Bangalore: State-run Shipping Corp. of India Ltd, India’s biggest shipping firm, has placed orders for constructing two anchor handling tug cum supply vessels worth about $ 35 million with Cochin Shipyard Ltd, the country’s biggest shipbuilder under state control.

The shipbuilding contract between the two state-owned firms was signed in Delhi on thursday, according to a government official who asked not to be named. The contract also involves an option for building two more similar vessels with a pulling capacity of 120 tonnes that are used to support offshore oil drilling operations.

Spokespersons for both SCI and CSL declined to comment because the deal has not been made public yet. Cochin Shipyard is one the prime candidates among a few sate-run firms that are looking to sell shares to the public through an initial public offering (IPO).

Cochin Shipyard already has the backing of the shipping ministry to launch an IPO to fund an expansion plan worth Rs800-1,000 crore. “ The government can, if they want, piggy back on the IPO to sell its shares in the market,” a union shipping ministry official said.

A decision in this regard will be taken soon by the Cabinet Committee on Economic Affairs (CCEA). Money raised through an IPO will go to the company while that from a secondary share sale go to the government’s exchequer.

Cochin Shipyard, fully owned by the government, has been waiting for a few months now for the stock markets to stabilize ahead of launching the IPO. If the share sale happens, it will become the first state-owned shipbuilder to be listed on the bourses. The firm is setting up a small ship-building division with an investment of Rs 98 crore and had also floated plans to build a second dry dock to construct bigger ships.

A dry dock is a narrow basin that can be flooded to allow a ship to be floated in, then drained to allow that ship to come to rest on a dry platform. Dry docks are used for the construction, maintenance and repair of ships and typically costs around Rs800- 1,000 crore.