Reliance’s Vizag project in limbo

Hyderabad: The Andhra Pradesh government is planning to refer Reliance Naval Engineering’s proposed naval project near Visakhapatnam to its investment board in view of delay in its implementation and doubts raised by the company’s auditors about the firm’s financial position.

The shipbuilding facility, proposed with an initial investment of Rs 5,000 crore, is yet to take off though an MoU was signed by Reliance Naval and Engineering (formerly Reliance Defence), an Anil Ambani group company, with the state government in January, 2016.

Also there were some issues related to land allotment for the project. A senior state government official said despite repeated requests, the company had so far not made any advance payment for the land it sought for setting up the world class naval facility at Rambilli along the East Coast, just 70 km south of Visakapatnam.

“We are in the process of identifying land in Visakhapatnam. It has been six months since we have informed the company to come out with detailed implementation plan along with timelines and also make initial payment (10 per cent of the land cost),” the official said.

“We also hear reports about the company auditors’ concerns on its financial position. We want to hear from the company on many issues," the official said. According to the official, the whole issue would be referred to the state Investment Promotion Board. “The board will take a final call on how to proceed further. They may impose stricter timelines this time,” he said. 

When contacted, a company spokesperson said they were committed to implementing the project. “Reliance Group is committed to the project and continues to engage with the state government for actively pursuing the land acquisition for its proposed naval ship-building facility at Rambilli near Visakhapatnam,” the company official said in an email response.

In its notes to the company’s 2017-18 earnings statement, auditors Pathak HD & Associates in April raised doubts about Reliance Naval Engineering's ability to “continue as a going concern”.

The audit firm listed cash losses, erosion of network, loans being called back by secured lenders, current liabilities being substantially higher than assets and winding up petitions being filed by a few operating creditors to raise the doubts.

The company wants the state government to allot land on lease basis for 99 years at Re one per acre, besides other sops while the government has fixed the price at Rs 17.5 lakh per acre on sale basis, besides other incentives.

The government has expressed its willingness to allot 1,000 acres for the project initially. Announcing the project, Reliance Group chairman Anil Ambani had then said the facility would also lead to creation of a multi-tier array of defence ancillaries with further investments of Rs 5,000-10,000 crore and thousands of skilled jobs.

It would complement Reliance Group’s existing facility at Pipavav in Gujarat and will have a clear focus on building strategic assets for the Indian Navy, he had said.