Livemint reported that two of India’s top shipbuilding companies, as well as a third that is constructing a new facility may have to defer plans to raise money from the public to fund their projects due to sluggish market conditions.
Pipavav Shipyard had received clearance in October from India’s stock market regulator Securities and Exchange Board of India or Sebi, to raise as much as INR 800 crore by selling shares to the public through an IPO. The shipyard promoted by SKIL Infrastructure Ltd and Punj Lloyd Ltd has time till December to launch the IPO. The Sebi clearance for public offerings is valid for three months.
Mr Bhavesh Gandhi vice chairman of Pipavav Shipyard Ltd said that “Nobody wants to touch the IPO market now. It is for everyone to see adding that the country’s newest shipbuilder that began constructing the first of a series of 26 ships worth INR 4,300 crore for French, Greek and Norwegian fleet owners early this year.”
Mr Gandhi said that “If we are not able to complete the IPO by December and the approval lapses, we will refile the prospectus and take fresh approval from Sebi. He said that we are waiting and watching for the good times. It is just a question of the markets getting charged up before we take the plunge. Any delay in IPO would not impact the commercial shipbuilding project. The current project is fully funded through debt and equity. The IPO was meant to raise additional resources to fund expansion plans to cater to offshore vessels as well as building and repairing ships for the Indian Navy.”
Cochin Shipyard had recently received approval from the Union government to set up a small shipbuilding division with an investment of INR 98 crore. It had also floated plans to build a second dry dock to construct bigger ships.
An official at Cochin Shipyard said that poor market conditions have also nixed the plans of state run Cochin Shipyard Ltd to sell shares to the public. We will not be going for an IPO now. He added that the company though is proceeding with all the pre IPO related work so that it can enter when the market picks up.
Goodearth Maritime has started work on putting up a new shipyard at Cuddalore in Tamil Nadu with an investment of over INR 2,000 crore. An executive of Chennai based ship owning firm Goodearth Maritime Ltd said that the company has also put off plans to raise money from the public, citing unfavorable conditions. He said that “The company’s board has deferred IPO plans for now. We will revisit the plan at a later date.”
According to a recent industry funded report prepared by KPMG Advisory Services, India has some 23 yards that are currently building about 250 ships valued at INR 24,000 crore. The country’s shipbuilding capacity is projected to reach 4 million tonne by 2012 from the present 2.8 million tonne and rise further to 19 million tonne by 2017, aided mainly by cost competitiveness and availability of skilled and cheap labor. The report which was submitted to the government said that at this stage, India will have a 7.5% share of the global market up from less than 1% now. Local firms had outlined plans to invest close to INR 20,000 crore over the next 3 to 5 years to build new facilities and tap the potential that prevailed till early this year when shipping and global trade were at their peak.
