On the Keel laying of India’s stealth Frigates Project 17 Alpha at MDL, BW Businessworld’ s Manish Kumar Jha spoke with MDL’s Chairman & Managing director, Vice Admiral, Narayan Prasad. MDL’s IPO has seen the record subscription, receiving bids worth Rs 70000 cr. CMD talks about Indian navy's next generation submarines Project 75 I, collaboration and its core AIP system development stage.

MDL’s IPO has seen record overall subscription. How will it boost MDL?

It is world’s unique shipyard with such diverse set of products. It proves that people have immense faith in us. We are constantly working on our leadership position in defence ships and submarines.

For IPOs that have happened till now in FY21, MDL has set the following records:

  • Highest overall Subscription; Rs 444 crore public offer of Mazagon Dock subscribed 157 times- a record by public sector
  • Highest Non-Institutional Subscription
  • 2nd highest in overall subscription in terms of amount

Often referred as the “Ship Builder to the Nation”, Mazagon Dock Shipbuilders (MDL) has crucial role in building maritime muscle of India. Could you talk about such vision and how MDL gears up for future challenges?

MDL has a rich legacy of building front line warships submarines, offshore platforms and a wide range of commercial vessels. MDL has played a very crucial role in contributing to the blue water capability of the Indian Navy since we embarked on the first indigenously built warship INS Nilgiri. Warship building in India has been the forte of state owned enterprises. The nuances of warship building is different from that of merchant shipbuilding.

With the continued support of indigenous shipbuilding industry, the Indian Navy has already transformed into a ‘Makers Navy’ from a ‘Buyer’s Navy’. R&D initiatives, adoption of industry best practices, benchmarking of our key processes against global standards, improvement in productivity should be the key drivers that can help achieve the goal.

For a country that is predominantly peninsular in nature with a coastline of approximately 7500 kms, requires a vibrant and strong shipbuilding industry for economic as well as strategic reasons. India’s shipbuilding capabilities need to keep pace with its macro economic development, market demand and the enormous human resource potential that we have.

MDL’s mission statement ‘Build Quality Ships on Time’ reflects our aspiration as a shipyard for continual holistic improvement in all spheres of the company’s activities. We are taking several steps to remain as a centre of excellence in ship and submarine building. I will mention just four of the key initiatives viz Human resources, best practices, procurement and infrastructure:

Human resources with the requisite complex skill sets are our main asset. It is our focus.

We have completed a process of benchmarking our key processes with international shipyards. With this we expect international best practices to be adopted in the yard for both ongoing and future programs. We have already implemented Enterprises Resource planning and also gone for e-tendering for high value purchases to ensure transparency and probity in our procurements. With our modernized infrastructure MDL is capable of implementing integrated construction methodology that is at par with global standards. To complement this upgradation, we are collaborating with an international shipyard for imparting the requisite soft skills, reengineering of process. With this effort an upgradation of technology levels and also enhancement of capabilities are expected.

What is the overall order book of Mazagon Dock Shipbuilders ( MDL) now?

Currently we have an order book comprising of four in number project 15 B destroyers, four in number stealth frigates and six submarines of P75, we have delivered two of them and we’re now building remaining four. In addition, we’re also doing another vertical which is the refit and repairs of ships and submarines and that also is a very promising line. So together right now the order book constitute about Rs. 54,000 crores.

MDL & Naval group joint development of Scorpene class submarines are delayed and stretched. While the 4th Submarine "Vela" was launched in May 2019, what will the time line for the rest?

Two boats have already been delivered and as regarding the third one, we’re planning to deliver in all earnestness by 31st December this year. At the most, it might spill over to early January or maybe early February next year. And subsequent boats are all being delivered at an interval of about a year. So by what I would say that by mid-24’ or end of 23’ we would’ve delivered all the boats with regard to Residual 4 boats.

At this particular point of time, we’re at a very advanced stage in the construction and trials of all the 4 boats. The boat number 3 that we’re talking about, has already been to the sea, a few times, has operated, and has performed extremely well. It has come for certain maintenance and repair work which has to be undertaken. On completion we will be putting her back to sea and we’re very sure the cardinal dates we should be able to adhere to.

MDL with L&T for P751 is scouting for foreign partner under SP Model. What is the technological assimilation MDL is looking for? How will the partnership with L&T will unfold? When is it expected to take off?

At the moment both L&T and MDL are the two key strategic partners of MoD which have been identified by the government severally to undertake this program of P75 I, not together. Further, there are five foreign OEMs who are potential technology collaborators. The strategic partners will have to identify their collaborator based on techno-commercial merits.

Right now I don’t foresee a collaboration between MDL and L&T as we have to submit competitive bids to MoD independently. Having said that we are very hopeful because of one reason - we have the current experience of building six Scorpene submarines and past experience of building two SSK class submarines. L&T on the other hand hasn’t built a conventional submarine at all. Nevertheless, L&T has been a very proud engineering establishment for this country and we are all very proud to have L&T with us, developing and trying to get as many number of indigenous products with significant contribution in our journey to self-reliance.

