Cabinet okays improved VRS for Hooghly Dock & Port employees

NEW DELHI: Government today approved improved Voluntary Retirement Scheme for the employees of Hooghly Dock and Port Engineers Ltd and restructuring of the company through a joint venture.

"The Union Cabinet, chaired by Prime Minister Narendra Modi today approved the introduction of an improved Voluntary Retirement Scheme (VRS) for the employees of Hooghly Dock & Port Engineers Limited (HDPEL) and restructuring of the company through a Joint Venture (JV)," Ministry of Shipping said in a statement.

After the implementation of the improved VRS, JV formation with the private sector would be attempted, failing which, the company would be disinvested, it said.

Implementation of the new VRS package would substantially reduce the manpower of HDPEL and would help in downsizing. Thereafter, HDPEL would become amenable to restructuring, the release said.

The scheme would be open for three months with a provision of extension by another one month, it said. "The improved VRS package is based on IDA 2007 linked pay scale."

The current VRS package, it said, is at the old pre-revised scale, therefore, implementation of an improved scheme would provide better retirement benefits to the HDPEL employees.

This decision will take care of employees' welfare as well as prevent recurrent loss to the public exchequer, it added.

The HDPEL has two units, one in Salkia and other in Nazirgunge located on the banks of the Hooghly River. However, both units have been suffering heavy losses.

Approval for improved Voluntary Retirement Scheme (VRS) for the employees of Hooghly Dock & Port Engineers Limited and restructuring of the company through Joint Venture (JV)

The Union Cabinet, chaired by Prime Minister Shri Narendra Modi today approved the introduction of an improved Voluntary Retirement Scheme (VRS) for the employees of Hooghly Dock & Port Engineers Limited (HDPEL) and restructuring of the company through a Joint Venture (JV). The improved VRS package is based on IDA 2007 linked pay scale. The improved VRS Scheme would be open for three months with a provision of extension by another one month. After the implementation of the improved VRS, JV formation with the private sector would be attempted failing which the company would be disinvested.

Implementation of the improved VRS package would substantially reduce the manpower of HDPEL and would help in downsizing. Thereafter, HDPEL would become amenable to re-structuring.

The current VRS package is at the old pre-revised scale, therefore, implementation of an improved VRS package would provide better retirement benefits to the HDPEL employees who opt for it. This decision will take care of employees' welfare as well as prevent recurrent loss to the public exchequer.

Background:

The HDPEL was established in 1819. Subsequently, in 1973, it merged with Port Engineering Works, which had been under the control of Andrew Yule Ltd. The Company was nationalized in 1984 as per the Hooghly Dock & Engineer Company (Acquisition and Transfer of Undertaking) Act, 1984 and was renamed as Hooghly Dock & Port Engineers Ltd. The HDPEL has two units, one in Salkia and another in Nazirgunge located on the banks of the Hooghly River. However, both units of the company have been suffering heavy losses.

The Centre is toying with the idea to induct a strategic partner and give up its majority control in Hooghly Dock & Port Engineers Ltd (HDPEL) to revive the city-based sick public sector unit, adopting an innovative model that will skirt privatisation.

The company, engaged in shipbuilding and repairing, will lease out its assets to a joint venture entity in which a private company will have a majority stake (76 per cent) and full operational and managerial freedom. HDPEL will become a shell company and earn rent apart from holding 26 per cent in the joint venture.

The company, engaged in shipbuilding and repairing, will lease out its assets to a joint venture entity in which a private company will have a majority stake (76 per cent) and full operational and managerial freedom. HDPEL will become a shell company and earn rent apart from holding 26 per cent in the joint venture.

"Hooghly Dock is closed now. We are trying to restructure and revive it with foreign collaboration," Gadkari said at an interactive session organised by the MCC Chamber of Commerce & Industries.

Established in 1817 on the banks of Hooghly, HDPEL is one of the oldest shipyards in India. After suffering heavy losses, it was taken over by the Centre through an act of Parliament in 1984. The company has two manufacturing facilities in Salkia and Nazirgaunge (near Botanical Garden) with 216 employees on its rolls. However, the Centre has announced a lucrative voluntary retirement scheme and all the employees are likely to opt for it.

"It is not possible to privatise the PSU given the political sensitiveness attached to it. So the ministry is toying with this innovative model where a private firm can have operational and management freedom but the ownership will remain with the government," a source said.

Under the NDA government led by Atal Bihari Vajpayee, several PSUs such as Indian Petrochemicals Corporation Ltd, IBP and Videsh Sanchar Nigam Ltd were privatised. However, the UPA government junked the idea and resorted to piecemeal stake sales in state-run companies such as Coal India without giving up majority control. The Narendra Modi-government has so far not indicated that it will take the privatisation route.

As a result, this two-tier structure is being considered where holding company HDPEL will see no dilution. However, the business will in effect be run by the joint venture, which will pay rent for the 30-acre river-facing plot and associated infrastructure. The chairman and the managing director will also be selected by the private firm.

The minimum annual rent for the unit is likely to be around Rs 4.3 crore.

