In 1936, eight German-built Orjen-class MTBs were added. Also in 1936, a new naval coastal command was established under the command of a rear admiral. It was headquartered in Split, and included shore-based commands at Selce, Šibenik and Đenovići. By the end of that year, the KM consisted of 27 surface combatants, four submarines, and around a dozen auxiliary vessels, crewed by a total of 487 officers and about 5,000 men. The yacht Lada had been disposed of, as had the minesweeper D2. The training ship Sitnica had been converted into a second submarine depot ship, and the Galeb-class mine tenders had been reclassified as minelayers. The river flotilla consisted of the four monitors, the royal yacht Dragor, two patrol boats—Graničar and Stražar, and three river tugs; Cer, Triglav and Avala. However, in 1936 the only vessels ready for war service were Dubrovnik and the four submarines, and the navy was only considered capable of patrol duties and coastal surveillance, minelaying and minor raids against enemy shipping. Despite this, the United States naval attaché observed that the morale and discipline of the navy was very good. He further stated that higher-level commanders appeared discouraged at the poor position of the navy due to its inadequate budget. He concluded that the fleet was in very good condition considering its funding. During 1936, Nebojša and Osvetnik visited Corfu, and Zmaj and three Galeb-class mine tenders also visited Corfu.
