Cochin entity to become first govt shipyard to get listed

The global shipbuilding industry may not be in a good shape, but with business for Cochin Shipyard looking up, the government is likely to divest a 10 per cent stake in the company.

This would be the first disinvestment in the sector. The company is expected to take a decision at its next board meeting, to be held in June. In 2011, the government had planned to go for divestment, but did not go ahead, pending expansion of the shipyard. The government plans to raise Rs 54,000 crore through divestment this year, nearly doubling the FY13 target of Rs 30,000 crore.

Cochin Shipyard recently started its ship repair unit near the Kochi port and is planning to expand operations there. Last September, the company signed a contract with the port to set up a ship repair unit at 42 acres owned by the port trust, at an estimated cost of Rs 750 crore. A senior company official said the company would also look for raising fresh equity of around Rs 450-500 crore later to fund its short-term expansion.

The government-owned shipyard reported a turnover of Rs 1,405 crore and a profit after tax of Rs 172 crore for the year ended March 2012. Cochin Shipyard Ltd can build 110,000 deadweight tonnage (DWT) capacity vessels, the largest size for the ship building industry in India. Hindustan Shipyard Ltd comes next at 80,000 DWT.

The shipping industry has been reeling under the problem of oversupply of vessels and falling freight rates. Shipbuilding companies have been starved of orders. According to experts, ship repair facilities can help in keeping companies afloat till commercial orders pick up.

More than merchant ships, the defence business is keeping the business going for shipyards in India. Cochin Shipyards currently has 28 ships on order consisting of six offshore support vessels for domestic and international owners, 20 fast patrol vessels for the Indian coast guard and the prestigious aircraft carrier for the Indian Navy. In 2012-13, the yard delivered three ships to Shipping Corp of India.