Cochin Shipyard IPO review – Things to know

In India, Cochin Shipyard Limited is the largest public sector shipyard in terms of dock capacity.  Cochin Shipyard Limited is coming up with an IPO. They are going to introduce their initial public offer which will hit the primary market on 1^st August, 2017 and closes on 3^rd August, 2017. The company aims to raise around Rs. 1,468.11 crore by offering shares at Rs 424 – Rs 432 Per Equity Share. They are offered discount of Rs 21 to RII and Employee. So the discounted price band for Retail and Employee is Rs 403 – Rs 411.

About Company

Cochin Shipyard Limited was incorporated as Cochin Shipyard Limited on March 29, 1972. They are one of the largest public sector shipyard in India in terms of dock. They serve to the clients involved in the defence sector in India and the commercial sector worldwide. In addition to shipbuilding and ship repair services, they also offer marie engineering training.

They have two docks:-

• Ship Repair Dock- This enables them to accommodate vessels with a maximum capacity of 125,000 DWT.
• Shipbuilding Dock- This enables them to accommodate vessels with a maximum capacity of 110,000 DWT

They are in the process of constructing a new dock, a ‘stepped’ dry dock (“Dry Dock”). This stepped dock will enable longer vessels to fill the length of the dock and wider, shorter vessels and rigs to be built or repaired at the wider part. They are also in the process of setting up an International Ship Repair Facility (“ISRF”), which includes setting up a shiplift and transfer system.

They have built and delivered vessels across broad classification which includes bulk carriers, tankers, Platform Supply Vessels (“PSVs”), Anchor Handling Tug Supply vessels (“AHTSs”), launch barges, tugs, passenger vessels and Fast Patrol Vessels (“FPVs”). They are currently building India’s first Indigenous Aircraft Carrier (“IAC”) for the Indian Navy. They have also grown their ship repair operations and the only commercial shipyard to have undertaken repair work of Indian Navy’s aircraft carriers, the INS Viraat and INS Vikramaditya.

Competitive Strengths

• One of India’s leading public-sector shipyards catering to both commercial clients as well as clients engaged in the defence sector with a multitude of offerings for a broad range of vessels across life cycles.
• Modern facilities and infrastructure and integrated capabilities to deliver quality products and services
• Order book with a strong customer base of reputable ship owners and marquee clients
• Competitive cost structure and efficient operations
• Led by a dedicated board, long serving and experienced senior management backed by a strong pool of experienced professionals
• Continuous profits leading to robust financial performance

Strategies

• Expand capabilities through their proposed Dry Dock and International Ship Repair Facility
• Build a strong order book by bidding vigorously for projects to be awarded by the Indian PSUs and defence sector pursuant to ‘Make in India’ initiative
• Continue to enhance construction quality and delivery time and enhance price competitiveness in order to increase market share
• Strengthen market leadership by continuously adding upgraded and new vessel models to their offerings and expanding customer services
• Continue to leverage market position and relationships with customers, suppliers and other business partners to support growth and improve the competitiveness

Product Offerings

1. Shipbuilding– Some of the vessels they have built in the past are currently in the process of building include:

Clients engaged in the defence sector

• IAC (Indigenous Aircraft Carrier)
• FPV (Fast Patrol Vessels)

Clients engaged in the commercial sector

• Double hull tanker- The vessel was designed as a single screw, diesel-driven double hull tanker carrying oil in bulk with machinery space and all accommodations, including a navigation bridge.
• Bulk carrier- This ship was designed and built as a single screw diesel engine driven bulk carrier for unrestricted worldwide service.
• Dredger- They constructed a 1700 cu m trailer suction hopper dredger for the Chennai Port Trust.
• Buoy Tender Vessel- This is a specialized multi-purpose ship which is used for transportation and placement of buoys in position at deep seas, recovering and maintenance of buoys, towing and mooring of light vessels, distress management, transportation of equipment and materials in containers and for repair of light houses in remote islands.
• PSV- The vessel is designed for satisfying the specific demands of the offshore industry for transport of deck cargo, pipes, liquid cargo and cement and unloading to rigs, production platforms, and pipe-laying barges.
• AHTSs- These vessels are used as support platforms for oil rigs and platforms.

2. Ship repair– They have undertaken repairs of all types of ships including the upgradation of ships of the oil exploration industry as well as periodical maintenance, repairs and life extension of ships of the Indian Navy etc.

Objects of the Issue:

Company proposes to utilize the Net Proceeds towards funding of the following objects:

1. Setting up of a new dry dock within the existing premises of the Company (“Dry Dock”)..
2. Setting up of an international ship repair facility at Cochin Port Trust area (“ISRF”).
3. General corporate purposes.

Financial Details

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