Govt to sell 15.17% in Mazagon Dock to raise up to Rs444 cr
29 Sep 2020
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The government will sell 15.17 per cent of its stake in defence major Mazagon Dock Shipbuilders Ltd through an initial public offer, starting Tuesday, as part of its divestment drive in state-run entities.
The government will be offloading 3,05,99,017 equity shares of the defence PSU at a price band of Rs135-145 per equity share, to raise Rs413 crore at the lower price band and nearly Rs444 crore at the upper price band.
The maiden public issue of Mumbai-headquartered Mazagon Dock is set to open for subscription on 29 September. The initial public offer will close on 1 October and the listing on BSE and NSE is expected on 12 October.
While the stake sale will help Mazagon Dock listed on the bourses the company will not receive any proceeds from the offer as these will go to the selling shareholder, the government.
Mazagon Dock, has a shipbuilding and submarine capacity of 40,000 DWT, and is the only defence PSU building destroyers and submarines for the Indian Navy and Indian Coast Guard.
It is engaged in the construction and repair of warships and submarines for the government for use by the Indian Navy and other vessels for commercial clients.
The company was conferred the 'Mini-Ratna-I' status in 2006. It is also one of the initial shipyards to manufacture Corvettes (Veer and Khukri Class) in India.
Mazagon Dock is engaged in shipbuilding (including repair of naval ships), submarine and heavy engineering (which includes building, repair and refits of diesel electric submarines). The company is building four P-15 B destroyers and four P-17A stealth frigates and undertaking repair and refit of a ship for the MoD for use by the Indian Navy.
Its shipyard is located on the west coast of India, on the sea route connecting Europe, West Asia and the Pacific Rim, a busy international maritime route.
Location of facilities promotes closer association with vendors and customers
Mazagon Dock had an order book for shipbuilding and submarines and heavy engineering worth Rs54,074 crore, comprising three major shipbuilding projects and two submarine projects as of July 2020.
The company in its prospectus said its objective is to enhance market position by expanding capabilities, capitalising on opportunities, both in domestic and international markets, and to enhance competitiveness.
Mazagon Dock posted a 7.9 per cent YoY growth in revenue at Rs4,977.65 crore for FY20, 3.2 per cent rise in FY19 and 27 per cent growth in FY18. It has consistently reported profits in the last four financial years but there has been volatility as the bottomline fell 10.7 per cent YoY to Rs477.06 crore in FY20 against 7.3 per cent rise in FY19 and 17 per cent decline in FY18.
In the grey market, unlisted shares of the company were trading at a premium of about Rs125-130, or about 90 per cent.
The book running lead managers to the issue are Yes Securities (India), Axis Capital, Edelweiss Financial Services, IDFC Securities and JM Financial.
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