Cochin Shipyard Ltd IPO opens for bidding for public investors on Tuesday and will close on 3 August 2017. The price band for the issue is fixed at Rs 424-432 per share for the IPO of 33.98 million equity shares. The issue consists of a fresh issue of 22.65 million shares and an offer for sale of 11.32 million shares by The President of India.
Cochin Shipyard was incorporated in the year 1972 as a fully owned Government of India company and according to a CRISIL report, it is the largest public sector shipyard in India in terms of dock capacity, as of 31 March 2015. The company commenced ship repair operations in the year 1982 and has undertaken repairs of all types of ships including the up gradation of ships of oil exploration industry. It also looked after the periodical lay up repairs and life extension of ships of Navy, UTL, Coast Guard, Fisheries and Port Trust besides merchant ships of SCI & ONGC.
Objectives of issue:
The proceeds of the offer for sale will be received by the selling shareholder – The Government of India, the company will not receive any proceeds from the offer for sale. Chairman of the public sector shipyard in India, Madhu S Nair said, the company will be investing Rs 3,100 crore over the next five years for capacity expansion in both ship building as well as on the repairs side.
The Cochin Shipyard is constructing a new bigger dry-dock facility which would make the firm a strong contender for constructing the country’s next indigenous aircraft carrier, PTI reported citing a CSL official earlier last week. The CSL also plans to build a Rs 100 crore facility on the shore of Hooghly river in Kolkata for constructing vessels for inland water transport system.
The company fixed a price band of Rs 424-432 per equity share of Rs 10 face value for its IPO. The issue will constitute 25% of the post issue paid-up equity share capital. Cochin Shipyard will receive Rs 978.74 crore through the fresh issue of shares. SBI Capital Markets Limited, Edelweiss Financial Services Limited and JM Financial Institutional Securities Limited are the book running lead managers to the offer. The bids can be made for minimum 30 equity shares and in multiples of 30 shares thereafter.
The company targets to raise Rs 1,440.92 crore at the lower end of price band and Rs 1,468.11 crore at the higher end of the price band. Cochin Shipyard will receive Rs 978.74 crore through the fresh issue of shares. The government is divesting 11.32 million shares through an offer for sale while the company is issuing 22.65 million fresh shares, that should ensure the government stake comes down to 75% post-issue.
The PSU company clocked a revenue of Rs 2,059 crore in FY17, with 74% contribution from the ship building side and the rest from repairs. The profit after tax was at Rs 312 crore.