Cochin Shipyard plans to raise Rs 600-700 cr

Shipyard plans to add a dry dock to build larger container vessels and new generation aircraft carriers

Cochin Shipyard, which recently received Cabinet clearance for an initial public offering, is planning to raise Rs 600-700 crore to support the company's Rs 2,500 crore investment in the ship repair facility and a new dry dock.

The government has approved the sale of a 10 per cent stake in Cochin Shipyard to restart its disinvestment programme that had been put on hold in a weak market. The stake sale announcement has come from the Cabinet but the intimation has not yet reached Cochin Shipyard. It would take a while to receive the final notification, said a company executive.

K Subramaniam, chairman and managing director, Cochin Shipyard, said the company had initiated two key projects, investments in the ship repair facility and a new dry dock. “Our rough estimate is Rs 2,500 crore for the two projects and the proceeds from the IPO will be used for these,” he said.

Subramaniam said the projects would be taken up over the next four years. He added Cochin Shipyard conducted Rs 300 crore worth of ship repairs and this would be increased to Rs 800 crore in the next 15 years with new terminals.

The shipyard is also planning to add a new dry dock to build larger container vessels and a new generation aircraft carriers. This large dock will also help with repair of larger vessels.

The shipping ministry had last September approved in principle the preparation of the detailed project report for the dry dock. Cochin Shipyard has invited expressions of interest from international consulting firms and the offers received are being evaluated.

“We want to develop our capabilities, both physical infrastructure and technology. While we are investing in infrastructure, technology will be built both in-house and through partnerships,” said Subramaniam. Cochin Shipyard’s existing dock was built 40 years ago. The government has mandated three of the nine ships GAIL requires for transportation of liquified natural gas be built in India. Cochin Shipyard has entered into a technical service agreement with Samsung Heavy Industries of South Korea for building these LNG vessels.

Cochin Shipyard has an evaluation agreement with GTT France to obtain the licence for membrane technology for the containment system of these ships. It also has a memorandum of understanding with IHC Holland for work on dredgers.

After completing the new projects, Cochin Shipyard expects its turnover to increase to Rs 5,000 crore from Rs 2,000 crore now.