Cochin Shipyard IPO: Govt to sell 10% stake

The company will also be asked to issue bonus shares

The Union government has begun the groundwork for a public offer for its Cochin Shipyard Ltd (CSL), the country's largest shipbuilding and repair facility.

The plan is for a sale of 33.9 million shares, a third of this being the government's. A draft note for the Cabinet, circulated by the ministry of shipping, says CSL would be issuing around 22.6 mn new shares, of Rs 10 each, to raise double the amount compared to the government.

In the run-up to the Initial Public Offer, the government will out through a capital restructuring exercise, enhancing the authorised capital to Rs 250 crore, enabling the government to infuse Rs 120 crore. Currently, the authorised capital is Rs 130 crore. More, the company would be asked to issue bonus shares in keeping with guidelines of the department of public enterprises. The amount of these to be issued against the cash surplus has not been decided. Its latest annual financial report said the reserves and surplus amounted to Rs 1,239 crore.

CSL has been in discussion with global shipping lines to bid for the GAIL contract for LNG (liquefied natural gas) container vessels. GAIL had invited proposals for construction and charter of these vessels beginning September 2017, to import LNG.

To give the Indian ship building industry a fillip, the tender had mandated construction of a certain number in India. To be bid in sets of three, with every one carrier to be constructed at an Indian shipyard.

CSL's turnover in 2013-14 was Rs 1,637 crore as compared with Rs 1,554 crore in 2012-13. The net profit was Rs 194 crore and Rs 185 crore, respectively.