"The shipping ministry is clear that it is more interested to revive the company and utilise the national asset than earning rent from it," sources said. The joint venture will get the asset on 30-year rent with the option of extension for another 30 years.

The facilities can be used to build barges, small ships and hovercraft apart from repairing work. "There is a lot of latent demand in Bengal. With the focus on coastal shipping and inland waterways, demand for barges and ships will only go up. Moreover, there is requirement to repair them," industry observers said. However, the tender will come at a time of overcapacity in ship-building capacity globally.

At the MCC meeting, Gadkari today launched the recently built fly ash handling jetty, a stacker cum reclaimer and refurbished lock entrance besides laying the foundation stone for a floating storage cargo-handling facility at Haldia Dock Complex through a remote control.

The private company will be selected through a global tender where precedence will be given to technology.

Hooghly Dock to form JV with pvt shipbuilder

Hooghly Dock and Port Engineers Ltd (HDPEL) in West Bengal will be restructured into a shell company and will form a joint venture with a private shipbuilder to manufacture, maintain and repair ships.

This move comes after HDPEL was served an ultimatum by the shipping ministry to either float a JV or face disinvestment

HDPEL, in turn, will lease its land and assets to the planned JV for 30 years which can be extended upon necessary approvals. Furthermore, only 24 per cent of the stake in the JV will remain with the Centre, thereby equipping the private partner with managerial control. Besides shipbuilding and repairing, the private partner will have the additional responsibility of promoting tourism in inland and coastal waters. In case the ailing vessel maker fails in this attempt, it will be disinvested.

The ministry in September this year also improved the voluntary retirement scheme (VRS) for the shipbuilder's employees. So far, of its 314 workers, 80 have opted for the scheme.

According to a company executive, the employees have to opt for the improved VRS by January. The fate of those who do not opt for the scheme remains uncertain as the ministry is yet to take a call in this regard.

Manish Jain, chairman of HDPEL, is, however, confident of roping in a private partner. Given its 800 metre waterfront in Nazirguange and Salkia on the banks of the Hooghly river, he said the request for quotation for the JV would attract global and Indian companies. “All we need is a partner that has the technological edge,” he told Business Standard.

He said Indo-Bangladesh maritime traffic (cargo and passenger vessels) was poised to lead growth in shipping in the east which, in turn, would increase demand for shipbuilding.

According to professional services company KPMG, trade between India and Bangladesh was valued at $6.9 billion during 2014-15 and was expected to double to $10 billion by 2018. “The share of the eastern coast ports of the total cargo handling capacity for Indian ports is expected to increase to 40 per cent over the next 4-5 years,” Prahlad Tanwar, director, transport and logistics at KPMG in India, told this newspaper.

The east coast ports in India handled about 370 million tonnes of cargo in 2014-15 out of the total 1,051 million tonnes handled by all ports in India.

“If we need to handle more cargo in inland waters and increase Indo-Bangladesh maritime traffic, we need to have the latest technology,” Jain said.

In June this year, Prime Minister Narendra Modi signed an agreement with Bangladesh on coastal shipping and renewed the 1972 protocol on inland waterways transit that uses the two countries’ waterways for commerce. A memorandum of understanding was also signed for using Chittagong and Mongla ports in Bangladesh for movement of goods to and from India.

Asked about the interest the move would generate among private shipbuilders in India, P R Govil, advisor to the Shipyards’ Association of India said, “The equipment at HPDEL is too old and there needs to be a concrete policy on shipbuilding from the Centre.”

He said private shipbuilding majors in the country would not be interested in participating in the forthcoming tender.

Established in 1819 and nationalised in 1984, HDPEL has been suffering recurring losses for 10 years.

Hooghly Dock & Port Engineers Limited

Ship Building

The Company has two units ideally located at Salkia and Nazirgunge on the bank of River Hooghly in the city of Howrah and well connected with Kolkata. Both these units have the required infrastructure and potential for construction of various types of vessels, viz. Tugs, Dredgers, Floating Drydock, Fire Float, Fishing Trawlers, grab Hopper and Surface Dredgers, Light House Tender Vessels, Oil Pollution Control Vessel, Passenger Vessel etc.

Repair & Support

Our ship repair division with its Drydock at our Salkia Works – an ISO 9001 unit (Drydock measuring 94 M X 13.4 M x 8.6 M deep) & with facilities like Jetties, Building Slipways / Berths / Wet Basin, Cranes etc, we are well equipped to undertake repairs of any size vessels / marine crafts to the fullest satisfaction of customers. We also have facilities to undertake emergency repair jobs at Kidderpore and Haldia.

Joint Venture

The Company has two units ideally located at Salkia and Nazirganj on the bank of River Hooghly in the city of Howrah (in the State of West Bengal, India), which is well connected with city of Kolkata. Both these units of HDPEL have the required infrastructure and potential for construction of various types of vessels, viz. Tugs, Dredgers, Floating Drydock, Fire Float, Fishing Trawlers, grab Hopper and Surface Dredgers, Light House Tender Vessels, Oil Pollution Control Vessel, Passenger Vessel etc.