Cochin Shipyard to foray into inland vessel building segment

Company to form JV with shipping ministry arm

State-owned Cochin Shipyard will enter the inland vessel building segment on the back of strong growth potential in the next three years. The company will build small barges, passenger ferry, river-sea vessels and river cruise among other inland vessels.

“We have seen action on the Ganga and Brahmaputra stretches and hence this segment is promising for shipbuilders,” Madhu Nair, chairman and managing director of Cochin Shipyard told Business Standard. “We are expecting the inland waterways market to open up over the next three years and are preparing to capture this market,” he added. 

The shipbuilder has already received in-principal nod to form a joint venture with Hooghly Dock & Port Engineers (HDPE), part of the Ministry of Shipping as the latter already has expertise in the segment.

“We will move strongly into this space with the two shipyard assets of HDPE and would take about 18 months to build up this facility further after it has received environment clearance,” said Nair.

HDPE, which has been under financial stress for a while, has two shipyards in Kolkata. While Cochin Shipyard refrained from divulging any revenue estimates from inland vessels division, Nair said that the company would take three years to bring in any revenues from this division of business.

Currently the most visible project in the inland waterway's division is the Jal Marg Vikas Project on National Waterway-1(NW-1). Here, industry officials are of the view that the market is expected to open up further in coming years. Of the three National Waterways (Ganga, Brahmaputra and West Coast Canal), NW-1 (Ganga) has been witnessing the highest cargo movement over last three years, shows the data on Inland Waterways Authority of India website.  

Cochin Shipyard, the country’s largest public sector shipyard, will be opting for an initial public offering (IPO), from August 1 to August 3, to raise Rs 1,470 crore to fund its Kochi facility's expansion. The company will see a 10 per cent disinvestment by the government and a 20 per cent fresh issue of shares. After this IPO, the government will have a 75 per cent shareholding while the balance 25 per cent will be held by the public. 

Currently, the company is involved in shipbuilding and ship repair. It has chalked out a Rs 3,100 crore capital expenditure plan for the next five years.

The shipbuilder is also aiming to grow its ship repair revenue over its shipbuilding revenue since the former is a high-margin business. At present, 26 per cent of the revenue comes from the ship repair business and the balance from shipbuilding.