Shipping Ministry is believed to have put the disinvestment of Cochin Shipyard on the backburner, as the state-run shipyard has yet to firm up its expansion plans for which it had to raise funds.
The government was mulling disinvestment in Cochin Shipyard through an initial public offering (IPO) and is now likely to take a while following the expansion plans getting delayed.
"Its (Cochin Shipyard) IPO has to be linked to its expansion, they are working on the expansion...Which may take up to next fiscal (2011-12) to complete, therefore not right now," a Shipping Ministry official told PTI.
An IPO would make Cochin Shipyard the first state-owned shipbuilder to be listed on the bourses.
The company's clientele includes ABG Shipyard, the country's biggest private shipbuilder, Essar Oilfields Services, a unit of the diversified Essar Group and Bharati Shipyard among others.
India has 23 yards that are involved in building about 250 ships, costing at least Rs 25,000 crore.
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In addition to its existing yards, Cochin Shipyard is now setting up a small shipbuilding division with an investment of about Rs 100 crore.
It also plans to construct a second dry dock for building bigger ships.
A dry dock is a narrow basin that can be flooded to allow a ship to be floated and then drained to allow that ship to come to rest on a dry platform.
Dry docks are used for the construction, maintenance and repair of ships and generally cost between Rs 800-1,000 crore.
As far as shipbuilding in the country is concerned, the government has laid out a plan in the new Maritime Agenda 2010-2020.
This includes introduction of new shipbuilding subsidy scheme and grant of infrastructure status to shipbuilding industry.
The government diluted 10% of its stake in state-owned Shipping Corporation of India through a follow-on offer in December, 2010 and raised fresh equity equivalent to 10% of the paid-up capital. The follow-on offer garnered about Rs 1,200 crore.
Shipping Corp plans to invest the money on expansion, including in its proposed entry into the ports and terminal management business through a joint venture with a global company.
The government has targetted to raise Rs 40,000 crore through disinvestment in the current fiscal, up from around Rs 25,000 crore in 2009-10.