Visakhapatnam: Hindustan Shipyard Ltd, a ministry of defence enterprise, is gearing up to build naval support vessels by the second quarter of 2020-21 in technical collaboration with a Turkish shipbuilding consortium led by Anadolu Shipyard and hopes the order will steer it back into the black.

HSL, the oldest shipyard in the country having been set up in 1941, hopes to ink the collaboration agreement with the Turkish shipyard group by September, HSL chairman and managing director Rear Admiral (Retd) LV Sarat Babu said.

Admiral Babu said the Turkish shipyard was chosen as partner because it had the expertise to build fleet-support naval vessels. The two companies had exchanged documents on the collaboration in May.

“We expect to finalise the details of the partnership with the TAIS group of Turkey, in which Anadolu Shipyard is a key partner, by September this year. Anadolu will be providing HSL the expertise to build fleet support vessels, which will be used to supply Indian Navy ships with critical material, including provisions,” Admiral Babu told TOI.

HSL expects to begin work on the fleet supply vessels in the second quarter of 2020. “The meter for the delivery of the first vessel will start running from the time we get the order. We will be required to deliver the first of the five vessels within four years, and each of the other four within 10 months of each delivery,” he said.

The Turkish group was selected after a global tender was floated and three potential partners were shortlisted from eight bidders. The Turkish group was finalised from the shortlisted firms. “Anadolu will be transferring the technology to HSL. The defence ministry approved the partnership,” Admiral Babu said. According to him, HSL was given the order to build the five-fleet support naval vessels on an Acceptance of Necessity (AoN) basis. “The cost of the five vessels has been set at Rs 9,800 crore,” he said.

Admiral Sarat Babu said HSL had exited the cargo vessel segment because of low margins. “Cargo vessels do not generate high margins. Moreover, shipbuilders in other countries like Sri Lanka and the Philippines, where the labour costs are lower, have become more attractive for customers,” he said.

HSL has been focusing on the retrofitting of submarines, construction of speciality vessels for the oil and gas industry and now naval support vessels. “We are waiting for the Indian Navy to float a Request for Proposal (RfP) for the Medium Refit Life Certification (MRLC) of one of its submarines. The MRLC will increase the life of the submarine by up to eight years,” he said.

HSL currently has 1,500 full time workers and about 1,000 contract workers.