Pipavav Shipyard: Sale to boost cash flows, reduce debt
Punj Lloyd, one of the co-promoters of Pipavav Shipyard (PSL), has sold its entire 19.4% stake in PSL for Rs 656.46 crore at an average price of nearly Rs 50.7 per share to two other co-promoters.
By Amriteshwar Mathur, ET Bureau |
Punj Lloyd, one of the co-promoters of Pipavav Shipyard (PSL), has sold its entire 19.4% stake in PSL for Rs 656.46 crore at an average price of nearly Rs 50.7 per share to two other co-promoters.
The existing PSL co-promoter, SKIL Infrastructure, held an 18.27% stake in the company at the end of December 2009 quarter, along with the other co-promoter SKIL Shipyard Holding, whose stake was negligible. Post this transaction, the two entities — SKIL Infrastructure and SKIL Shipyard Holding — will control 37.7% stake in PSL.
These two entities are unlisted and very little of their financial details is available. As per Sebi rules, SKIL Infrastructure and SKIL Shipyard Holding will shortly come out with an open offer for existing PSL shareholders. The PSL stock touched a 52-week high of Rs 71.9 during Monday’s trade and ended at Rs 69.5. Analysts pointed out that that this transaction has helped remove the uncertainty related to co-promoter holdings.
However, this sale transaction of Punj Lloyd has come barely a few months after the listing of PSL’s stock on October 9, after it had raised nearly Rs 498.66 crore from its initial public offering (IPO). Meanwhile, during the first nine months ended December 2009 quarter, PSL’s operating profit was just Rs 4.9 crore on net sales of Rs 438.39 crore.
This transaction will help boost Punj Lloyd’s cash flow at a time when its operations are unable to generate positive cash flows due to various operational issues. In FY09, the company’s operating cash flows turned negative to the tune of Rs 884 crore. This forced the company to raise money to maintains its operations. As a result, Punj Lloyd’s total consolidated debt was Rs 3,559.2 crore at the end of March 2009, more than double from what it was two years earlier.
The PSL stake sale should help Punj Lloyd improve it cash flows and will give the company a breather. However, the stock market was not very happy with the move and the stock declined nearly 3.9% to close at Rs 178 on Monday.
The existing PSL co-promoter, SKIL Infrastructure, held an 18.27% stake in the company at the end of December 2009 quarter, along with the other co-promoter SKIL Shipyard Holding, whose stake was negligible. Post this transaction, the two entities — SKIL Infrastructure and SKIL Shipyard Holding — will control 37.7% stake in PSL.
These two entities are unlisted and very little of their financial details is available. As per Sebi rules, SKIL Infrastructure and SKIL Shipyard Holding will shortly come out with an open offer for existing PSL shareholders. The PSL stock touched a 52-week high of Rs 71.9 during Monday’s trade and ended at Rs 69.5. Analysts pointed out that that this transaction has helped remove the uncertainty related to co-promoter holdings.
However, this sale transaction of Punj Lloyd has come barely a few months after the listing of PSL’s stock on October 9, after it had raised nearly Rs 498.66 crore from its initial public offering (IPO). Meanwhile, during the first nine months ended December 2009 quarter, PSL’s operating profit was just Rs 4.9 crore on net sales of Rs 438.39 crore.
This transaction will help boost Punj Lloyd’s cash flow at a time when its operations are unable to generate positive cash flows due to various operational issues. In FY09, the company’s operating cash flows turned negative to the tune of Rs 884 crore. This forced the company to raise money to maintains its operations. As a result, Punj Lloyd’s total consolidated debt was Rs 3,559.2 crore at the end of March 2009, more than double from what it was two years earlier.
The PSL stake sale should help Punj Lloyd improve it cash flows and will give the company a breather. However, the stock market was not very happy with the move and the stock declined nearly 3.9% to close at Rs 178 on Monday.
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