Garden Reach Shipyard faces disqualification in bid for military export contract with phillipines navy

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NEW DELHI: A bid by a state owned enterprise for what could have been one of India’s largest military export contracts may be slipping away with the company failing to clear financial assessment tests. Garden Reach Shipbuilders & Engineers had emerged as the lowest bidder for a Philippine naval requirement of two light frigates against Korean and Spanish competitors.
While the Rs 2,150-crore contract would have been India’s largest warship export – in the past, Indian yards have not managed to bag any major project against global competition – reports from the Philippines suggest that a post-qualification assessment found GRSE deficient on financial requirements.
Unlike the Indian system of procurement, where the navy or coast guard makes tranche payments as construction progresses at the yard, the Philippines order was structured around a single payment to be made only when the frigates were delivered, people familiar with the matter told ET.
After Kolkata-based Garden Reach Shipbuilders emerged as the lowest bidder, the Philippine Navy assessed the yard to determine whether it was capable of meeting the order. While the yard scored perfectly on physical infrastructure and capability, it did not meet requirements on the financial side, which required adequate funds to construct the vessels over the next few years without any payments from the Philippines.
While GRSE is still hopeful of winning the contract – a senior official told ET that the final decision has not been taken and that it has not been informed of any disqualification – reports from the Philippines say the navy has already taken a call on the matter.
“They postqualification assessment is on and we are in the race,” Commodore Ratnakar Ghosh, Director (Shipbuilding) at GRSE, told ET.
The company posted a turnover of Rs 1,613 crore and a net profit of Rs 43.45 crore in 2014-15, according to the Garden Reach Shipbuilders’ annual report on its website. With the contract close to slipping away, it would take some deft handling by New Delhi to rescue it by directly reaching out to the Philippines through diplomatic channels.
The Central government could offer to back the company and help it to meet the financial requirements of the contract. However, people said GRSE is already running on capacity with several orders from the Indian Navy.
Garden Reach Shipbuilders’s bid for the light frigates beat proposals by Korean shipbuilding giants Daewoo and Hyundai and Spain’s Navantia to emerge as the winner on both technical and commercial grounds.
Source:- ET
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