Mumbai-based warship maker Mazagon Dock Shipbuilders Ltd has received a regulatory nod on its revised plan to float an initial public offering (IPO), after its 2018 approval lapsed.
The Securities and Exchange Board of India (SEBI) issued final observations to the IPO on 13 December, according to the website of the capital markets regulator. This makes Mazagon Dock the 27th company to receive a regulatory clearance this year for an IPO.
SEBI had cleared 72 IPO proposals last year and 46 in 2017.
Mazagon Dock, which is fully owned by the government of India, re-filed its IPO proposal on 6 August this year. The stake sale is part of the mega divestment plan of Rs 1.05 trillion ($11 billion) for the current financial year.
The government will sell a little more than 29 million shares, or 13% stake, in the warship maker. The revised IPO size is estimated at Rs 700-800 crore, according to two people in the know.
As per the earlier plan, the government had planned to sell 22.41 million shares, resulting in a 10% stake dilution.
Yes Securities (India), Axis Capital, Edelweiss Financial Services, IDFC Bank and JM Financial are the merchant bankers managing the 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 then 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.
It 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.
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 (or small warships).
The company operates under two verticals: One is shipbuilding, under which it builds and repairs naval ships, and the second is submarine and heavy engineering, which includes building and repairing diesel electric submarines.
Mumbai-based Mazagon Dock is currently building four P-15 B destroyers and four P-17A stealth frigates for the defence ministry 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 to 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.
A successful IPO and listing will see Mazagon Dock join listed peers such as state-run Cochin Shipyard Ltd, which went public in August 2017 besides Garden Reach Shipbuilders & Engineers Ltd and Reliance Naval and Engineering Ltd (formerly Pipavav Defence and Offshore Engineering Co. Ltd), acquired by Anil Ambani’s Reliance Group in March 2015.