Mumbai-based warship maker Mazagon Dock Ltd has received regulatory nod to float an initial public offering (IPO).
The Securities and Exchange Board of India (SEBI) issued final observations to Mazagon Dock’s IPO on 10 August, according to the website of the capital markets regulator.
Mazagon Dock is the 38th company to receive SEBI approval for an IPO in 2018. As many as 46 companies had received clearance for IPOs in 2017, according to SEBI’s website.
The company had filed its draft proposal on 28 March. The IPO size is estimated at Rs 1,500 crore, people in the know had told VCCircle previously.
The government will sell 22.41 million shares, excluding shares reserved for employees, to the public. This will result in a stake dilution of a little more than 10%. The government will get three years from the date of listing to trim its stake to 75% or below as part of SEBI's minimum public float norms.
The company will not receive any proceeds from the offer. The money will go in the government’s kitty.
Yes Securities (India), Axis Capital, Edelweiss Financial Services, IDFC Bank and JM Financial are the merchant bankers managing Mazagon Dock’s IPO.
Mazagon Dock operated as a small dry dock in Mazagaon village in Mumbai to service the ships of the British East India Company in 1774. The dock was subsequently developed into a ship repair yard and later a ship building yard over the course of two centuries.
The company was incorporated as a private firm in 1934, and was acquired by the government in 1960 to expand its warship development programme.
The company constructs and repairs warships and submarines for use by the Indian Navy and other vessels for commercial clients. It has a maximum shipbuilding and submarine capacity of 40,000 dead weight tonnage (DWT).
Mazagon Dock is India’s only shipyard to have built destroyers and conventional submarines for the Indian Navy, besides being one of the initial shipyards to manufacture corvettes.
The company operates under two verticals: One is shipbuilding, under which it builds and repairs naval ships, and second is submarine and heavy engineering, which includes building and repairing diesel electric submarines.
Mazagon Dock is currently building four P-15 B destroyers and four P-17A stealth frigates for the Ministry of Defence for use by the Indian Navy. It is also building five Scorpene class submarines under a transfer of technology agreement with Naval Group.
Since 1960, the company has built 795 vessels, including 25 warships, from advanced destroyers to missile boats and three submarines, besides delivering cargo ships, passenger ships, supply vessels, multipurpose support vessels, water tankers, tugs, dredgers, fishing travellers, barges and border outposts for various customers in India as well as abroad. Its order book stood at Rs 52,760.8 crore as on February 2018.
The company reported consolidated net profit of Rs 285.79 crore for the six months ended September 2017 on revenue (from operations) of Rs 1,751.4 crore. For 2016-17, the company’s net profit was Rs 595.62 crore on revenue of Rs 3,530.48 crore.