The Hindu Business Line : Alcock Ashdown scouting for partners to complete projects on hand

Work line
Looking for cos already engaged in the same business.
Bank of Baroda, SBI financially supporting the company.
Global ship owners are now building more ships at Indian yards.

Virendra Pandit

Ahmedabad, Aug 6 Wholly state-owned ship-building company Alcock Ashdown (Gujarat) Ltd, or AAGL, which turned around last year and gave up its proposed divestment plans, is now exploring the possibility of entering into a joint venture on profit-sharing basis to raise funds to complete its projects on hand, with an order book worth over Rs 1,500 crore.

The company is in talks with some shipbuilders, including Dolphin and Modest, and a decision is likely to be taken in the next few weeks, sources told Business Line.

A meeting in this regard may take place next week in Bhavnagar. Once the company zeroes in on its joint venture suitor, it would send the proposal to the board for final approval. Alcock Ashdown intends to raise an initial capital of around Rs 100 crore for their tanker projects for four ships under construction at its Chanch shipbuilding yard in Amreli district.

Although funds were available from other sources, it chose to have a joint venture with companies already engaged in the same business so that a seamless and ready technical collaboration became available.

For tankers

However, for the time being, the proposed joint venture is restricted for tankers for four ships under construction. If this goes off well, the joint venture could be expanded to other projects as well. As of now, Alcock Ashdown is building two vessels for the Indian Navy, a series of tugs, and a passenger ship for the Andamans, apart from the four ships for which it is looking for a joint venture.

Bank of Baroda and State Bank of India are financially supporting the company. Last year, the Gujarat Government has stalled divestment plans for a second time for AAGL, with the receipt of bids for Rs 169 crore against the reserve price fixed to nearly Rs 350 crore, despite the company’s turnaround and booming business.

ABG Shipyard and Elecon Engineering were in the race to buy the Bhavnagar-based company, after being short-listed from among four bidders. The decision to privatise the company was taken four years ago when the global shipbuilding business was stagnant.

When the State Government decided to exit shipbuilding, however, this business started looking up and the company’s order book position improved significantly. Global shipowners are now building more ships at Indian yards as builders in maritime nations in the East, such as China, Japan and South Korea, are building only large ships, the sources said.

Management

Alcock Ashdown was originally a British-owned company which went into liquidation. It was taken over by the Government of India in 1975 and then by the State Government in 1994. Its entire paid-up equity had been paid by the State Industries Department, Gujarat Industrial Investment Corporation (GIIC) and Gujarat Maritime Board (GMB) and the State Industry Commissioner has been its ex-officio Chairman.

Its corporate management has a board of directors with nominees from the Indian Institute of Management-Ahmedabad (IIM-A) and Indian Navy, among others.

Its order book position, on which was based valuation of shipyards, increased from Rs 25 crore in 2003-04, when the State Government began considering its divestment, to Rs 43 crore (2004-5) and then zoomed to Rs 720 crore (2005-06), Rs 760 crore (2006-07) and now over Rs 1,500 crore when it was in a position to decline fresh orders until it executed the existing ones.

Turnover

The turnover, too, increased from Rs 60 crore in 2003-04 to Rs 111.77 crore in 2005-06, whereas profits went up from Rs 89 lakh in 2003-04 to Rs 3.54 crore in 2005-06 and to Rs 11 crore in 2006-07 and Rs 26 crore in 2007-08.

Alcock Ashdown has two shipbuilding yards at Bhavnagar and Chanch (Amreli) districts, respectively. The Chanch yard is one nautical mile from Pipavav Port, in the Gulf of Cambay, and is set to emerge as the company’s flagship yard.