The Hindu Business Line : Turnaround: Gujarat defers Alcock Ashdown divestment again

The Gujarat Government has put on hold divestment plans for a second time for its wholly-owned shipbuilding company Alcock Ashdown (Gujarat) Ltd, or AAGL, with the receipt of bids for Rs 169 crore against the reserve price fixed to nearly Rs 350 crore, despite the company’s recent turnaround and booming business.

Divestment

The divestment is now likely to be taken up afresh next year, sources told Business Line.

Last year also, the State Government had decided to invite fresh bids as the company’s order book swelled and a higher price was expected. Ship-building company ABG Shipyard Ltd and Elecon Engineering Ltd were in the race to buy the Bhavnagar-based company, after being short-listed from among four bidders and asked to submit price-bids by July 31.

Quotation low

However, when the price bids were opened it was found that the largest bid quoted offered a maximum Rs 169 crore, which was less than half the reserve price fixed. When contacted, Mr K. Soman, Managing Director, declined to comment, saying the State Government would take a decision.

The decision to privatise the company was taken three years ago when the global shipbuilding business was stagnant. When the State Government decided to exit shipbuilding, however, this business suddenly zoomed and the company’s order book position improved significantly.

Performance

Alcock Ashdown’s order book position, on which is based valuation of shipyards, increased from Rs 25 crore in 2003-04, when the State Government began to think of its divestment, to Rs 43 crore (2004-5) and then zoomed to Rs 720 crore (2005-06), Rs 760 crore (2006-07) and now Rs 1,500 crore. Its turnover, too, increased from Rs 60 crore in 2003-04 to Rs 111.77 crore in 2005-06, whereas profits increased from Rs 89 lakh in 2003-04 to Rs 3.54 crore in 2005-06 and projected profits zoomed to Rs 11.1 crore in 2006-07 and Rs 26.4 crore in 2007-08.

Alcock Ashdown has two shipbuilding yards at Bhavnagar and Chanch (Amreli) districts, spread over 27 acres and 10 acres area, respectively.

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