An anonymous email is the latest device used to try and wreck Bharati Shipyard, India’s largest private shipbuilder. The promoters of India’s largest private sector shipbuilding company have decided to get to the bottom of it and complained to the police’s cyber security cell.
The letter, circulated from diverse sources, including a marine news service from Gujarat, has been claiming as “breaking news” that the promoters of the company were exiting, as the operations had become unmanageable. Talk of private investors coming on board were mentioned in the mail, with detailed pointers. Also mentioned were names of almost every company from the shipping sector as potential suitors -- “ABG Shipyard, L&T, Pipavav Shipyard, Great Eastern Shipping and Mercator Lines”.
The promoters of Bharati Shipyard are not new to hearing conspiracy theories about them. Since 2009, when the duo of P C Kapoor and Vijay Kumar, two IIT professionals-turned-shipping entrepreneurs, took over Great Offshore in an intense takeover drama, there have been theories abounding: Leveraged balance sheet, unmanageable operations of the two different listed companies, slowdown in the sector aggravating the cash crunch and nimbler, and bigger rivals eventually buying them out for a song.
So far, the markets have not reacted negatively to the speculation. Yesterday, the stock actually ended up by half a per cent. But even so, Kapoor, Bharati’s managing director, decided to soothe nerves through Friday, denying vehemently any negotiations with strategic or private equity (PE) investors. Every time he clarified, the stock inched up four per cent, before ending the day almost two per cent up.
The promoters hold 44.47 per cent in Bharati, while the company owns 49 per cent in Great Offshore.
Kapoor, in an interview with Business Standard, said, “We don’t know the sources of such baseless news. We have lodged an official complaint with the cyber security cell to investigate the miscreants behind the email. The police have said they shall begin their probe from next week. We shall also inform the exchanges.”
Kapoor’s rationale is simple.
After investing Rs 1,400 crore in expanding Bharati’s shipyards across across five of its yards, “Why would we want to exit? We have strategic expertise in-house. So, we don’t need partners. For funds, it’s better to tap the markets than get a PE player,” explained Kapoor. Rs 1,100 crore alone has been spent on new projects in Dabhol and Mangalore.
Even Great Offshore will be undergoing capital expansion. “At least 10-12 ships need to be replaced over the next five years, as they are very old and cannot be deployed,” Kapoor added. He did not divulge any number, but typically a deep water rig in today’s market costs $200-500 million. Similarly, deep sea vessels are $35-80 million each, depending on the specifications. “Great Offshore’s new fleet will be for deep waters. That’s the new frontier,” Kapoor is clear about that.
The ‘mischieveous’ email goes on to state, “Bharati Shipyard has lost more than the half of its market cap after the Great Offshore acquisition. Bharati Shipyard’s current market cap is only Rs 370 crore, whereas debt is FY10: Rs 2,300 crore; FY11: around Rs 3,000 crore. After the acquisition of Great Offshore, Bharati Shipyard’s debt has gone up by Rs 1,300 crore.” And as a clincher, goes on to say, “Watch this space for more news tomorrow.”
Aban Offshore gets auction notice
The bankruptcy trustee of the Guyana Development Corporation will auction the pledged shares of Chennai-based Aban Offshore Ltd in the Corporation. In an order passed on June 15, 2011, United States Bankruptcy Court, Texas, said the trustee shall conduct an auction of the estate’s interest in 22,80,000 shares of Aban Offshore represented by two certificates.