The encashment of bank guarantee of Anil Ambani group Reliance Naval Engineering Limited (RNEL) has prompted the Indian Navy to take a fresh look at the contract for construction of five offshore patrol vessels by RNEL. The company is now facing legal problems after undergoing corporate debt restructuring.
Stating that "punitive action" has been taken against the company, Navy Chief Admiral Sunil Lanba said there is no "preferential treatment" given to RNEL.
When asked about the delay on the part of RNEL in supplying five offshore patrol vessels, he said the company is undergoing corporate debt restructuring and the bank guarantee for the deal has been encashed. "The contract has not been cancelled yet but it's being looked at," Admiral Lanba said.
In 2017, RNEL launched two ships. "It will still take 1-2 years. The ships are far from even starting trials," a source said. When contacted, a Reliance spokesperson declined to comment on the developments.
In September 2018, IDBI Bank moved the National Company Law Tribunal (NCLT) to recover its dues.
The group's entry into defence manufacturing has been embroiled in controversy, especially the Rafale fighter jet deal with France. The issue has triggered a political row with the Opposition claiming that the company was given undue benefit by being the offset partner in the deal with French Dassault Aviation.
The deal worth Rs 2,500 crore was for naval offshore patrol vessels was clinched by Pipavav Defence in 2011 but the company was later taken over by Reliance in 2016.
In August this year, the Defence Ministry approved the proposal for procuring six more next generation offshore patrol vessels for the Navy at the cost of Rs 4,941 core. The vessels will be built indigenously in Indian shipyards.
These vessels will be a boost for the Navy's surveillance missions and protection of offshore assets and mine warfare.
Caught In Choppy Waters
- RNEL is facing legal problems after undergoing corporate debt restructuring
- In Sept 2018, IDBI Bank moved the National Company Law Tribunal to recover its dues
- RNEL had bagged the contract to construct five offshore patrol vessels for the Navy
- The deal worth Rs 2,500 crore was for naval offshore patrol vessels
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 "Offshore Patrol Vessels")
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