Cochin Shipyard IPO to open on August 1; may raise Rs 1,468 crore
The company aims to raise up to Rs 1,468 crore via the IPO.
The company aims to raise up to Rs 1,468 crore via the IPO. Of that, as much Rs 489 crore will come from an offer for sale by the government. The rest will come via a fresh issue of shares by the company. The issue is priced at Rs 424 to Rs 432 per share. It comes with a discount of Rs 21 per share for retail and employees.
The money from the IPO will be used to fund its expansion plans. Cochin Shipyard has a capital expenditure plan worth over Rs 3,000 crore over three years. This includes a dry dock that will be used to build larger ships.
A dry dock is a narrow basin or vessel that can be flooded to allow a load to be floated in, then drained to allow that load to come to rest on a dry platform. Dry docks are used for the construction, maintenance, and repair of ships, boats, and other watercraft.
Cochin Shipyard also plans to invest in a 42 acre ship repair facility. It is building the country's first indigenous aircraft carrier.
An agile shift in focus towards more lucrative business segments has made sure Cochin Shipyard is insound financial health despite overarching industrial problems of overcapacity which has hit businesses of shipyards across the world.
The company has in the last few years diversified towards defence contracts. About 75% of its shipbuilding revenue comes from defence while the rest come from commercial contracts, its chairman Madhu S Nair had told ET in an interview last year. Five years back, defence constituted 40% of its shipbuilding revenues. Its total order book as of March 2017 totalled Rs 2936 crore.
Also, the company has rapidly grown its ship repair business. As of last year, the segment contributed 23% to its overall revenue from a miniscule chunk a few years earlier.