Ships That Turned Thousand Eyes

During his tenure as Director (Finance), Goa Shipyard positioned itself in a profitable and growth-driven trajectory contributing in strengthening the Defence capabilities of the nation. The net worth of the shipyard stood at “an all-time high of Rs 1,246 crore as on 31 March 2023.” Both revenue and PAT were robust in 2022-23– the former was up by 20%, and the latter by more than 50%. During the financial year (2022-23), the company signed a huge contract for nearly Rs 6,000 crore, which boosted the overall order book position to more than Rs 20,000 crore. During the FY 2022-23, the company signed a major contract worth Rs 6,000 crore for construction of seven New Generation Offshore Patrol Vessels for the Indian Navy which catapulted the order book to approx. 20,000 crores. 

“The Chairman of the company highlighted this as an unprecedented order book that is slated to be executed in the next 8-9 years.” One of the major reasons for the healthy order book position is the Rs 1,400-crore phased modernization plan, which was initiated in 2003, and culminated with the inauguration of the ‘Integrated Stores Complex’ in August 2023. This modernization program of which Bagi as the crucial finance expert over the years and finally as the Director (Finance) , claims that “ a modern, world-class infrastructure has been created at GSL which is at par or arguably better than foreign shipyards.” The Chairman added that it made it “one of the most modern shipyards in the region equipped with dedicated facilities for construction of high technology GRP hull vessels, new steel fabrication facilities for construction of new technology ships, and facility for repair and refit of ships.” Modernisation in the Shipyard, besides other large-scale measures undertaken in last 10 years played a major role in enabling the shipyard to scale newer heights in the shipbuilding domain. This program will be a driver for execution of advanced platforms such as Missile Frigates and Mine Counter Measure Vessels, adding another shipyard to the list which can construct weapon-intensive warships.

In June 2023, Prime Minister Narendra Modi and the US President Joe Biden signed a historic agreement. One of the clauses acknowledged India’s “emergence as a hub for maintenance and repair of forward deployed US Navy assets,” and welcomed the “conclusion of Master Ship Repair Agreements with Indian shipyards.” GSL, under the able leadership of Director(Finance), has also been selected to enter into this agreement.  According to CMA Bagi, ship repair has been a focus area of the company and this sector saw an upward growth trajectory contributing to the overall revenue by Rs 160 crore in the FY 2022-23. Signing of the Master Ship Agreement with US Navy will further boost future revenues of GSL from repair and refit markets. CMA Bagi highlighted that “Increased thrust on harnessing the opportunities emerging in this segment would accelerate the growth from this vertical.” In fact, CMA Bagi says that during his tenure the company has come a long way, as the order book is 7-10 times higher than the earlier Rs 2,000-3,000 crore.

Apart from modernization, and impressive order book, CMA Bagi contributed immensely in driving the Government of India’s intense indigenization program years before the post-pandemic call for Atma-Nirbhar Bharat. The Government has identified Defence and Aerospace Sector as a focus area for the “Atma Nirbhar Bharat” or Self-reliant India initiative with a formidable push on the establishment of indigenous manufacturing infrastructure supported by a requisite R&D ecosystem. “Goa Shipyard inked MoUs and partnerships for promoting indigenization of equipment/items required for shipbuilding under the Make-in-India program. We wish to develop the propulsion system with Indian collaborators, and part-finance the manufacturing process. We have increased procurements from local MSMEs, the CMA predicts. In the 2022-23 annual report, the Chairman stated that the company “successfully indigenized 23 equipment/systems for Advanced Frigates in collaboration with Indian vendors to achieve indigenization content of 55% approximately.” GSL is working towards maximization of local content in ongoing projects.

The idea to localize the components is not limited to sell and consume domestically. CMA Bagi says that Goa Shipyard has been aggressively focusing on exports. “Our goal to achieve 10-15% of the annual revenue will stem from exports to friendly countries,” he adds. The 2022-23 annual report states that the shipyard pursues overseas opportunities to help the government achieve an export target of $5 billion by 2025. It participates in global tenders, and remains in dialogue with foreign navies. “Efforts are on for pursuing exports… following both the G2G route wherein the Government of India has opened Lines of Credit… as well as the B2B route with sovereign guarantee of the recipient nation,” adds the annual report. A prestigious export contract for construction of a 4000 T Floating Dock for a friendly foreign country is advancing well with construction phase progressing in full swing. 

Given the focus on exports – CMA Bagi claims Goa Shipyard is the only one shipyard which has made export earnings of $200million – handling forex matters, and hedging currencies is crucial. His astute management of forex, guided by a robust risk policy, has safeguarded the company from financial uncertainties for years. The strategic hedging of imports, and receivables through forward contracts has resulted in substantial forex gains, and additional revenues. Ï started these processes. “I implemented, and completed them,” says Bagi. Since the company strives to hike its export earnings, these will enhance protection from volatile and unexpected currency fluctuations.

Both local and foreign revenues are further enhanced by the increasing use of AI. The 2022-23 annual report cites several examples –construction of Autonomous Surface Vessel fitted with AI systems along with Bharat Electronics, AI-based Condition Monitoring System to help undertake timely maintenance and avoid “catastrophic failure,” and tie-ups with reputable institutions such as IISc and BITS for joint development of AI technologies. We will invest Rs 200-300 crore in the next phase of infrastructure augmentation to create AI-based systems and introduce robotics. Preventive maintenance will be the key as we will shift from labour-dependent operations to robotics,” says CMA Bagi.

Under the able leadership of Shri Bagi, CMA, GSL has been at the forefront in implementing various flagship programs of the Government of India such as consistent thrust on procurement from MSEs, foster invention, innovation and IPR culture, promotion of startups etc. During the FY 2022-23, GSL achived 60% of the indigenous procurement from MSE sectors as against the mandatory target of 25 % set by GoI. GSL has also participated in the iDEX-DIO program of the government to boost startups and foster innovation in the defence sector. 

In the future, ships will be built to meet the exact customer requirements and specifications. Goa Shipyard will work with equipment suppliers to iron out teething issues related to specifications and technical parameters. The recently established virtual reality lab will boost R&D efforts, and “create an immersive virtual reality environment that would be used to visualize the 3-D stereoscopic model of warships and use them for design review.” CMA Bagi explains, “At present, 20% of the AI-related work that we have planned is completed. The rest will be over in another two years, or by 2025-26.” By then, the shipyard will be among the most advanced in the world, and use the latest technology for ship-building. With the amalgamation of advance technologies and strategic planning, Goa Shipyard is highly confident of delivering world-class products to its customers and help in nation building, thereby leaving a footprint in the global shipbuilding market. With an eye on future technologies, the Yard has been instrumental in getting niche technologies to GSL with modern upgrades and through collaborations and tie-ups, thereby driving the GoI agenda of ‘Make in India’. As the modernization phase has been successfully completed, GSL, under the leadership of CMA Bagi, and on strength of technology adoption in recent years, is ready to take challenges in shipbuilding and thereby, keeping the Indian Defence ahead of its rivals.