Mazagon Dock Shipbuilders Bets Big On India’s Atmanirbhar Bharat Plan
Mazagon Dock Shipbuilders Ltd. expects to benefit from the government’s Atmanirbhar Bharat initiative, a post-pandemic financial rescue package, as increase in local manufacturing will aid its order book.
The Atmanirbhar plan will positively impact private and public shipyards. Also, manufacturing of ships has been placed under the negative list, using own design and development capabilities to meet requirements, said Vice Admiral Narayan Prasad, chairman and managing director at the shipyard under the Ministry of Defence. “Future order books worth Rs 90,000 crore for submarines and destroyers are in the offing for the shipping defense industry.”
The Miniratna status shipyard’s current order book, according to Vice Admiral Prasad, stands at Rs 54,500 crore, providing a revenue visibility for the next six to seven years.
According to Director-Finance Sanjeev Singhal, the company has a capacity of taking up 10 ships and 11 submarines simultaneously. “Currently, there are eight ships in hand and four submarines. Spare capacity is there future orders.”
Mazagon Dock is engaged in constructing and repairing warships and submarines for the Defence Ministry. It’s the only shipyard that builds destroyers and conventional submarines for Indian Navy. Besides, it manufactures cargo ships, multipurpose support vessels, barges and border outposts, tugs, dredgers and water tankers, among others for commercial clients.
The company is planning to launch its three-day initial public offering on Sept. 29. It plans to raise almost Rs 443.7 crore via an offer-for-sale by promoter—the government (acting through Ministry of Defence). The public issue will close on Oct.1.
Here are some other key highlights from BloombergQuint’s conversation with Vice Admiral Narayan Prasad and Sanjeev Singhal:
Vice Admiral Narayan Prasad
- By the end of 2023, all four submarines of the Scorpene plan—jointly developed by DCN of France and Navantia Spain—will be delivered.
- In fiscal 2020, the company executed value of production worth Rs 5,000 crore and it’s expected to grow 8-10% per year.
- Within a span of two years, submarines that are under repair will be delivered.
- Margins are currently pegged at 7.5% and the company remains hopeful that it will increase to 8% under the ministry’s defence procurement regulations.
- Repair and pre-fits order contribution to total revenue to increase from 3.5% to 15-20% in the next five years, which will improve the overall margin profile of the company.
- Private client orders have significantly higher margins, which are done on a competitive bidding process.
Watch the full interview here: