Mumbai Mirror – Shipbreaking firm that bought Vikrant threatens to back out of Rs 70-cr deal

(Written by Yogesh Naik)

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16 May 2014 - City-based shipbreaking company IB Enterprises, which had purchased IMS Vikrant for Rs 70 crore, has told Western Naval Command that it is considering backing out of the deal, as the Supreme Court stay on the decommissioned aircraft carrier’s dismantling is causing interest to mount on the capital it borrowed for the deal.

The ultimatum from IB Enterprises comes a day before Friday’s hearing in the apex court on the government’s plea for its relocation from the naval dockyard in Mumbai.

The government counsel told the court that Vikrant’s hull is over 70 years old and was deteriorating. “Due to extreme obsolescence and deterioration, Vikrant can no longer be repaired or refurbished.

The ship may kindly be relocated. In fact, the cost for its day-to-day maintenance is increasing and the cost of refurbishment would be prohibitive,” the government told the court

Requesting that it revoke its May 5 order for maintaining status quo, the government told the court that it wanted to shift Vikrant from the naval dockyard to another berthing place in Darukhana ship-breaking yard in Mumbai, and not dismantle it.

Abdul Karim Jakha, proprietor, IB Enterprises told Mumbai Mirror, “After the High Court clarified its stand, the Navy and the Centre wanted to auction it. We bought her in an auction and I have raised a loan of Rs 70 crore for the purchase. We had planned to pull Vikrant out of the naval dockyard by April. Now, there is a status quo. If the stay continues, we will not be able to pull her out as the sea is choppy during monsoon.”

Jakha added that his firm was planning to dismantle Vikrant in Darukhana as the hull is in a bad shape. “The navy must get the stay vacated, else we will have to back out. I have to pay interest of Rs 3 lakh on the loan every day,” he said.

A naval spokesperson said, “Since SC has passed an order on the issue, further action can be taken only when the SC gives its judgement. However, in view of safety and operational reasons, the Indian Navy is asking for a priority hearing of the case.”