CAPACITY ASSESSMENT OF PRIVATE SHIPYARDS

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CAPACITY ASSESSMENT OF PRIVATE SHIPYARDS NEED
FOR A RELOOK

• Cdr Kinshuk De
• IHQ MoD(N)/DSP

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WHAT IS CAPACITY ASSESSMENT OF SHIPYARDS

• Organisation Infrastructure
• Shipbuilding Experience
• Product Profile
• Details of Collaboration
• Turnover and Financial Health
• Personnel with Background
• Orders Executed in last 05 years
• Orders in Hand and Future Orders
• Plans

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WHAT IS CAPACITY ASSESSMENT OF SHIPYARDS

• Production facilities and Process Control
• Design Capability
• Quality Control Procedures
• Legal Issues

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CAPACITY ASSESSMENT PRESENT PROCESS

• Capacity Assessment Committee scrutinises Report
  of WOT with inputs of Domain experts
• Report approved by CWPA
• RFP for Type of ships are thereafter issued to
  Shipyards with valid and current Capacity
  Assessment
• Validity is Two Years

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NAVAL ASSETS - WORLD
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NAVAL ASSETS - WORLD
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NAVAL ASSETS UNDER CONSTRUCTION- WORLD
SHIPBUILDING COUNTRY MAJOR SHIPS UNDER CONSTRUCTION PERCENTAGE 
Western Europe 109 39.5
Russia 40 14.5
USA 33 12.0
India 22 8.0
Turkey 20 7.2
South Korea 9 3.3
Poland 7 2.5
Portugal 6 2.2
Malaysia 5 1.8
Argentina 5 1.8
Japan 4 1.4
Denmark 3 1.1
Australia 3 1.1
China 2 0.7
Indonesia 2 0.7
Chile 2 0.7
Colombia 2 0.7
Iran 1 0.4
Thailand 1 0.4
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INDIAN NAVAL SHIPBUILDING
S NO CLASS OF SHIP INDIAN YARDS
(a) Aircraft Carrier 1
(b) Destroyer 3
(c) Frigate 3
(d) Corvette 4
(e) Offshore Patrol Vessel 4
(f) Replenishment Tanker
(g) Submarine 6
(h) Fast Attack Craft/Extra Fast Attack Vessels (FAC/XFAC) 10
(i) Sail Training Ship 1
(j) Survey 6
(k) Landing Ship Tank (L) 4
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INDIAN SHIPBUILDING INDUSTRY
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SHIPBUILDING WORLD STATISTICS

• 62 vessels are delivered in good quality,
  within the budget and on time. 27 of vessels are
  delivered beyond one year after delivery date.
• 11 orders either get cancelled or land up in
  arbitration

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SWOT ON INDIAN SHIPBUILDING GLANCE
Strengths Weaknesses
Maturity of Defence. Rise in private shipyards participation. Strategic location. No. 2 in trained manpower. Low building cost. Low cost of labour. Capital intensive Economy of Scale Insufficient level of indigenisation. Lack of expertise to develop weapon system. Dependence on foreign suppliers for upgrades. limited capacity. Long gestation period in design and construction.
Opportunities Threats
Continual enhancement of Defence budget outlay for Capital acquisition. Allowances of 26 FDI by Government of India. Likely to be raised soon. Setting up of 1600 Km ship building park. Overwhelming response exhibited by industry academia. Active participation by private industry for development of products. Delays arising out of long procurement procedure. Time and cost overruns. Critical technology not transferred through ToT.
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NAVAL SHIPBUILDING THROUGH PRIVATE SHIPYARDS
UNCERTAINTIES RISKS

• Private Sector participation will improve the
  overall cost benefit, competition, participation,
  sector development, widen expertise etc
• Due diligence, risk assessment during the
  decision making process
• Need for continuous assessment of the shipyards
  for their capacity and competence to deliver
  Naval Warships

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NAVAL SHIPBUILDING THROUGH PRIVATE SHIPYARDS
UNCERTAINTIES RISKS

• Private shipyards have defaulted to deliver
  Yardcrafts and Survey vessels on time primarily
  due poor financial health, error in assessment of
  costs and shipyard capacity
• Issuance of RFPs may have been an error due
  in-accurate assessment of financial strength
• Limited Domain expertise within Navy to look at
  Balance Sheets

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NAVAL SHIPBUILDING THROUGH PRIVATE SHIPYARDS
UNCERTAINTIES RISKS

• Shipyards ability to compete and stay in
  business is greatly affected by its ability to
  know what it costs to do business

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NAVAL SHIPBUILDING THROUGH PRIVATE SHIPYARDS
UNCERTAINTIES RISKS

• Need for rigorous financial assessment as per
  checklists prior to Capacity Assessment by Credit
  Rating agencies with knowledge of present market
  dynamics, risks, rating of clients, management
  etc
• Process initiated

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NAVAL SHIPBUILDING THROUGH PRIVATE SHIPYARDS
RECOMMENDATIONS

• Check Lists
• Financial assessment by Credit Rating Agencies
• Reputation of management, Promoters, track
  record and experience
• Assessment of production facilities, production
  process, productivity,
• Logistics
• Current order book,
• Knowledge, innovation, product mix, workforce

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NAVAL SHIPBUILDING THROUGH PRIVATE SHIPYARDS
RECOMMENDATIONS

• Check Lists
• Planning design infrastructure
• Organization HR practices
• Procurement procedures
• Subcontractors, quality assurance, safety,
  health and environment
• Relationship with unions

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NAVAL SHIPBUILDING THROUGH PRIVATE SHIPYARDS
RECOMMENDATIONS

• Need for weighted consideration of factors in
  Capacity Assessment with emphasis on financial
  assessment for Risk Assessment to ensure Quality
  Warships, Within Costs and on Time for our Navy

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CAPACITY ASSESSMENT OF PRIVATE SHIPYARDS NEED
FOR A RELOOK

• Questions