The original plan of P75 Scorpene submarine to have an air independent propulsion system (AIP), has not materialized so far. We are still struggling with AIP technology for our future project- P75 I. Why could we not get an AIP system for the Scorpene submarine?

As far as the air independent propulsion system is concerned, now these are very niche technologies very rarely available in today’s combat market. I’d just like to share with you, we have an R&D lab with DRDO called NSTL Visakhapatnam and way back in 2002 they started having a tryst with an air-independent propulsion package and they developed a closed-cycle diesel engines which is one of the apes but this is one of the very, very basic model.

In today’s scenario a couple of navies are claiming to have developed an air-independent propulsion system, largely based on fuel cells. However, they may not be willing to share those technologies with us. In P75I the AIP is introduced with an aim to enhance the submerged endurance of the boat. AIP will increase the submerged endurance by may be about 10 to 15 days vis-à-vis what is being achieved traditionally. It is envisaged that the foreign partner in the P75I will provide the AIP know-how to the Indian side.

So, P75 I is one of the niche technologies which has to come out with that it has to be a conventional submarine with an air independent propulsion system for enhanced submerged endurance. And in terms of technologies which are available in the world, certainly Germany claims to have all the commissioned boats with an air package largely again on the fuel cell. We’re also hearing about Navantia from Spain that they are very soon going to commission a boat with another additional package, Daewoo in South Korea claims with one of the boats what they’ve already produced. Similarly, even Rosoboronexport, an Amur-class of submarine which they’re trying to offer to us is also one of the boats in which the land trials of air-independent propulsion system is presently in progress, and they’re hopeful to offer a product of that kind.

We’re also putting a huge amount of effort in our indigenous programme of the air independent propulsion system, but the complete details right now are not available in the open public domain. But I can only suffice to say that this will take a little more while.

So, the Air Independent Propulsion (AIP) System will be the core of P75I. Where is DRDO now in terms of developing this technology because it might delay this program? Could you share an update on this – and if it is being developed indigenously?

I’d only share with you that the indigenous program is at a very advanced stage but exact stage is not known to me because it’s not fully available in the public domain. They’re also putting up a huge amount of impetus to develop because it’s to be integrated with the P75 I for which a RFP is already expected somewhere in the end of October or maybe mid of November this year itself. Now a vagueness cannot be retained there.

If, it [DRDO] is to incorporate an indigenous air independent propulsion system whenever the boats are going to be commencing their production, they should be ready and usable by the time they reach that level of construction or it has to go for a foreign developed air independent propulsion package.

So there’s a huge amount of hastening up that happening in the DRDO sector which is happening around there but as I’ve told you, it is always good particularly in a niche technology like this one that we fit our own ones because once we start sailing these boats what kind of a problem that we are going to envisage is not known. What kind of a maintenance problem will come out here, and submarines by and large is a very technology intensive platform and if it has to remain underwater that is what the combat efficiency of the platform and its punch delivery capacity will talk about that she should not come out once she dive.

Once the position of the submarine is revealed, it becomes very vulnerable. So, its strength lies in remaining in deep water for a very long time undetected. So she should not come out at any point of time. So with such technology getting proven we do not have very neat and clean and open forum data available. So we will have to have a very concerted kind of a look and this RFP is taking a little amount of time because we have to be very, very clear that if the development programme from the Indian side is going to get delayed, shall we delay the programme or else try to look for a foreign option.

But India will always look, in case they can incorporate the one which is indigenous development which will be the best one.

MDL’s Nhava Yard is all set for futuristic project which will have a far reaching capacity, probably making MDL the busiest dock. Apart from the P75I project, what are the projects earmarked?

Right now, the order book is about 54,500 crores, and we’re also saying that out of the total capacity that we have for 11 submarines, we have only about 4 in number right now and which also we will deliver in 2.5 to 3 years from today. Similarly the ship’s programme that we have 8 against the 10 capacity and these all will get delivered in 5 to 7 years from now. Having talked about that, we’ve also bid for certain programs. The case-in-point is new generation missile vessels. They’re roughly about 6 in number. We’ve already submitted our bids and the navy will take its own course of time to identify certain competitive bidding and we’ll get to understand.

With depleting Naval Budget -reduced from 18% to 13% of the Defence outlay- how does it affect the modernization as far the MDL is concerned?

Creation of a modernized infrastructure at MDL was undertaken in the 1990s as a partly customer funded asset. MDL has already completed the modernization and this infrastructure is already in place and is being utilized. The modernization program was conceived as an infrastructure upgrade to enable implementation of the ‘Integrated Construction’ methodology of shipbuilding practiced by advanced shipbuilding nations.

