Mumbai: Bharati Shipyard, which will make an open offer for a controlling stake in Great Offshore, plans to keep the company independent with operations being run by the current management, a top official said.
“There is no need for a change,” managing director PC Kapoor said about the management of Great Offshore. “I will not be the MD of that company. That company will run independently,” he told Reuters over the telephone on Monday.
The board of Great Offshore on Saturday appointed a committee of senior officials to look after the affairs of the company, after its managing director resigned, Kapoor said.
Vijay Sheth resigned as managing director of Great Offshore on Saturday, coinciding with Bharati’s announcement of an open offer for a 20% stake.
Shares in Bharati Shipyard rose to touch its upper circuit limit of 10% on Monday on the open offer plan, while Great Offshore ended up 2.5%.
Bharati expects assured business from Great Offshore for the latter’s vessels, Kapoor said, adding most of its fleet is very old and due for replacement.
“The kind of prices that we can give them, no one can give. So it would only make so much sense for them to place orders with us. There being so much of synergies, we’ll be able to give them a price advantage,” Kapoor said.
Bharati, which already holds 14.9% in Great Offshore, plans to invest about Rs2.5 rupees to acquire a further 20% in the offshore services firm, Kapoor said.
The shipbuilder’s current order book stands at Rs50 billion, Kapoor said, adding there had been no order cancellations so far.
In March, the company won an order from ministry of defence worth Rs2.8 billion to be executed over 4 years but has not received any fresh orders since.
“We are bidding for several big projects and we hope something will come. The thrust will continue to be on offshore,” he said.
The company, which earns over 70% of its revenue from offshore supply vessels, does not have any fresh capex in FY10 and is going slow on expanding its Mangalore and Dabhol units due to a downturn in the global economy, Kapoor said.
The first phase of the Dabhol plant, which has rig-building and ship repair facilities, will be operational in 18 months from now while the Mangalore Project will take another two years, Kapoor said.
“We had planned we would be spending 600 crores (Rs6 billion) in Dabhol and 400 crore in Mangalore but that may vary now. We’ll phase it out because of the current downturn,” he said.