The Hindu Business Line : SKIL may sell 50 pc in Pipavav Shipyard

THE Nikhil Gandhi-promoted SKIL Infrastructure Ltd is at advanced stage of negotiations with a couple of global players to offload up to 50 per cent equity in the Rs 800-crore Pipavav Shipyard Engineering Ltd (PSEL).

SKIL, the founder promoter of Gujarat Pipavav Port Ltd, is understood to be close to clinching a deal that may net them Rs 200 crore.

Pipavav Shipyard, which has an equity portion of Rs 290 crore and a debt component of Rs 510 crore, is eyeing a 30 per cent premium for its investment in the project that has been close to six years in the making. The debt portion has participation from the Japanese government and a consortium of Indian banks.

The Pipavav facility is rated to be among the six largest shipyards in the world, the others being Hyundai and Samsung (Korea), Aker Masa (Norway/Finland), Izhar (Spain) and Damen (Holland). According to industry sources, SKIL is currently negotiating with at least two of the big global players in the shipyard business for divesting stake by the time its four docks get commissioned in a few months' time.

Getting ready at the 200-acre developed property at Pipavav are four docks of 350-metre by 65-metre size, which has seen equipment and design from Sumitomo and OSCC, Japan. The docks would be in a position to build, repair and dry dock VLCCs, ULCCs, LNG carriers, offshore platforms, rigs and large container ships.

The Pipavav shipyard assumes significance in the context of the $84-billion outlay that is expected to come through during the 2007-15 period in the industry. The requirement during these eight years would be to either build anew or replace 700 new VLCCs and ULCCs aggregating to meet with the IMO regulations.

China, which has emerged as a manufacturing hub in the last one decade, is now understood to be keen to move head into more high technology segments. And it is this vacuum that greenfield projects such as PSEL is expected to move into. The last shipyard to be built in India was way back in 1972 at Kochi, underlining the need for adding new infrastructure.

Prepared to shed more

SKIL is also probing options to divest stake to some of the Indian corporates that are trying to enter the shipbuilding sector. If this materialises, the SKIL holding in the shipbuilding yard could come down further, thus rendering whosoever picks up 50 per cent stake the majority partner in PSEL. Coming close on heels to the company's decision to offload 32 per cent equity in GPPL in favour of Maersk Sealand, the industry watchers are left in doubt about SKIL's intentions of shifting its area of operation out of Gujarat.

The draw for the big ticket Indian corporates, as far as the shipbuilding yard is concerned, is the Rs 13,000-crore-per-annum pie of the Ministry of Defence, which is planning to source about 70 per cent of its requirement from public and private sector firms by 2005.

The likes of Tatas, Mahindra & Mahindra and L&T have won contracts that include unattended ground sensors, warships and tanks and light armoured multi-role vehicles. However, it is the breakthrough by L&T, first for making parts of a submarine and now to build a full-fledged submarine, that seems to be putting the Pipavav Shipyard under the limelight.

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