India's Cochin Shipyard plans to sell new shares.
Cochin Shipyard Ltd., building the first Indian-made aircraft carrier, may hold an initial public offering to help fund a 10-billion rupee (US$215 million) dry-dock as the government presses ahead with privatization plans. The state-owned shipbuilder will likely sell new shares, Chairman Muthukrishnan Jitendran said in an e-mailed reply to Bloomberg questions yesterday. He didn't say how much the company plans to raise or give a timeframe for the sale.
Prime Minister Manmohan Singh's government has revived share sales in state-run companies after the Bombay stock exchange's Sensitive Index surged the most in 18 years in 2009. Shipyards in India, the world's fifth-biggest by orderbook, are raising capacity as they compete with China, the Philippines and South Korea for contracts to build new vessels.
"They already have an aircraft carrier, they have a well- established infrastructure and it's a company that has been delivering," said Anand V. Sharma, a director at Mantrana Maritime Advisory Pvt., a Mumbai-based industry consultant. "These factors will improve their valuations and investor attractiveness."
Pipavav Shipyard Ltd., India's biggest shipbuilder by market value, raised 4.96 billion rupees in an IPO in September. The Sensex surged 81 percent in 2009.
Getting listed will help Cochin Shipyard "convert its worth into share value and invest in expansion projects," Jitendran said. "Investors will be very much interested in the public offer."
India may sell as much as 250 billion rupees of shares in state-run companies in the year ending March 31, more than half the total raised since privatization efforts began in 1991, the government said last month.
Singh's cabinet on Nov. 5 approved a plan requiring all profitable state-run companies to ensure that at least 10 percent of shares are in public hands.
Cochin Shipyard's net income rose 70 percent to 1.6 billion rupees in the year ended March 31, according to the company's annual report. Revenue increased 41 percent to 13.6 billion rupees, which only lags behind ABG Shipyard Ltd. in India.
The new dry dock will allow Cochin Shipyard to build and repair vessels up to 200,000 deadweight tons, Jitendran said. The shipbuilder, based in southern Indian city of Kochi, now has the capability to make vessels up to 110,000 deadweight tons.
India's Planning Commission, the government body that prepares five-year plans, has estimated shipbuilding orders of 5 million deadweight tons in the five years ending March 31, 2012. Deliveries will total 2.5 million deadweight tons or $2.5 billion, it said.