible never the less.