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Cochin Shipyard’s Rs 1,470-crore IPO to open on August 1

Cochin Shipyard Limited (CSL) will sell shares through an IPO to raise Rs 1,470 crore to help fund a Rs 2,800-crore expansion plan for constructing larger sophisticated ships and strengthen its ship repair business.

The share-sale involves 34.984 million equity shares of 10 each, comprising a fresh issue of 2.2656 crore shares and the Central Government’s stake of 1.1328 crore shares. The share-sale will open on August 1 and close on August 3, in a price band of 424-432 an equity share.

Madhu S Nair, Chairman and Managing Director of Cochin Shipyard, said at a conference in Mumbai on July 25, “Proceeds from the share-sale will be utilised by CSL to part-finance the setting up of an international ship repair facility at nearby Cochin Port Trust as well as a new dry dock, the firm’s third, to facilitate the construction of larger ships and underwater repairs of rigs and semi-submersibles.”

CSL, a debt-free company, will be the first of India’s five State-run shipbuilders to be listed, allowing the firm to convert its worth into share value.

There are only three listed private sector shipyards in India—ABG Shipyard, Bharati Shipyard and Reliance Defence and Engineering (RDEL). L and T Shipbuilding, which runs a shipyard at Kattupalli in Ennore near Chennai, is not listed but is part of L and T, a listed company.

CSL, a profitable and dividend-paying company, is currently executing orders worth INR 3,000 crore, comprising four passenger-cum-cargo ships for the Andaman & Nicobar Administration, one technology demonstration vessel for the DRDO and the balance 40% work on Phase II of the aircraft carrier, apart from on-going ship repairs.

Nair said that CSL has submitted bids for projects worth INR 12,000 crore, three for the Indian Navy and one for the Home Ministry. The expansion also involves expanding its ship repair capacity, a high-margin business in which the firm earned Rs 550 crore in the year ended March 2017, by undertaking repairs of some 80 to 100 ships. The new ship repair facility will help Cochin Shipyard repair another 80 mid-sized ships a year.

 


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