Cochin Shipyard in revamp mode, IPO to get delayed

Government-owned Cochin Shipyard has plans to raise funds via the capital markets, but it seems its planned IPO will get delayed further because of some crucial restructuring.
The yard is working on a new face. In order to garner better investor response for its initial public offer scheduled in FY11 as approved by the government, the PSU is undergoing a business restructuring exercise and will see the yard with a renewed focus on specialised shipbuilding.
NDTV learnt from sources that the the yard is looking to split the infrastructure in five specialised business units namely naval, offshore, small commercial ships, repair and ship conversion, in order to be a broad spectrum shipyard.
The new IPO draft prospectus will also project defence shipbuilding as a focus area.
Industry experts suggest the restructuring exercise may delay the yard's IPO, which was initially planned in 2008 during the shipping boom, to raise Rs 1,000 crore through issuance of 10 per cent fresh equity.
With the changed business plans, a host of approvals will be needed before the issue can hit the market.
D T Joseph, former secretary and advisor to the ministry of shipping, said, "It’s a good move to specialize, but should pay attention so that there is no duplication of resources. It could be a model for other shipyards to follow.”
The shipyard did not comment on the restructuring plans but in an email response a spokesperson said, “The draft proposal would address the issues of raising capital for the expansion and will be submitted to the ministry within next three months.”
Cochin Shipyard's move indicates the lucrativeness of allied areas such as defence and ship conversion in the changed shipbuilding market dynamics.
Meanwhile, experts caution that while increasing focus on defence orders Cochin Shipyard should not lose out on its core merchant shipbuilding, as once new orders start flowing globally, shipbuilding countries like Korea and China will become aggressive and here Indian yards should be prepared to maintain their share of global shipbuilding.