Bharati Shipyard mulls funding options for new shipyards in Bengal, Gujarat

Bharati Shipyard, the country’s largest shipbuilder, is mulling various options including qualified institutional placement (QIP), foreign currency convertible bonds (FCCBs) and rights issue to part-finance its new shipyards and to expand the fleet of Great Offshore.

‘’The process (to raise money) has started and various options are being explored. We may go for QIP, FCCBs or rights issue,” managing director Vijay Kumar told DNA.

Kumar was in Kolkata to mark the delivery of first two new ships to operators that will be used in the Baltic sea.

“We are discussing all options (for fundraising) as we are going into major expansion. The shipping market is down and we feel it is the right time to invest. Building a facility takes time and we want to be up and going when the market revives,” Kumar said.

“The projects planned are shipyards in Bengal and Orissa to be built by our joint venture with Apeejay, and one in Gujarat that would come under Bharati Shipyard. We also need to expand our fleet in Great Offshore,” Kumar said.

Bharati had earlier acquired Great Offshore.

The quantum of funds to be raised and its timing depends a lot on the progress of the projects, which are all time consuming as land acquisition is involved.

“Unless we acquire the lands, we really don’t start with the project. Financial closure happens after you are done with the land acquisition,” financial controller Parag Doshi said.

The investment involved in the joint venture would be anything between Rs1,500 and Rs2,000 crore and will be infused in phases over two to three years, Doshi said. The capex over the next two years would be about Rs50-100 crore.

“We have just pumped in Rs1,100 crore in two yards. Dabhol yard is almost complete while in Mangalore the first phase is about to reach completion and phase two would be taken up only after the market improves,” he said.

These apart, Bharati’s only planned project as of now is in Gujarat for which it had earlier signed a memorandum of understanding with the Gujarat government for a shipyard that will take time to fructify.

“We are looking at an investment of around Rs1,500 crore over a period of 5-6 years but that will happen only after some land allotment happens (in Gujarat),” Doshi said.

When asked if the Bengal project, conceived in 2007, is suffering because of land acquisition hurdles, Kumar didn’t have a straight relay:

“We have been trying our best but sometimes it so happens that we propose and some higher power disposes. We had asked for 500 acres for the Bengal project but nothing has come as yet.”
Kumar doesn’t see any progress in the Bengal project till the Assembly elections, slated in May, are over and a new government is formed.