BID/ISSUE OPENING ON September 16, 2009
BID/ISSUE CLOSING ON September 18, 2009
Objects of the Issue: The objects of the Issue are:
· Construction of facilities for shipbuilding, ship repair and the Offshore Business;
· Margin for working capital; and
· General corporate purposes.
Overview: Pipavav Shipyard project was originally conceived and implemented by SKIL Infrastructure Limited (SKIL) as Pipavav Ship Dismantling and Engineering Limited on October 17, 1997. In April 2005, IL&FS, one of the leading infrastructure finance companies in India, became a shareholder, and the name of the Company was changed to Pipavav Shipyard Limited. In September 2007, Punj Lloyd Limited (PLL) acquired a substantial stake in the Company, and now, both SKIL and PLL are co-promoters of the company.
Business: PSL’s long-term strategy is to diversify the business by focusing on opportunities across a range of areas and not solely on commercial shipbuilding. The Company plans to engage in activities in the following business sectors:
· Commercial shipbuilding
· Offshore fabrication and servicing
· Shipbuilding and repair for navy and coast guard vessels
· Ship repair
The company is currently completing the construction of the Pipavav Shipyard, located on the west coast of India adjacent to major sea lanes between the Persian Gulf and Asia. 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, including naval vessels and coast guard vessels, as well as the fabrication and construction of products such as offshore platforms, rigs, jackets and vessels (but excluding sub-sea pipelines) for oil and gas companies.
Financials: Commercial operations at the Pipavav Shipyard commenced on April 1, 2009. Other Income was Rs.617.78 millions in FY2009 up from Rs.277.49 in FY2008.Net Profit was Rs.48.56 million in FY2009 up from Rs.48.24 in FY2008. The Company have firm order agreements with Golden Ocean Group Limited and AVGI Maritime Group for the construction of 10 Panamax (The maximum size of a ship capable of transiting the Panama Canal) bulk-carriers of 74,500 Dead weight tonnage each, having an aggregate value of US$ 373.52 million (Rs.17,880 million), scheduled for delivery from April 2010 to May 2012.
Risks: Key risks include:
· The Companycurrently does not generate sufficient cash flow to service its debtedness and it may not be able to generate sufficient cash flow to meet its debt service obligations.
· High execution risk of completing the construction of the Pipavav Shipyard as scheduled.
· No prior experience in shipbuilding or repair activities, or in the Offshore Business.
· Limited operating history, which may makes it difficult to evaluate historical performance or future prospects.
· Cyclical trends in the shipbuilding, offshore business and related industries.
Valuation: Commercial operations at the Pipavav Shipyard commenced on April 1, 2009 and therefore it is difficult to compare it with its peers.