Pipavav Shipyard plans Rs 2,900cr project

Chennai, January 18 2008: Pipavav Shipyard Limited is currently constructing a shipyard complex at Pipavav, located on the west coast of India adjacent to the maritime sea lane between the Persian Gulf and Asia. The Shipyard will have an estimated investment of Rs 2,888 crore. Upon completion of construction, the Pipavav Shipyard will be capable of ship construction and repairs for a range of vessels of different sizes and types, as well as the fabrication and construction of offshore platforms, rigs, jackets and vessels, for use by oil and gas companies in their exploration and production activities.

The Company proposes to part finance this project cost with the help of Rs 1,248.67 crores (including premium) raised through equity already issued and term loans from banks and financial institutions to the tune of Rs 935.2 crores. To meet the remaining funding requirement, Pipavav Shipyard Ltd proposes to enter the capital markets with a public issue of 86,850,000 Equity Shares of Rs 10 each through 100% book building process. It has already filed DRHP with SEBI for the purpose. JM Financial Consultants Pvt. Ltd, Citigroup Global Markets India Pvt. Ltd and Enam Securities Pvt. Ltd are the Book Running Lead Managers (BRLMs) for the Issue. SBI Capital Markets Ltd, Kotak Mahindra Capital Co. Ltd and Motilal Oswal Investment Advisors Pvt. Ltd are the Co-BRLMs for the Issue. IL&FS Investsmart Securities Limited is Advisor to the proposed offerings.

The Company is constructing the Pipavav Shipyard based upon the principle of concurrent shipbuilding, which involves the production of vessels while simultaneously completing construction of the shipyard. The construction of the Pipavav Shipyard is being conducted on an owner-managed basis. It has agreements with three international shipowners for the construction of 26 Panamax bulk carriers of 74,500 DWT each for delivery from 2009 to May 2012 at an aggregate contract value of US$ 1,063.12 million (Rs. 42,992 million).

The Pipavav Shipyard was originally promoted by SKIL Infrastructure Limited and Grevek Investments. Punj Lloyd has now joined as a co-promoter through its acquisition of 129,361,538 Equity Shares of the Company. As a co-promoter, Punj Lloyd has agreed to conduct all of its offshore business, excluding the construction and fabrication of sub sea pipelines, in India through Pipavav Shipyard and is expected to provide the Company with access to opportunities in the Offshore Business industry, which includes business opportunities in the fabrication and construction of offshore platforms, rigs, jackets and vessels for the oil and gas industry. The construction of the Pipavav Shipyard is expected to be completed in October2008.