Apart from enabling assembling and handling grand blocks, the facility will facilitate enormous amount of pre-outfitting which will pave way for a substantial reduction in build periods. A 300 T goliath crane that straddles across the slipways, a modular workshop where grand blocks could be assembled and lifted, an impounded wet basin that can hold two destroyer sized warships and two submarines simultaneously, a cradle assembly shop for assembling the sections of the conventional submarines, electronic stores etc were the major components of the modernization program. Therefore, the reduction in Naval Budget is not envisaged to adversely affect MDL’s modernization program.

What is the export outlook for MDL? And what are the plans for scaling up defence export?

In terms of export of this particular shipyard, we enjoy a very enviable past. We’ve exported 243 vessels in the past which includes countries like Mexico, France, UK, Singapore, Yemen, Iran, Mozambique, but they all are small sized utility vessels like multi-purpose support vessels to Mexico, some drizzle to France, some general cargo vessels to UK, bulk carrier to Singapore, and likewise water-tankers, cargo barges, lighters, pontus. Now these all are where our verticals at certain point of time when we didn’t have so much of order book. Having migrated into the current order position right now and since we have a capacity, we’ve an export segment which is available because we’ve been researching these markets and we’ve visited these markets.

Africa, we’ve engaged with Ghana, Nigeria, Sierra Leone, Cameroon, they have a requirement for floating docks, fishing trawlers, offshore patrol vessels, fast interceptor crafts and anchor hanging vessels. Middle east, Egypt and Saudi Arabia have a requirement for anchor handling decks, Europe-Portugal require maritime electrical equipment, Asia-Bangladesh have large patrol vessels and floating dock, South America-Peru they need offshore patrol vessels FIC’s. We’ve also engaged with Brazil very recently. So all these potentials are available and we’ve about 14 to 15 agents distributed all across who give us the lead to identify what are the requirements and how do we go about doing it. So there is a huge potential. Actually we’ve submitted some of our bids also but just when the whole thing was shaping up, we’ve this Covid-19.

Whatever we have given to ourselves, we should be able to place if not realise place-in order for about 70 to about 90 crores this year but over a periods of about 5 to 7 years it is to be taken to about 1000 to 1500 crores but what we’re looking at, unfortunately this we don’t have a big marker for capital warships like destroyer frigates and submarines. The countries that we have in our vicinity or geographical area out here, they don't have their frigates and destroyers. And as they’re all financially very intensive platforms costing 5000 crores to about 7500 crores they don’t want to buy these. So, identifying a market for these vessels is going to be a tough one, I won’t say no, because if Bangladesh is there, and Sri Lanka is there and if they’re also migrating to acquire frigates, you can build for them.

Will MDL be keen to go to the overseas market and acquire some of the existing ship-building companies, positioning as a global player. Is this idea possible as far as MDL is concerned in the near future down the line?

We will have to slightly wait and watch what is going to be the emerging government policy.

Right now, as far as the Department of Defence Production is concerned, we have not migrated to go - I mean that mandate has not been given to us to migrate and put a foothold out there and do a merger or acquisition of the - any shipyard. But should there be any such opportunity which the government mandates us to do this work, we have the capacity and we have the capability to do it.

In the leadership position on India’s leading DPSU, you also have a greater responsibility to hand-holding private players to be the part of ecosystem which will lead to greater innovation & efficiency?

I’ve talked about what is the vision of MDL. Mission and the vision I have spelt out right in my opening statement here but I can tell you what we’re doing is we’re not only trying to execute with the quality and timely delivery of our projects, we’re also trying to share technologies and we’re trying to bolster all defence PSU shipyards. Like today, the project 17 Alpha programme, the complete designing details are being developed out here. Though 3 ships are being built by GRSE but the detailed designs are all being done. The complete provisioning action of major equipment, their price negotiation which happens with all the vendors for the economy of scale and a better kind of a rebate is all being undertaken and led by MDL. Also, their reps are also present here. So that’s a huge amount of collaborative effort with GRSE and certainly they are getting bolstered to produce such kind of stealth frigates in their premise.

As you are aware, we have 42% of equity stake in GSL and Goa Shipyard Ltd, today they are also producing in collaboration with a Russian partner, 2 in number, Talwar-class stealth frigates. We already have 6 in number of such platforms, 4 more acquisitions where 2 are being built in GSL and 2 in Yentania Zavrot. Since we are located here, and we have a knowhow of building frigates and all, whatever assistance is being required by our sister shipyard which is Goa shipyard, we are very keen to work with them.

Now coming to share our entire efforts even with a private partner, we’re giving impetus to 2 shipyards, who are also building different blocks of our running programs. We have Chouglay shipyard in Goa and we also have a private shipyard - Shoft shipyard in Bharuch. They are building certain blocks and it is a very nice hand holding. It is a very nice offloading, as it lessens my routine mundane kind of a job, at the same time they have also got fully entrenched with building such kind of complicated platforms so that's a very good thing to happen.

Like we gave an order for five in number naval OPV vessels to Pipavav, 3 in number cadet training vessels to ABG shipyard. Similarly there’s a Gujarat PSU called Alcock Ashdown, we’ve given 6 in number vessels to them.