Led by businessman Nikhil Merchant and his family, Swan Energy partnered Hazel Mercantile through a special purpose vehicle – Hazel Infra – to acquire RNEL, the largest shipyard in the country. In December, the National Company Law Tribunal approved its ₹2,100-crore bid for RNEL, which will be renamed Swan Heavy Industries.
Swan Energy, a diversified business group with interests in oil and gas, real estate and textiles, holds a 74% stake in the SPV while Hazel Mercantile owns the rest.
“It is a good asset and has been run efficiently and smoothly. It has a 2-million square feet workshop. It has the largest drydock in India. And there’s enough available area to almost double the whole set-up and make it the best engineering centre in India,” said Paresh Merchant, director, Swan Energy.
The versatility of the asset, according to him, is in addition to taking up ship repair work or oil and gas vessel work. “One could also look at manufacturing containers, wagons or retrofitting of tanks,” he added. The company is already in talks with the Indian Navy, Oil and Natural Gas Corporation and Indian Coast Guard to revive the existing contracts at the shipyard, Merchant said. As RNEL went into bankruptcy, the promoters were unable to deliver the above-mentioned contracts. However, it did deliver two oil rigs to ONGC even when it went into bankruptcy.
Swan Energy plans to use the facility to bag international orders as the shipyard was also qualified for the maintenance of the Fifth and the Seventh Fleet of the US Navy. Currently, the company is in discussions with the coast guard, which is in search of a jetty. Executives said if the talks fructify, the coast guard could be using Swan’s facility.
RNEL, formerly Pipavav Shipyard, has a 720-metre sea front and 685-metre outfit quay, making it one of the largest dry docks in the world. “Other than L&T’s Kattupalli Shipyard, there are no other private yards in the country. From 2014 to 2020, not many naval defence contracts have been awarded. But now, as India looks to become a major defence manufacturing hub, we expect orders to start coming in,” added Vivek Merchant, project manager, Swan Energy.
The shipyard originally had two wet basins – one approximately 680-m long and 65-m wide and the other about 680-m long and 60-m wide. The first was subsequently converted into a dry dock 662-m long and 65-m wide. A dry dock is an area drained of water to allow for the inspection and repair of a ship’s hull.
As per the terms of the approved resolution plan for RNEL, a five-member monitoring committee is required to be constituted. Two members will be identified and appointed by the resolution applicant, two representatives will be identified and appointed by the financial creditors, and the fifth member, an independent insolvency professional, shall be jointly appointed by the remaining members.
The company plans to increase headcount. “We are highly short-staffed at RNEL. Against 300 people, the company is down to 80. We will begin recruitment of more people shortly,” Paresh Merchant added.
