Commodore Rakesh Anand, CMD, Mazagon Dock and Shipbuilders Limited (MDL) explains the reasons behind the ₹3,000-crore cost overrun and a delay of six years in delivering six submarines to the Indian Navy. Edited excerpts:
Mazagon Dock has rich history. Can you throw some light on how it came into existence?
Mazagon Dock Ltd was setup in 1774 basically to service and repair the East India Company’s ships, so we are almost 250-year-old company, the oldest shipbuilding yard in the country. We were incorporated in 1934 and taken over by the Government of India in 1960. Modern shipbuilding for the Naval War ships started actually through MDL in the country after the navy decided to have its own design department in 1955 to secure the 7,500 km of sea frontiers.
There are three defence public sector undertaking (DPSU) shipyards. Where do you stand?
Besides, MDL, we have Garden Reach Shipbuilders and Engineers (GRSE) and Hindustan Shipyard, that was taken under the wings of the Defence Ministry almost 10 years back. In Cochin, Shipping Ministry have their own shipyard, which traditionally builds merchant ships. MDL has since 1960 built practically the entire range of warships other than landing platform dock (LPD) and landing ship tank (LST) which were smaller versions and given to GRSE.
What’s your USP among the three DPSUs?
GRSE is focused by virtue of its infrastructure available on its LST, LPDs and corvettes. We have built an entire range of platforms which one can think of from naval vessels to offshore platforms at Bombay High for ONGC. Our USP today is building state-of-the-art destroyers and conventional submarines. Destroyers are most highly concentrated level of equipment for both propulsion systems and for the weapons systems.
How many warships have you delivered to the Indian Navy so far?
We have delivered 795 platforms since 1960 and a large number of them have been exported. We have built passenger ships to cargo ships. The last ships which were exported were the multi-support vessels to Bahamas and Mexico in 2014. There are 26 front line warships that have been delivered to the Indian Navy.
When was the last submarine delivered to the Indian Navy?
We are the only ship building yard in the country to have built conventional submarines. The last SSK submarine was delivered in 1994 and currently, we are building six Scorpene class submarines. The first of the Scorpene class submarines has been delivered to the Indian Navy last year.
This month, we will be delivering the second submarine Khanderi and the third submarine, next year by September-October. So, every year, one submarine is going to be delivered to the Indian Navy with the last one being delivered in 2022.
Any of the submarines made by Mazagon Dock have ever been used in wars?
No, our last war was in 1971 and unfortunately we missed that operation. At the time of Kargil, I was also on a ship and we were all deployed at appropriate places in the readiness that in case something happens we would be ready. The issue is we have not seen any war after the 1971. We were not building indigenous platforms at that time. The first major platform that we started building was Leander Class which we delivered in 1972 after the 1971 war to Indian Navy.
During 1971 Ghazi Attack, which submarine was used if it was not an indigenous built ship?
During the Ghazi Attack in 1971 we had some submarines. In 1968, we had this Foxtrot class Russian submarines. Our Kalvari class submarines was decommissioned 1968, but the name still carries on today. So during that time we didn’t had indigenous warships.
How many submarines used by Indian navy are indigenous and what would be the ratio by 2022?
We have three indigenous submarines out of the total 13 and the rest of them are imported. There are eight Russian EKM submarines and four SSK submarines and one Kalvari. By 2022, we will have 18 submarines, of which eight will be indigenous.
The order for six submarines was awarded in 2005 and yet, you delivered just one so far. Why the huge delay?
This contract came in 2005 and we were supposed to deliver the first submarine in 2012. But, there were certain issues in this contract related to the materials. The cost went up and additional sanctions had to be taken.
The contact said that the material procurement was the responsibility of MDL. The material was to be supplied by our collaborator and there were a number of equipments which were to be procured by MDL from a number of small suppliers from whole of Europe and these small time suppliers were not willing to participate, leading to huge delays. They were all nominated by all our collaborator. We decided to bundle up all and ask our collaborator to supply all this.
Even after the orders were placed, there were delays in supply. So, this material issue was the prime problem causing the delay.
The six submarines were awarded to you on nomination basis or bids were called?
It was a nomination. Because as I said we are the only shipyard, which has built submarines in the past and there is a consensus that we want to become self-reliant in submarine construction by 2030 so it is part of that on which MDL got this order.
What’s the cost escalation due to delay?
The cost, which was originally envisaged was ₹16,000 crore, went up to ₹19,000 crore and we had to take additional sanctions and the delays happened because of the procurement of material which has caused the total impact on the delivery of these submarines. So, each submarine is costing between ₹3,000-₹3,500 crore.
The government is planning to award another six submarines. Will you participate in the bids?
Yes, we are waiting for that now. The follow on the P75 India is awaited now so we are all hoping for the RFP that should be coming in. Let’s see, we are eagerly waiting for this order.
The last order you got was on nomination basis. How competitive you will be this time given there will be competition from private payers as well?
We don’t want to take names but we have been in this industry for more than 60 years so a new company cannot start from scratch and be better than us. There are private shipbuilders as well no doubt in that, our work speaks for our self. We need to see that this shipyards can do that overnight and can reach where we reach in less than the years we took.
How the competitive bids are going to help you compared to bagging projects on a nomination basis?
All the government policies today are totally focused towards Make in India. The existing project was the first project in 2005, such mandates probably did not exist that are existing now. You know about the offset clause, we didn’t had the offset clause at that time and consequently there was no benefit. But next time I am very sure that the government will ensure that we get much more out of the next series of submarines and not like how it was
What is your order book?
Our order book at the moment will be roughly ₹53,000 crore to be executed by 2025.