India's Cochin Shipyard Gears up for IPO

By Aiswarya Lakshmi March 25, 2017

Cochin Shipyard Ltd (CSL), India's largest public sector shipyard, has filed initial public offering (IPO)document with the market regulator Securities and Exchange Board of India (SEBI) to go public. The government approved a stake sale of up to 25 percent.

Cochin Shipyard IPO will consist of 34 million shares to raise about INR 1,400-1,500 crore (USD 214 - 229 million). On completion of a successful IPO, CSL will become the first of five state-owned shipbuilding companies to be publicly listed. It has filed a draft red herring prospectus (DRHP) with SEBI.

The company, which built India’s first indigenous aircraft carrier, the INS Vikrant, is looking to raise funds to set up new construction and repair facilities.

The proceed from the offer will be used to set up a new dry dock facility within the existing premises of the company, set up an international ship repair facility at Cochin Port Trust area and for general corporate purposes, a release said.

Cochin Shipyard caters to the defence, government as well as private entities. Cochin Shipyard IPO will be managed by SBI Capital Markets, Edelweiss Financial Services and JM Financial Institutional Securities.

The IPO is part of a record disinvestment target set for the forthcoming financial year by Finance Minister Arun Jaitley in the Budget.

According to global analytical and rating firm Crisil, Cochin Shipyard, which caters to the defence and commercial sector, offers marine engineering training in addition to ship-building and ship repair at its two docks.

The state-owned shipyard builds and repairs tankers, product carriers, bulk carriers, passenger and defence vessels. Nearly three-fourths of the company’s clients are engaged in the defence sector, while less than one-third are from the commercial sector.

“First dock is used for ship repair and second for ship-building. The repair dock enables to anchor ships up to 125,000 dead weight tonnage (DWT), while the ship-building dock allows vessels up to 110,000 DWT,” added the statement.