A strong order pipeline and new contracts have prompted public sector undertaking Cochin Shipyard (CSL) to start tying up funds for its 26,000 crore investment plans that will fructify in the coming five to six years. Company officials say funding will be sourced from a combination of government schemes, multilateral loans, blue bonds, and internal accruals. "There are investments that will be needed. It will come from multiple pools of funding," a top company official told ET.

Cochin Shipyard expects these investments to be spread across shipbuilding, ship repair and 'certain other things.

For project-linked support, CSL plans to use the newly enhanced Shipbuilding Financial Assistance (SBFA) policy, which provides subsidies of 20-25 per cent once contracts are signed. "For a Rs 3,000 crore project, you are talking about 750 crore as incentives," the official said, adding this improves viability and profitability.

For brownfield expansion, the company will tap the shipbuilding development scheme, through either direct assistance or commercial borrowings with interest subvention. For large-scale infrastructure projects, CSL is exploring multilateral agency funding from "East Asian countries including Singapore, which offer low-cost, long-term loans, possibly via country-to-country credit lines with government involvement.

The company has also initiated work on issuing blue bonds worth about $50 million, and may consider tapping the domestic equity market if viable. "We could tap the markets also if that is a viable option... we are a listed company, the official said.

Cochin Shipyard is additionally studying the feasibility of a greenfield shipyard, expected to entail investment of $2-3 billion, still at a conceptual stage. The firm, which earns a profit after tax of Rs 600-850 crore annually, plans to fund part of expansion through internal accruals.

Cochin Shipyard has secured new commercial shipbuilding orders from both European and domestic clients, reflecting its strategy to expand its presence in the global commercial vessel market. Despite this diversification, defence work continues to anchor its business, contracts from the Indian Navy account for about two-thirds of its total order book.

Source: ET Infra. Com

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