State-owned Mazagon Dock Shipbuilders Ltd (MDL) is looking at foreign equity flowing into the public sector enterprise as it gears up for the initial public offering under the government’s disinvestment programme.

The over 200-year-old dockyard, which was taken over by the government in 1960, is open to the idea of 49 per cent equity participation by foreign firms through the foreign direct investment (FDI) route.

“Various CPSEs are in the process of getting listed. Foreign investments are going to be there in the public shipyards. According to the FDI rules, up to 49 per cent can come in. Certain shares, as and when decided, will be listed,” Chairman and Managing Director of MDL Rakesh Anand told BusinessLine .

Although MDL refused to disclose the percentage of shares that will be listed in the IPO, which is expected to happen in the next few months, according to official sources, the government plans to mop up around ₹2,000 crore by selling around 15-20 per cent of its stake.

Leading shipyards

MDL is one of the leading strategic shipyards in the country engaged in building warships and submarines. It is at present building six Scorpene-class submarines with technology transfer from the French shipbuilding behemoth Naval Group, formerly known as DCNS, under the P75 programme.

The first submarine, out of the six, is scheduled to be delivered to the Navy next month. Deliveries of all the submarines under the Scorpene project is expected to be completed by 2020.

However, MDL, along with the French Naval Group, expects a repeat order for building three more submarines for the Indian Navy.

“Our proposal for three more submarines is almost ready. We are going to make an offer in the next few months. The Navy has given us a checklist of what they want. This is our aspiration,” said Rajiv Lath, Director (Submarines and Heavy Engineering), MLD.

Lath also said that the three new submarines will be an improved version of Scorpene with more updated technology.

MDL is also concerned that with under the government’s ‘Strategic Partnerships’ policy, priority will be given to private shipyards for building the next phase of submarines under the new P75 (I) project, which is yet to be officially announced.

Maintenance of submarines

Meanwhile, MDL is looking forward to grabbing a multi-billion-dollar contract for the maintenance and life extension of the two German SSK class Type 209 submarines — INS Shalki and INS Shankul. The two submarines were built by MDL in the 1990s and are currently in service with the Navy.

“The work should start at the end of 2018. This should keep us busy,” Lath said.

According to Anand, MDL is also capable of building nuclear submarines at its brand new Alcock Yard where at present the last two submarines of P75 are being built.

It is also building three P-15A Destroyers which are considered to be the most formidable frontline warships ever built in India. Additionally, it is constructing four more missile destroyers that are expected to be delivered between 2020 to 2024. Besides, MDL is also building four Project 17A class of frigates.

(The writer was in Mumbai at the invitation of MDL and Naval Group)