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Vice-Admiral HS Malhi, the chairman and managing director of Mazagon Dock Ltd (MDL), Mumbai, was commissioned into the Indian Navy in July 1972 after completion of the Basic Engineering Course and Marine Engineering Specialisation Course at Naval College of Engineering at INS Shivaji, Lonavala and subsequently did a Post-graduate Advanced Marine Engineering Course at Institute of Armament Technology, Pune, Naval Higher Command Course at College of Naval Warfare, Mumbai and National Security Course at National Defence College, Delhi.
He has served on both major and minor war vessels ranging from Cruisers (Old INS Delhi) and Destroyers (INS Ranvijay) to Frigates (INS Kuthar and INS Vindyagiri) and Missile Boats (INS Nirghat and INS Chapal). Among important appointments ashore were commanding officer of INS Shivaji, which is Indian Navy's premier technical training establishment and General Manager (Refit) at Naval Dockyard, Visakhapatnam.
He was also Warship Production Superintendent at Mazagon Dock Ltd. Mumbai and oversaw commissioning of Missile Destroyer INS Mumbai, Missile Corvette INS Kirch and Missile Boat INS Prabal.
As Flag Officer, he was Director, Defence Machinery Design Establishment at Hyderabad and served as Admiral Superintendent Naval Dockyard at Visakhapatnam, a premier ship repair yard on the East Coast.
He was also the recipient of the Ati Vishisht Seva Medal and Vishisht Seva Medal by the President of India. Malhi spoke with Amritha Pillay and RN Bhaskar of DNA about how the navy has become the most successful among the armed forces wings to indigenise and to adapt without losing its edge as one of the best naval forces in the world. Excerpts from the interview:
How would you best describe your stint at MDL?
We have tried to bring about more accountability and to ensure we start delivering the ships we have undertaken to build. To that extent, we have delivered two important frigates in the last two years' time. The other important achievement was updating our purchase manual for the procurement process so that we are more efficient.
MDL had reported losses in FY02 and FY03. However, FY05 onwards the company has shown some good numbers.
As far as the profits are concerned, the company has been profitmaking since 2005. By then, we started getting good orders. There was a time in the 1990s when there were few defence orders placed with public
sector shipyards. The orders began pouring after the successful implementation of financial reforms in the country. After 2000 we started getting orders and some significant projects. We also began
restructuring our organization as a project management team. We identified areas which allowed scope for cost-cutting. Then from 2004-05 we started making profits. We expect for FY11-12 to show a record profit.But, I must also add, that profit making is not our prime objective.
Our prime objective is to serve the country's defence interests. But making a profit helps, because it gives us the cash to bring in more technology and to deliver better goods.
How cost-competitive are ships made by MDL compared with globally?
There is no doubt that the ships that we make are far more economical, without being inferior to the best in their class worldwide. However, it is very difficult to quantify this as it depends a lot on project specifications. A very rough ballpark figure would be one-and-a-half times more or less.
You have a huge order book and at the same time you have many private players eyeing the defence sector. Do you see any diminishing of order book due to growing participation from the private players?
No. I do not expect any diminishing of orders. The maritime capability perspective plan is looking at ten to fifteen years into the future. Currently, all the defence public sector shipyards – Goa Shipyard,
Garden Reach Shipbuilders and Hindustan Shipyard including MDL -- are fully loaded. There are around 33 ships under construction. These numbers could go up. There will be enough business for all – both the
PSU shipyards and the private players.
What are future plans for MDL?
The modernisation plan is already in place. During the next five years, the major change which is going to take place in MDL will be the way the construction is carried out. There is going to be a paradigm shift to integrated construction comprising building blocks of large sizes, carrying out outfitting jobs in the workshop and then putting all things together to make a ship, also called modular construction.
This will speed up construction. This will start with our project 17a or 17 Alpha. There is another order comprising 10 frigates that should be placed before the end of this year and we will start construction thereafter. In the next five years, we would be fully booked as far as integrated construction in concerned. The modernisation project that we are undertaking will help modular construction in a big way.
What is the total investment in this modernisation project?
The total investment is in the range of Rs800 crore and then there is another separate investment plan of close to Rs400 to Rs500 crore Thus we are looking at an investment of around Rs1400 crore to be made
in order to modernise the shipyard. The Mazagon Dock modernisation project will be completed by December 2012. The additional modernisation that we are undertaking in the Alpock yard located nearby would be completed by 2013. The foundation for the modernisation project was laid in 2009.
The navy has indigenised its capabilities far better than other wings of India's defence services.Would you comment on this?
I cannot speak for other wings of India's defence services, but I can say this much: the navy has done India proud. This was on account of the vision of the navy's senior management, especially Admiral SM
Nanda during the sixties. At that point of time, it was realised that if we have to be self-reliant in warfare production, that we will have to integrate shipbuilding and the other associated activities with the navy. The navy cannot divorce itself from the service of ship production or ship building. Today, the two major reasons why the navy has succeeded in indigenisation are: First, it has taken greater
interest, and is far more involved in ship production than what was considered feasible earlier. It does not adopt a standalone policy where you give an order and expect it would be delivered in so much time.
We have a process which allows us to decide that if we cannot deliver it within the required timeframe; we will source it from somewhere else.
The second reason is the development of the equipment and systems that go on the ship. The navy has its own units that look into both development and design with the help of the Defence Development and
Research Organisation and then passes it on to the shipyard. In other words, the navy's uniformed force, the war-fighting force, is actually designing ships as well. The more you are involved in designing ships; you are investing that much more in building the warships. The design is passed on to the shipyard and then the shipyard and the navy work very closely together on the ship. That is why the person who heads a PSU shipyard making navy ships is always a former naval officer.
What would be your wish-list in terms of policy which could make MDL perform better?
I would like to do away with the public sector version of C3I. In military parlance, this means command, communication and control and I stands for information. If you have all this, you would be a winning
force. In a PSU scenario, C3 is CVC, CBI and CAG and I is RTI. These are all good institutions, doing a good job. But these also create a fear of the unknown, because you just do not know when anything can
backfire. The decision which is taken in good faith can either be bad or good. In any organisation, a very good manager may take 100 decisions. On an average, of these, close to 20 may be bad. If the
system is unable to tolerate a bad decision, it will never ever get a good decision. Because this creates over-cautiousness. The system should be made in a manner that one looks at outcomes. The system
should also incentivise personnel who are proactive, rather than hold them back. Unless this done, one would not be able to deliver his or her full potential.
You are the largest shipbuilding institution in India. Would you retain this status with the private sector coming in?
Sure we will. The private sector has the money, they can create huge capacities, but where is the capability. Where will they get these capabilities from? After all, our attrition rates are very low. There are people who have been serving the company all their life. Certainly, over time even the private shipyards will develop such expertise and experience. But MDL has a 300-year legacy. It will take
a while, for the private shipyards to come to that level.
At what stage in your joint venture with private player Pipavav Shipyard?
We are told that the defence ministry had stepped into to review the deal. The joint venture has not run into rough weather. The government is merely finalising the template; because this could lead to more
such joint ventures. It is in the process of completing this template. I am quite hopeful that the guidelines would be promulgated soon, probably in a month's time.
Do you have any land monetisation plans?
No, In fact we are looking at land parcels. We are extremely congested right now, and there is not much scope to expand in Mumbai. We do have the Alpock yard where we do offshore work, but we cannot go beyond
this. Yes, we can look at acquiring additional land along the western coast, but right now we do not have anything on the anvil.
'Guidelines for PPP in shipbuilding may come in a month' - Money - DNA
