Punj Lloyd buys 25% in Pipavav Shipyard

NEW DELHI: The New Delhi-based infrastructure major Punj Lloyd has acquired a 25.1% stake in Pipavav Shipyard (PSL) for Rs 403 crore. The deal, done through preferential allotment, is seen as a strategic investment by Punj Lloyd to support the growth of its business in the offshore sector.

“In view of the robust oil prices and the substantial exploration and production activities in the country, the opportunity for revamping existing offshore platforms and deploying new platforms by upstream oil and gas companies is expected to be significant.

This investment will provide us access to capabilities to operate in this market more effectively,” said a company spokesperson. As per industry estimates, growth in the shipyard industry is expected to be over 30% per annum in the next few years.

The proposed shipyard, spread over 725 acres of land, is located on the west coast of India along the Dubai-Singapore sea route. It has 175 acres of developed waterfront land and confirmed orders worth $358 million (nearly Rs 1,450 crore) and a letter of intent (LoI) for another $513 million (over Rs 2,050 crore).

The whole project will be completed within 10 years in three phases. Once completed, PSL is expected to be the largest shipyard in India and of the 10 largest in the world, joining the league of Hyundai and Samsung of Korea, Damen of Holland, Aker Masa in Finland and Izhar of Spain.

As of now, 51% stake in PSL is held by a clutch of leading financial institutions, including IL&FS and Exim Bank, while 49% is with the Gujarat-based Sea King Infrastructure (SKIL) promoted by Nikhil and Bhawesh Gandhi.

Even before the deal, PSL had an association with Punj Lloyd. Last year, PSL had roped in the Singapore government company SembCorp as a strategic partner. Recently, SembCorp’s engineering and construction business was acquired by Punj Lloyd and was rechristened Sembawang.

The deal will provide Punj Lloyd an access to fabrication facilities for platforms, single-buoy mooring facilities, rigs and jackets to exploit the opportunities in this sector. Punj Lloyd is currently executing the Heera Field Redevelopment project for ONGC. The facility at Pipavav Shipyard can also be used for fabrication of vessels for petrochemical industries and refineries.