Bengaluru: State-run Cochin Shipyard Ltd (CSL), which is building the country’s first indigenous aircraft carrier, has hired a consortium led by SBI Capital Markets Ltd for its initial public offering (IPO), CSL said on Thursday.

The public sector firm plans to raise 600 crore from the IPO as part of its efforts to expand and construct larger vessels and also undertake ship repairs and fabrication.

The consortium of merchant bankers include JM Financial Institutional Securities Ltd and Edelweiss Financial Services Ltd, a spokesperson for Cochin Shipyard said.

The share sale was approved by the Cabinet Committee on Economic Affairs in November last year.

The IPO involves the sale of 34 million shares of CSL. The offer comprises fresh issue of 23 million shares and the central government’s stake of 11 million shares.

Proceeds from the sale of new shares will be used to part-finance the setting up of an international ship-repair facility at the nearby Cochin Port Trust as well as a new dry dock to facilitate the construction of larger ships and underwater repairs of rigs and semi-submersibles.

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 construction, maintenance and repair of ships.

CSL is the only Indian yard that is qualified to build three LNG (liquefied natural gas) carriers to be used by state-run natural gas firm GAIL (India) Ltd for transporting LNG from the US.

CSL will be the first of India’s five state-run shipbuilders to be listed, allowing the firm to convert its worth into share value.

There are three listed private sector shipyards in the country—ABG Shipyard Ltd, Bharati Shipyard Ltd and Pipavav Defence and Offshore Engineering Co Ltd.

L&T Shipbuilding Ltd, which runs a shipyard at Kattupalli in Ennore near Chennai, is not listed, but is part of Larsen and Toubro Ltd, which is a listed company.

The expansion plan involves building a new dry dock, the firm’s third, to build very large ships like capesize bulk carriers, general cargo ships, aframax and suezmax tankers, panamax and post panamax type container ships, LNG carriers, oil drilling rigs, semi-submersible rigs, and better versions of aircraft carriers.

The existing two dry docks cannot be used for building large vessels; hence it is proposed to build a new dry dock, a Cochin Shipyard spokesperson said.

The expansion also involves expanding its dry dock to allow the shipbuilder to repair oil drilling rigs.

Cochin Shipyard, India’s biggest state-owned shipbuilder by capacity, now has the capability to build vessels of up to 110,000 deadweight tonnes and repair ships up to 125,000 deadweight tonnes. Deadweight tonne is a measure for the total weight-carrying capacity of a ship.

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