Cochin Shipyard to sell shares, tax-free bonds to fund expansion

Cochin Shipyard Ltd, building the first Indian-made aircraft carrier, plans to sell shares to the public through an initial public offering (IPO) and issue tax-free bonds to help fund a Rs.1,000 crore expansion into ship repair and fabrication.
The state-owned shipbuilder last week filed an application with the finance ministry to sell tax-free bonds worth Rs.600 crore, according to spokespersons of the shipping ministry and Cochin Shipyard.
“The board of Cochin Shipyard will meet this week to clear the IPO plan,” the spokesperson for Cochin Shipyard said. The size of the IPO, the number of shares to be sold, and the time frame for the sale will be decided after the board approves the proposal. “We are looking at Rs.1,000 crore worth of expansion to be financed through a mix of tax-free bonds and share sale,” the spokesperson added.
If and when the IPO takes place, Cochin Shipyard will be the first state-run shipbuilder to be listed.
The only profit-making yard controlled by the shipping ministry, the firm is building India’s first aircraft carrier as well as 25 other ships.
The global shipping and shipbuilding sector has taken a hit due to the economic downturn since 2008, hurting Cochin Shipyard’s efforts to win new orders for commercial ships, forcing the yard to look at other related areas for growth.
The expansion plan involves setting up facilities for ship repairs, fabrication of offshore structures, and repair of oil rigs. “Ship repair is a very lucrative area. It is not cyclical like commercial shipbuilding. Perpetually, there will be ships to repair,” the spokesperson said.
Source: Livemint