Reliance Naval and Engineering Vs Gaden Reach Shipbuilders and Engineers Ltd

💢Reliance Naval and Engineering Ltd (RNEL):  

RNEL located in Gujarat, is India's largest private-sector shipyard with extensive infrastructure, including the largest dry dock. It spans around 210 hectares capable of building large naval ships, commercial vessels, and offshore structures. Photo: RNEL, Facebook.

☀️The fact that RNEL is engaged in the construction of both naval and commercial vessels, reflects a broader market approach.

This includes specialized defense projects for the Indian Navy, as well as commercial ships.

☀️The company aims to leverage its technological capabilities to serve both markets, which has been a significant part of its operational strategy.

💢 Garden Reach Shipbuilders and Engineers Ltd (Rs.1661.90): 

Garden Reach Shipbuilders and Engineers (GRSE), based in Kolkata, is a smaller shipyard with around 48.72 hectares. Though smaller in size, GRSE has a specialized focus on naval warships, with a long track record of delivering vessels to the Indian Navy. It compensates with efficiency, government support, and order execution capabilities.

☀️It specializes mainly in defense vessels for the Indian Navy and Coast Guard, including warships and submarines. 

☀️ It's also engage in the modernization of existing naval platforms. 

☀️Commercial Vessels: GRSE has a limited capacity to build commercial vessels. While its core business is focused on defense contracts, it has occasionally engaged in producing civilian vessels such as passenger ships and ferries.

Financial Summary: 

RNEL: Currently, there is no public disclosure regarding the exact value of the order book for Reliance Naval and Engineering Ltd (RNEL), especially after its acquisition by Swan Energy under the insolvency process. Before its financial troubles started, RNEL had secured substantial projects, including a $3 billion frigate contract from the Indian Navy and a $2 billion ship repair deal with the U.S. Navy. However, these projects were largely stalled due to the company's financial collapse.

Given the stalled projects and the company's insolvency status, it is difficult to determine an accurate total order book value, as many contracts were likely delayed or left incomplete.

GSRE: As of June 30, 2024, Garden Reach Shipbuilders & Engineers Ltd (GRSE) holds an order book valued at Rs.25,231.29 crore. This is an increase from the Rs.22,652.68 crore recorded at the end of March 2024. 

Furthermore, the majority (around 90%) of these orders come from the shipbuilding sector, largely from domestic contracts, including those for the Indian Navy.

Q. Were the former orders of RNEL cancelled?

Ans. The significant orders secured by Reliance Naval and Engineering Ltd (RNEL), such as the $3 billion frigate contract from the Indian Navy and the $2 billion ship repair deal with the U.S. Navy's Seventh Fleet, were not formally canceled, as per my sources (It is source based information and hence double check from your end).

Incidentally, RNEL’s inability to meet its financial commitments, operational obligations and eventual insolvency resulted in many of these projects facing considerable delays and ultimately getting stalled.

The acquisition of RNEL by Swan Energy Ltd (Rs.554.55) in 2022 under the Insolvency and Bankruptcy Code further complicated the situation, as new management took over. 

I reiterate, as per my sources, while there is no official record indicating the outright cancellation of these contracts, they were significantly delayed and potentially not fully executed due to the company’s financial collapse. 

Order details of Reliance Naval and Engineering Ltd (RNEL) secured during its operational years:

☀️$3 billion frigate order: This was part of India’s “Make in India” initiative and was awarded in July 2015. It was considered one of the largest warship-building projects in India's private sector, where RNEL was tasked with building naval frigates.

☀️$2 billion ship repair agreement with the U.S. Navy: This order was secured in February 2017. RNEL signed a Master Ship Repair Agreement (MSRA) to maintain vessels from the U.S. Navy’s Seventh Fleet.

These projects were milestones but faced execution difficulties due to the company's financial struggles. These past orders reflect RNEL’s significant role in both naval shipbuilding and defense-related projects.