Cochin Shipyard hopes to be principal contender for building next aircraft carrier for Indian Navy

KOCHI: Cochin Shipyard Ltd hopes to be the principal contender for building the next aircraft carrier for Indian Navy, with the completion of a new dry dock and international ship repair facility (ISRF) for which it is going for initial public offering (IPO).

CSL chairman and managing director Madhu S Nair said the new aircraft carrier is still in the design stage and will be bigger than the existing one being constructed by CSL.

"We already have the expertise for building the aircraft carrier. With the new dry dock we may be the only one in the country to accommodate it." The new dry dock will allow CSL to build and repair ships of all sizes except very large crude carrier (VLCC).

At present CSL repairs about 80 to 100 vessels a year. At the same time it has been turning down repair request for around 20 ships. "With ISRF in place we will get slots for another 70 to 80 ships. Possibly, we may be able to turn CSL into a ship repair hub on a global scale," Nair said.

The cost of the dry dock is estimated at Rs 1800 crore and that of ISRF at Rs 970 crore. CSL is going for IPO from August 1 to 3 part fund the project. It expects to raise Rs 1468 crore by issuing 33,984,000 equity shares of Rs 10 each at a price band of Rs 424 to 432 per equity share. The issue consists of fresh issue of 22,656,000 equity shares and offer for sale 11,328,000 equity shares.

Post IPO, the share of government in CSL will come down to 75 % from 100%. The construction will start in early 2018 and is expected to be completed in 30 months

"We have cash in hand of about Rs 1600 crore and another Rs 1200 crore will be got through internal accruals in the next few years. These along with IPO amount will help us fund the projects and meet the working capital of about Rs 1000 crore needed annually," Nair said.

He pointed out that global shipping is passing through one of the worst recessionary phases which has resulted in the drying up of international orders leading to a slowdown in the top line growth. However, CSL has been consistently making profits. In 2016-17, CSL made a net profit of Rs 312 crore on an income of Rs 2208 crore. While the profit went up 7%, the income grew by 5 % from a year earlier.