Cochin Shipyard is gearing up for strong top line in FY22: Madhu Nair

With the Covid-19 pandemic waning, state-owned Cochin Shipyard is gearing up to bring its top line back to pre-pandemic levels by executing orders in all three major business categories.

“Our orders in the indigenous category, government and private shipbuilding segments as well as the ship repair section are all into execution phase this financial year and none in design or engineering. We have, therefore, a top line growth guidance of 25 per cent for FY22 from last year,” Madhu Nair, chairman and managing director at Cochin Shipyard, told Business Standard. The 25 per cent growth looks huge on a lower base but it will bring the company to its usual pre-Covid top line growth of 13-15 per cent. The company hopes to achieve this target provided the anticipated third wave does not bring any bigger negative surprises in the coming months, Nair added.

The firm has been guiding 12 per cent annual top line growth but is achieving 13-14 per cent year-on-year (YoY) basis for the last four to five years (pre-Covid). “We have almost full staffing at our shipyards,” said Nair. Though FY22 started off well for the shipyard company, its operations remained shut during May 8-May 31, 2021, on account of the second wave-induced lockdowns.

For FY22, the company said its current order book size stands at Rs 12,000 crore, which includes private, government and navy shipbuilding and ship repairs. “For ship repairs, in all probability, we should touch the record level of Rs 800 crore if all goes well in FY22,” said Nair.

The company’s ship repair facility in Kochi witnessed 100 per cent utilisation, except during state and national lockdowns. Alongside, the company is also hoping to bag Rs 12,000-crore tender from the Indian Navy. The company is one of the lowest bidders in the tender. It takes about 18-24 months for project designing and engineering before the actual execution starts.

Nair also said since the change of crew was now sorted out to a sizable extent, shipbuilding is back and the ship repair segment has turned bull­ish. “There is no issue with the change of crew and so ships are coming to us for repair wo­rk. The grave problem we saw (regarding crewing) last year is not there,” he said. India was not allowing foreign nationals due to visa restrictions at the start of the pandemic last year. 

While the company is getting on its feet with regard to top line for FY22, its Rs 3,000-crore capex schedule has taken a sizable hit due to the pandemic. “There is delay in our Kochi dry dock capex, which has now moved to December 2022 from June 2021. Due to this, the commissioning of this project will now be in mid-2023,” said Nair. 

Besides, the ship repair facility at Kochi is facing challenges because the contractor is having financial issues, added Nair.