S’pore co 1st foreign player to invest in Indian shipyard

For the first time, a foreign shipyard has picked up a stake in the emerging domestic ship building and ship...

For the first time, a foreign shipyard has picked up a stake in the emerging domestic ship building and ship repair industry. Singapore-based SembCorp Marine, the world’s second largest offshore oil rig builder, has recently bought a 3.31 per cent stake in Pipavav Shipyard Ltd (PSL) for around Rs 80 crore.

The investment agreement between the two companies involves Sembcorp picking up over 17.5 million shares in PSL at approximately Rs 45 each. “Sembcorp has been our technical partner for some time, advising us on aspects like shipyard design, technology, infrastructure, management and training of employees. With this stake, it has become the first foreign shipyard to take a stake in an Indian shipyard,” said Praveen Mohnot, executive director of SKIL Infrastructure, promoter of PSL. Engineering construction company Punj Lloyd, too, holds a 25 per cent stake in the yard.

With this, the Singapore-based company would get a firm foothold in Pipavav Shipyard, which is located on the western coast along the East Asia- Middle East sea route. It would also give the company an opportunity to tap into what would perhaps be the country’s largest shipyard, post-completion in 2008. “The shipyard, when completed, will have a maximum dock size of 651 meters and an annual throughput of 10 Panamax size vessels,” informed Mohnot.

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To date, the shipyard has secured $1 billion in contracts to construct 22 Panamax sized vessels of 74,500 dead weight tonnage (DWT) each, with options to build an additional four. According to PSL, this constitutes the largest current order for Panamax vessels at any shipyard across the world.

The shipyard has the capability to build vessels of a maximum 4 lakh DWT. Compared to this, an average private Indian shipyard currently manages vessels between 30-40,000 DWT.

Pipavav plansIPO in January

The SKIL-promoted Pipavav Shipyard Limited has revealed that it plans to hit the markets with an IPO sometime in January next year. The company plans to raise Rs 700 crore-800 crore by offering a 15 per cent equity stake in the company, proceeds from which will be used to fund development of the shipyard. It is likely to file its red herring prospectus with Sebi within the next fortnight.

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