Bharati Shipyard net drops, sales jump; outlook steady

Bharati Shipyard net drops, sales jump; outlook steady

Mumbai: Bharati Shipyard saw quarterly net profit slip while sales jumped about half as lower government subsidy and higher interest costs pinched profitability, a top official told reporters on Monday.

The shipbuilder posted a net profit of Rs326.85 million in July-September compared with 331.6 million a year ago. Net sales grew to Rs3.2 billion from 2.1 billion last year.

“Subsidy accounted for this quarter has been lower than last year because of the nature of vessels. Interest costs have also risen in the quarter," managing director P.C. Kapoor said.

It received a subsidy worth Rs168.5 million in the quarter compared with 216.5 million last year, while interest cost more-than-doubled to 236.1 million.

The company expects to show a “similar performance" in the next quarter, he said, adding the firm has bid for several defence orders.

“There has been a slowdown in order book but we expect that to pick up," said the naval architect from IIT Kharagpur, overlooking the long boardroom crammed with television cameras.

“We are expecting huge orders from the defence in the next 6 months," he added, without giving any numbers.

Order book has remained mostly stagnant during the year as uncertainties on the offshore side persist but Kapoor said there were no cancellations so far.

The firm has an order book of Rs50.6 billion while about 2.8 billion worth is pending execution.

The company, which is in the fray to acquire offshore services firm Great Offshore Ltd , has a debt equity ratio of 1:1.25, Kapoor said.

Bidding War

Great Offshore is caught in a two-way takeover battle with Bharati and rival ABG Shipyard slugging it out to win the asset- and cash-rich firm.

The bidding war for Great Offshore was kicked off early this year when Bharati made an open offer for 20% after acquiring a near-15% stake.

ABG Shipyard came in with a counter offer and since then the firms have raised their offers more than once. Bharati has already invested more than Rs3 billion for a little over 23% stake in Great Offshore.

Both the offers await market regulator’s approval.

“The approval should come by shortly. We are talking with Sebi to expedite the process."