Cochin Shipyard Ltd (CSL), which recently got the government's nod for an initial public offer (IPO), is planning to raise around Rs 600-700 crore through the stake sale.
The government has approved 10% stake sale in Cochin Shipyard -- along with Coal India -- as part of restarting its disinvestment programme that had been put on hold in a weak market. The proposed fundraising is to support company's around Rs 2500 crore expansion plan, which is expected to double revenue.
A senior company official said official intimation about the stake sale is yet to reache CSL.
K Subramaniam, chairman and managing director, Cochin Shipyard Ltd said that CSL has initiated two key projects for which Detailed Project Report (DPR) is under preparation. "Our rough estimate is around Rs 2,500 crore for the two projects and proceedings from IPO will be used for the same." Subramaniam said the company will take up the projects over the next four years.
The investment includes around Rs 950 crore in the ship repair facility, while the rest will go into developing new dry dock project. CSL is currently evaluating expressions of interest from international consulting firms having experience in dry dock projects. The existing dock was designed and built around 40 years.
CSL currently does around Rs 300 crore worth of ship repair works, which will be increased to Rs 800 crore in the next 15 years as new terminals are added.
It also plans to add a new dry dock that would enable the yard to build large ships, such as LNG vessels, large container vessels, new generation aircraft carrier, and VLCC ships.
Further, this large dry dock would enable CSL to undertake repairs of vessels like LNG carriers, semi submersibles, and drill ships, among others, on its own premises.
"We want to develop our capabilities, both physical infrastructure and technology capabilities. While CSL is investing in physical infrastructure, technology capabilities will be built from both in-house and through partnership," said Subramaniam.
In terms of capability, one is technology, that will come through partners and those to be developed in-house. The second part is physical infrastructure. The existing dock can handle existing aircraft carrier, if somebody wants a bigger one it cant come into the current one.
Cochin Shipyard has already entered into technical service agreement with Samsung Heavy Industries, Korea to collaborate on building at least three LNG vessels for Gas Authority of India -- which needs nine ships -- as mandated by the government under its 'Make in India' campaign.
It has also entered into an evaluation agreement with GTT France to obtain licence for membrane technology for the containment system of these ships. It has signed an MOU with IHC Holland BV for working jointly on an exclusive basis towards Indian government/ PSU requirements of Cutter Suction Dredger's upto 500 mm suction/ discharge pipe diameter and Trailer Suction Hopper Dredgers upto 10,000 m3 hopper capacity.
After completing the new projects, CSL is expecting its turnover to increase to around Rs 5,000 crore from the current Rs 2,000 crore.
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