Cochin Shipyard Limited (CSL), a state run public sector company said it will open it’s over Rs1, 470 crore initial public offering on 1 August. You will be surprised to know that CSL will be the first state-run shipbuilding company to be listed. The reason for this listing is shared herewith for you.
Let me tell you about CSL first:
CSL is a debt-free company. ABG Shipyard, Bharati Shipyard and Reliance Defence and Engineering (RDEL) are the three listed private sector shipyards in India.
CSL is a profitable and dividend-paying company. It is currently working on projects worth ₹3,000 crore. This includes one technology demonstration vessel for the DRDO, four passenger-cum-cargo ships for the Andaman & Nicobar Administration and the balance 40 per cent work on Phase II of the aircraft carrier. It also earns revenue from ship repairs.
Let me list the financial details of the IPO:
The share value is Rs424-432 apiece for the Initial Public Offering that opens on 1 August and closes on 3 August.
The IPO of CSL will issue freshly 22.65 million shares, fetching the company over Rs978 crore at the upper end of the price band. The issue will also offer for sale of 11.3 million shares. At the upper end of the price band, the government will raise from the stake sale over the Rs489 crore. The government is selling a 10% stake.
This IPO will see a 20 per cent fresh issue of shares and 10 per cent disinvestment by the government. After this IPO, the government will have a 75 per cent shareholding while the balance 25 per cent will be held by the public
What will CSL do with the money?
“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,” Madhu S Nair, Chairman and Managing Director of Cochin Shipyard, said at a conference in Mumbai.
Dry docks are used for construction, maintenance and repair of ships.
has bided for projects worth ₹12,000 crore, three for the Indian Navy and one for the Ministry of Home Affairs.
The company is planning to expand its ship repairing capacity which gained ₹550 crore in the year ended March 2017 by undertaking repairs of some 80-100 ships. The new ship repair facility will help Cochin Shipyard repair another 80 mid-sized ships a year.
Finally you should know the controversy behind this shipyard business
China is the largest shipbuilder followed by South Korea and Japan. Though the shipbuilding industry in India does not list among the top shipbuilding nations, the sector is expected to thrive on increased defense orders from the government in the coming years.