ABG Shipyard on Tuesday won a R970-crore contract from the Indian Navy, marking its entry into the defence sector and taking its order book to about R14,890 crore. Meanwhile, in a block deal on the bourses, Standard Chartered Private Equity sold its remaining holding in the company, selling 27.54 lakh shares at an average of R355.34 apiece. While KBS Trading picked up 20 lakh shares at R355.25 per share, names of other buyers were not known.

?We have no PE investors in the company now, since all the funds which had invested before the IPO have exited,? Dhananjay Datar, group CFO, ABG Shipyard, told FE. The ABG stock closed 2% lower on the Bombay Stock Exchange at R361.80.

Datar observed that while ABG had ventured into defence and would pursue more contracts, it would continue to focus on commercial shipbuilding.

?The first naval vessel is due for delivery after 45 months and the second ship six months after that. The defence sector provides a huge opportunity and we will be looking at a larger share,? he added. The R970-crore order includes the construction of two cadet training ships also to be used for disaster relief, search and rescue operations.

While the large order was welcomed by analysts, they expressed concern about whether the firm would be able to execute all projects in time. ?The order book is fairly large and executing it in time could be a challenge partly because of the shortage of engine equipment,? said Kapil Yadav, research analyst at Dolat Capital Market. ABG reported a net profit of R194 crore on revenues of R2,077 crore in the year to March 2011. The firm reduced its debt by R506.35 crore to R2391.09 crore at the end of March 2011. Of this, R900 crore is long-term debt. ?We plan to further reduce our debt by R400 crore in the current year,? Datar said.

Late last year, the company had acquired 60.26% in the R111.4-crore Western India Shipyard, the largest domestic composite ship and rig repair company in the private sector. Apart from four defence PSUs, Cochin Shipyard and Pipavav Shipyard are the only two private yards in the country catering to the defence sector. Last month, ABG Shipyard had received industrial licences to design and construct naval warships and support ships. The vessels that the company will build for the navy will be approximately 110 metres in length and designed for a maximum speed of 20 knots. With the latest infrastructure in place at its Surat and Dahej yards and having delivered more than 140 vessels worldwide, ABG Shipyard is fully geared to build all kinds of ships for the Indian defence sector.

In mid-2009, ABG Shipyard had made a counter-offer for Great Offshore, forcing Bharati Shipyard to revise the open offer price several times thereafter, though it later sold its 8% stake in GOL. Promoters and the promoter group hold about 60.72% of the company?s equity while the public holds about 39.28% as of March 31, 2011.