Ministry actively considering Cochin Shipyard IPO plan

BSE | NSE 10/02/12

The Ministry of Shipping, Road Transport and Highways is 'actively' considering Cochin Shipyard Ltd's (CSL) proposal to raise funds through an initial public offering (IPO) for the public sector shipyard's expansion plans.

Cochin Shipyard has been planning to set up a third dry dock and a small ship division in place. "The expansion would require an expenditure of Rs 1,000-1,300 crore. The IPO proceeds would be used to part-finance this expansion proposal," said sources.

"The Shipping Ministry is actively considering the proposal for internal approvals," said sources in the know.

Miniratna status

The Shipping Ministry is also considering a proposal to confer Miniratna status to Cochin Shipyard, which would allow CSL more financial and operational autonomy.

The yard is also constructing 20 vessels for European/American clients valued at over Rs 2,000 crore. These projects are being undertaken exclusive of the Air Defence Ship for the Indian Navy, which is also currently under construction.

Cochin Shipyard's proposal for creation of Small Ship Division has been approved by the Government. The project is expected to be completed by March 2009. On completion these facilities would help the shipyard to undertake concurrent construction of small commercial ships with the aircraft carrier. CSL has two dry docks at present - one can build ships of up to 1,10,000 dead weight tonnage (DWT) and another can repair ships up to 1,25,000 DWT.

The yard has delivered two of India's largest double hull Aframax tankers each of 95,000 DWT, apart from building various types of vessels including tankers, bulk carriers, port crafts and passenger vessels.

Financials

CSL recorded a turnover of Rs 720 crore in the 2006-07 including a record shipbuilding turnover of Rs 478 crore. In 2007-08, the turnover is expected be much higher with the shipyard recording shipbuilding income of Rs 600 crore and ship-repair turnover of Rs 240 crore.

CSL could become the first public sector shipyard to be listed. Other shipyards that are listed in stock exchanges in the country include ABG Shipyard, Bharati Shipyard and Western India Shipyard. Engineering construction firm Larsen and Toubro has also diversified into shipbuilding, reports The Hindu Business Line.