Cochin Shipyard proposes IPO for funding expansion

Buckling up to join the IPO bandwagon, India’s largest shipbuilding and maintenance facility Cochin Shipyard has proposed issuance of an initial public offering (IPO). According to the various reports, the fund raised through the IPO will be used to fund two major infrastructure expansion projects.    

While the amount to be raised in the IPO has not yet been disclosed, the stated reports said that the two projects for which the company is planning to raise funds will comprise the construction of a new dry dock worth Rs 1,799 crore, as well as international ship repair facility worth Rs 970 crore. The company is likely to use the IPO funding to partially fund the two projects.

The IPO proposal that has off late seen some protest from the workers union fearing privatisation, is likely to take place with a 10 per cent disinvestment by the government and a 20 per cent fresh issue of shares. Following which, the government will hold 75 per cent stakes in the company and about 25 per cent stakes will be owned by the public.    

Most of the revenue of the company, about 75 per cent of it, is sourced through shipbuilding and ship repairs for the defence sector.