Mazagon Dock plans Rs 2,000 cr greenfield capex next to Nhava Sheva port

Aim is to attract third-party orders which currently stand at nil, firm is on the lookout for consultant

Mazagon Dock Shipbuilders will develop the 37-acre land it has adjacent to the Nhava Sheva port into a dockyard as the firm plans to diversify its order book, which is currently dependent on the Indian Navy.

According to a preliminary study, it would take five-seven years to build the facility at Rs 2,000 crore.

“We are in the process of hiring a consultant who can carry out the examination that is needed and commensurate with the funds required for this project,” Narayan Prasad, chairman and managing director of Mazagon Dock, told Business Standard. “The entire fund requirement, however, will not come at one time and so we will be prepared for this greenfield project.”

He was speaking on the sidelines of the initial public offering (IPO) press meet held virtually on Thursday. The company’s IPO that opens on September 29 has a minimum bid lot of 103 equity shares and in multiples of 103 equity shares thereafter.

Mazagon Dock annually spends about Rs 100 crore as maintenance capex at its facility in Mumbai. “We will look to maintain or repair merchant ships at this facility and with the Nhava Sheva port — also known as the Jawaharlal Nehru Port, or JNPT — being at close proximity, we will try to take advantage of the same,” Prasad added. Currently, the company has an order book of Rs 15,470 crore, which is entirely from the Indian Navy and which is executable over a span of six-seven years.

“So far we are on schedule to deliver one of the ordered submarines to the Indian Navy by the end of the year. But the ongoing pandemic, which has hit Mumbai the most (within India), has impacted our productivity as only 60 per cent staff is available due to restricted public transport availability,” Prasad said. The company, however, aims to make up for the Covid-19 impact in the following year and has already built its systems in place, said Prasad.

Meanwhile, within the domestic market, the company is also in talks with the coast guard to sign a Memorandum of Understanding (MoU) to identify if Mazagon Dock has vessel orders mainly for repair and maintenance. Though the dockyard has only Indian Navy orders at present, the company is engaged in talks with parts of Africa such as Nigeria and Ghana along with Portugal, Bangladesh and parts of West Asia to build non-warships with the aim to build its export vertical for the revenue stream. The company is currently debt free with cash reserves of close to Rs 5,500 crore.

The Indian Navy assigns its orders mainly to Mazagon Dock Shipbuilders, Goa Shipyard, Hindustan Shipyard and Garden Reach Shipbuilders & Engineers.

Govt eyes Rs 440 cr from Mazagon Dock IPO

The government is looking to raise Rs 440 crore by divesting 15.2 per cent stake in Mazagaon Dock through its initial public offering (IPO). The Centre currently holds 100 per cent stake in the shipbuilding firm. The price band has been set at Rs 135-145 per share. At the top end, the firm will be valued at Rs 2,924 crore. The IPO opens on September 29 and closes on October 1.